Navigating LIS Vendor Acquisitions: How to Protect Laboratory Operations During Market Consolidation

This is Part 2 of our series on LIS market consolidation. See Part 1 for background on the CliniSys-Orchard acquisition and its broader market implications.

Following CliniSys’s acquisition of Orchard Software, laboratory owners are asking how this might affect their operations. Industry research reveals consistent patterns when healthcare technology vendors are acquired, and understanding these challenges helps laboratories prepare proactive strategies to protect their interests.

What to Expect During LIS Vendor Consolidation

When specialized vendors are absorbed into larger organizations, customers consistently report changes in several key areas that directly impact laboratory operations.

Support Quality Changes

Industry surveys identify support quality as the most frequently affected area during vendor consolidations. Common changes include centralized support routing requests through general IT teams rather than clinical lab specialists, longer resolution times, and reduced direct access to technical experts familiar with your workflows. For laboratories accustomed to calling their account manager directly, these changes can significantly impact daily operations.

Implementation and Customization Limitations

Consolidated vendors typically standardize processes, creating challenges for laboratories with unique requirements. This results in extended implementation timelines, reduced flexibility, higher customization costs, and complex approval processes for modifications that smaller vendors previously implemented quickly.

Pricing Structure Evolution

Academic research on market consolidation shows consistent patterns of price increases following acquisitions. Changes include standardized fees eliminating volume discounts, usage-based charges for previously included features, and annual increases tied to vendor growth targets. Studies of healthcare consolidation document price increases ranging from 11-54% in concentrated markets.

Innovation Slowdowns

Large consolidated vendors face different development pressures, resulting in longer development cycles, reduced responsiveness to individual customer requests, and conservative approaches to new technologies.

Immediate Actions for Orchard Software Customers

The integration period provides Orchard customers with important opportunities to protect their interests, as customer leverage is typically highest during transition periods.

Contract Protection

• Review termination clauses and service level commitments in your current contract
• Document current support response times and service quality through detailed records
• Look for “change of control” clauses that may provide renegotiation opportunities
• Understand pricing protection provisions and annual increase limitations

Secure Service Commitments

• Request written commitments regarding support team consistency and response times
• Establish escalation procedures for unresolved issues
• Negotiate notification requirements for any changes to support delivery models

Price Protection Strategies

• Negotiate multi-year rate locks to provide cost predictability
• Seek written commitments preventing “integration fees” or unexpected migration costs
• Establish clear policies regarding annual increases and fee structure changes

Evaluate Alternatives

Even laboratories planning to stay with CliniSys benefit from understanding their options:

• Document current system capabilities and workflow requirements
• Research alternative vendors to understand market options and competitive positioning
• Establish relationships with potential alternative providers for future reference

Strategic Considerations for All Laboratory Owners

The CliniSys-Orchard acquisition represents a broader industry trend affecting laboratories regardless of their current LIS provider.

Assess Vendor Stability

• Research ownership structure and financial backing of your vendor
• Understand their acquisition history and integration track record
• Evaluate their strategic direction and commitment to your laboratory segment

Strengthen Contract Management

• Include specific performance metrics with penalties for non-compliance
• Negotiate termination rights for significant service level changes
• Establish data portability requirements to prevent vendor lock-in scenarios

Diversify Relationships

The consolidation trend makes vendor diversity increasingly valuable:

• Avoid single points of failure in critical laboratory operations
• Maintain relationships with alternative vendors even if not actively needed
• Network with peers to understand their experiences with different vendors

The Path Forward

While vendor transitions create immediate challenges, they also provide opportunities to reassess LIS requirements and ensure technology partnerships support long-term laboratory success.

The key to navigating these transitions successfully lies in maintaining optionality while protecting current operations. Laboratories that take proactive steps during transition periods position themselves better regardless of how vendor integrations ultimately unfold.

Take Action While You Have Options

The consolidation trend is accelerating, and forward-thinking laboratory owners are already taking action. Rather than waiting to see how vendor integrations unfold, many laboratories are proactively evaluating their options and making strategic moves to maintain operational independence.

We’re seeing an increasing number of laboratories choosing to transition to specialized, customer-focused LIS providers before consolidation forces their hand. These labs recognize that maintaining control over their technology partnerships is crucial for long-term success.

At Dendi, we’ve been helping laboratories navigate these transitions with transparent pricing, rapid implementation, and the personalized service that large consolidated vendors struggle to provide. Our customer-first approach has resonated with laboratory owners who want a true technology partner, not just a vendor.

Ready to explore your options? Contact Dendi today to learn how modern LIS technology and exceptional service can protect your laboratory’s future, regardless of what happens in the broader market.

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