Corewell Health has signed on to a joint venture with Quest Diagnostics covering inpatient and outpatient lab management and the construction of a new 100,000-square-foot advanced lab facility.
The signed definitive agreement, announced Tuesday, outlines 49% equity ownership for the Michigan health system and 51% ownership for the clinical diagnostics company. Their deal is expected to close in the first quarter of 2026, though certain arrangements related to the agreement are set to begin near the end of this year. Other financial terms of the joint venture deal were not disclosed.
“Quest has a proven track record of delivering innovative and high-quality diagnostic services that put patients first,” Chat Tuttle, chief operating officer at Corewell Health, said in the announcement. “This new joint venture will support our ongoing efforts to make health care more affordable and accessible.”
The new facility will be built on site at Corewell Health Southfield Center, one of the system’s hospitals outside of Detroit. The “state-of-the-art” facility will support automated microbiology, high-throughput molecular testing and other advanced lab technologies to serve Corewell’s diagnostic needs.
Meanwhile, the system’s 21 state-wide inpatient and outpatient hospital labs will be managed by Quest before and after the new facility is up and running. The partners said this arrangement will give Corewell’s patients and providers access to Quest’s full suite of services, including reference laboratory testing, professional laboratory management services, analytics and laboratory workforce and supply chain management.
Certain supply chain and reference agreements are slated to begin in late 2025, with lab management and other remaining service agreements kicking off the following year, the organizations said. The new advanced lab facility is expected to become operational during the first quarter of 2027.
Corewell Health is a 21-hospital integrated nonprofit system with more than 65,000 staff, over 300 outpatient locations and a 1.3 million-member health plan. During 2024, it reported $16.4 billion in total operating revenue, a $208 million net operating income (1.3% operating margin) and $921.2 million net income.
Quest Diagnostics, which last year reported $9.9 billion in revenues and over a billion of net income, cut several deals with health systems like University Hospitals and Allina Health during 2024 to acquire their lab assets. It also cited plans to grow its hospital presence among the company's strategic priorities for 2025, via deals like the Corewell joint venture as well as more hospital lab outreach acquisitions and scaled-up reference testing.
“This joint venture combines Corewell Health’s first-rate academic expertise and deep ties to Michigan with Quest’s leadership in scaling diagnostic innovation to improve access, affordability and patient care,” Jim Davis, CEO, president and chairman of Quest Diagnostics, said in the announcement. “It also advances Quest’s strategy to expand in growth areas through collaborations with top health systems, building on our many successful laboratory joint ventures in other parts of the U.S.”
Quest’s growth strategy lies parallel with competitor Labcorp, which last month announced a $195 million deal to acquire and run outpatient lab services for Community Health Systems. It had recently cut similar acquisition and primary referral lab deals with North Mississippi Health Services, Ballad Health, Inspira Health and Naples Comprehensive Health.