This lab testing service has been growing at an unbelievable pace since its turnaround. CEO Nate Headley shares the details.

With high quality service and automation levels unparalleled in the testing industry, it’s no wonder Spectrum Laboratory Network has been growing at a 25% clip over the past six years.

CEO Nate Headley

Today, Spectrum covers the Southeast, providing laboratory services to more than 7,000 physicians, 10 hospitals, and scores of nursing homes, home health organizations, clinics, urgent care facilities, and businesses. Spectrum separates itself from competitors by providing hospital-quality testing, exceptional customer service, and nationally recognized Web-based order entry and results delivery technology.

President and CEO Nate Headley is credited with turning the company around in 2000 and 2001, stemming operating losses and embarking on this period of robust growth, which is more than double the industry average of 9%. When Headley joined Spectrum in 2000, the company was losing $3.6 million a year on a sales volume of $35 million. Projections for calendar year 2007 show anticipated revenue of between $145 million and $150 million.

Righting the ship
“In the turnaround period between 2000 and 2001, the company underwent five data system conversions, and 85% of the management turned over,” Headley recalled. “It was quite a task to right the ship and lay plans to move forward.” Headley has been in the industry for 30 years and said Spectrum is the seventh organization he has brought back to profitability. “As a consultant, I was asked to look at the company in terms of improving its operation; one thing led to another, and I was running the company.”

The full-service regional medical laboratory was a joint venture formed by High Point Regional Health System and the Moses Cone Health System, with the original intent to consolidate laboratory functions. Pooling resources and expertise from all systems has proven to be an opportunity to create superior services and
outstanding quality for clients and affiliates.

A majority (56%) of Spectrum’s business is derived from accounts in its native North Carolina. The second-largest chunk of business (18%) comes from Tennessee, where Spectrum purchased MEDex Laboratories in 2004. The company also serves South Carolina (13% of business), Georgia (10%), and Virginia (3%). Spectrum is expanding its presence in northern Virginia and Georgia, and Headley said its current growth markets are in the Atlanta area and in Tennessee.

Spectrum Laboratory Network maintains a central laboratory in Greensboro where the vast majority of testing takes place, along with 35 stat facilities strategically located in the markets it serves for same-day testing. Routine samples are collected at the end of the day and flown to Greensboro, where testing takes place overnight and results are available by 7:30 the next morning. Headley said the company reports 99.3% of samples on time.

An internal measure of service levels is derived from the number of physician and client complaint calls that come to the company through customer service. The center may receive two dozen calls a week concerning 60,000 tests that were performed during the same period, a complaint rate of 0.04%.

Providing quality laboratory services and continuously improving quality are cornerstones at Spectrum. The company is committed to delivering the highest quality service to its clients, a pledge that’s emphasized in all divisions and technical areas. Spectrum has a planned a systematic quality assurance program that monitors and continuously evaluates all aspects of laboratory service, including the accuracy, clarity, and timeliness of laboratory reports.

The gold standard
Spectrum Laboratory Network adheres to standards for quality established by the College of American Pathologists, the Clinical Laboratory Improvement Act, the Joint Commission, the Food and Drug Administration, and other regulatory agencies. The company complies with all federal, state, and local laws and regulations and participates in external proficiency testing programs from CAP and other agencies. The CAP accreditation is recognized throughout the world as the “gold standard” for laboratory quality assurance.

“This is a highly competitive business, and we maintain service levels that are equal to or better than competitors,” Headley said. Spectrum Laboratory Network also has the most automated network in the industry. More than four out of five orders are received and results transmitted electronically, which increases the accuracy of requests and helps speed results. “Our high level of automation is one of our competitive advantages,” Headley said.

As the president and CEO plots the course of the company, he believes that sustaining a 20% growth rate will be difficult as Spectrum’s revenues keep rising. The second challenge will be maintaining the company’s culture as it expands. “We will stay on the cutting edge of technology to keep the company ahead of competitors that are more than 40 times our size,” Headley said. “We don’t endeavor to maintain services but to offer capabilities that in many respects exceed those of competitors.”

Growing the company means constantly examining laboratory capacity to make sure current and future needs can be met. Spectrum maintains a capacity that’s 50% higher than current needs to capture new business quickly and be able to ramp up while maintaining high service levels.

When Headley joined Spectrum Laboratory Network, the company had 258 employees. Today, that number has grown to 1,257. “I’m proudest of creating that many jobs through our growth,” Headley said. “You always read in The Wall Street Journal about how much CEOs are paid and their excessive perks, but part of what we do is provide livelihoods for our employees.”

Grayson Walker, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it , is a freelance writer based in Atlanta.