Legal and regulatory issues in hospital laboratory outreach and partnering arrangements

An independent laboratory's joint venture with a chain of five nonprofit hospitals unraveled in 1999. Despite substantial management control over the joint venture and 3 years spent investing in and managing a massive consolidation project, the laboratory operator was ousted by the hospital group in favor of a national laboratory competitor. In the process, it lost the $6 million commercial laboratory business it brought to the joint venture. The laboratory operator sued the hospital group for destroying its business. Were the hospital's actions legal? Could the laboratory operator have protected itself better? Although by no means the only causes of this disaster, regulatory restrictions and uncertain contract terms contributed to the problems experienced by the laboratory operator.