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Quest Diagnostics Launches Reorganization, Layoffs

NEW YORK (GenomeWeb News) – Quest Diagnostics today said that it has launched a reorganization of the firm that includes the creation of two new business groups and the elimination of approximately 400 to 600 management positions.

The Madison, NJ-based clinical lab firm, which has steadily increased its presence in the molecular diagnostics field, said that it will eliminate its current business structures and replace them with two new business units: Diagnostic Information Services and Diagnostic Solutions. The change will become effective on Jan. 1, 2013.

The Diagnostic Information Services group will include the "vast majority" of the company's revenues, said Quest, and will replace its current Physician Services, Hospital Services and Cancer Diagnostics businesses. The new unit will develop and deliver diagnostic testing, information, and services, and will be responsible for new test development, sales and marketing, routine and esoteric laboratories, and field operations.

In addition, Quest said it intends to cut around 400 to 600 management positions by the end of next year, an effort intended to cut down on management layers and eliminate complexity. Those cuts are expected to result in savings of around $65 million.

The moves are part of a three-year, $500 million cost reduction initiative announced last year by Quest aimed at improving operational efficiency. The launch of those efforts was followed earlier this year by Steve Rusckowski succeeding Surya Mohapatra as president and CEO of the firm.

"The new organization will allow us to aggressively drive operational excellence and improve our customer focus, which will, over time, enable us to restore growth," Rusckowski said in a statement.

The reorganization also comes with a shakeup in management. The firm said that Richard Mahoney, VP of Healthcare Information Services; Joan Miller, SVP of Oncology and Neurology Services; and David Norgard, VP of Human Resources, all plan to leave the company by the end of the year. Joseph Benage, VP of Insurer & Employer Services, will leave in 2013.

But the firm also announced a handful of management hires. Everett Cunningham will join the company from Pfizer on Oct. 15 to become SVP, Commercial. John Haydon will join Oct. 22 from Philips Electronics to become SVP, Operations. And Jeffrey Shuman will join Oct. 22 from Harris Corp. as SVP, Chief Human Resources Officer.