In their most recent startup ventures, Marty Rash and Bob Yeager separately ran companies that acquired hospitals in hopes of operating them for a profit.
Now, the two Nashville-area executives are targeting a different niche with American Pathology Partners, a new company based in Brentwood that aims to acquire and operate labs to examine tissues and cells for cancer.
Rash and Yeager's company would become partners with pathologists and probably would own majority stakes in their labs. It's an $11 billion market experiencing revenue growth of 9 percent a year from an aging of the U.S. population and more cancer tests.
Funded with $75 million of equity, American Pathology has letters of intent to acquire two labs, one each on the East and West coasts. Rash and Yeager's company would provide help with marketing and expansion into additional niches of diagnosing cancer.
"There's certainly going to be some pathologists that like this model because it allows them to grow without putting up as much capital," said Balaji Gandhi, an analyst with Oppenheimer & Co. in Boston, adding that last year's sale of industry leader AmeriPath Inc., for $2 billion to New Jersey-based Quest Diagnostics boosted investors' interest.
Doctors' offices, hospitals and surgery centers all send tissue samples to labs for testing by pathologists.
Room for growthRash, American Pathology's chairman, and Yeager, its chief executive, see room for growth for their company since only about 20 percent of 3,000 anatomical pathology labs are owned by large chains with the rest owned by smaller operators or individual doctors.
"It's a source of financing and monetizing their labs, and what they've worked to build over the years," said Yeager, who as co-CEO helped launch Attentus Healthcare, a rural hospital operator, five years ago. Yeager also co-founded OrthoLink Physicians Corp., which began as an orthopedic specialty physicians practice management company.
Rash was co-founder and CEO of Province Healthcare Corp., a rural hospital operator, that was sold to LifePoint Hospitals Inc., for $1.7 billion four years ago.
American Pathology's management includes two other former executives of rural hospital operator Attentus, which Yeager left two years ago and has since folded.
John Starling, vice president of finance, was vice president of taxation and finance at Emdeon Business Services after a similar role at Attentus. Lee C. Dilworth, American Pathology's executive vice president and chief legal and administrative officer, was Attentus' senior vice president and general counsel.
Rounding out the management team are: Robert A. Mignatti, chief operating officer; Edward D. Dooling Jr., executive vice president of sales and marketing and chief growth officer; and Thanasis Papaioanu, executive vice president of development and chief financial officer.
Dooling and Papaioanu began work on the concept more than a year ago before joining forces with Rash and Yeager. Equity funding was from venture capital firm, New Enterprise Associates.
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