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Tuesday, Oct 3, 2023


ANNE BURKE Contributing Reporter Jason Betterton hunches over a microscope, eyes fixed on cells from a pap smear. When he spies something suspicious among the oddly shaped, pink and blue spots and dark squiggles, he swoops in for a closer look, increasing the magnification from 100 to 400 power. Betterton examines dozens of such cell samples each day. But he says he examines each one as if it belonged to his own wife, mother or daughter. “If you don’t treat each one that way, you’re not doing your job,” he said. That degree of fastidiousness has helped propel Betterton’s employer, PathNet Esoteric Laboratory Institute of Van Nuys, onto a list of the nation’s fastest-growing companies. “Motivation here is really important. Everybody has to know that we’re not just showing up in the morning to sell shoes,” said Alan Kaye, PathNet’s 44-year-old president and chief executive. According to Entrepreneur magazine, PathNet, which had $2.3 million in sales and 58 employees in 1997, ranks 71st among the 100 fastest-growing companies in the United States. When it was founded in 1996, the firm had just two employees and $100,000 in sales. The magazine compiled the list by analyzing sales data from Dun & Bradstreet Corp., which tracks 11 million companies in the United States each year. If all goes according to plan, PathNet’s revenues will continue to soar. Kaye’s business plan calls for annual sales of $5 million by 1999, $20 million by 2000, and $45 million by 2001. It’s an ambitious goal, and PathNet will need a healthy infusion of cash to make it happen. Kaye already has one investor, accountant Robert Levine of Woodland Hills, who owns 10 percent of the company. PathNet also has been promised a $100,000 bridge loan from the Valley Economic Development Center. But more investors are needed. “You have to be very careful during accelerated periods of growth to make sure you have enough cash on hand,” Kaye said. From its offices and laboratories on Hayvenhurst Avenue near the Van Nuys Airport, PathNet provides “cytopathology” information to physicians and other clinicians across the country. (As opposed to pathology, which focuses on the examination of tissue, cytopathology deals with disease-related changes in cells.) The company provides laboratory services for all types of cancers, but specializes in screening and research for cervical and other gynecological cancers. Cervical cancer strikes about 13,700 women in the United States each year, killing about 4,900, according to the American Cancer Society. It is the seventh leading cause of cancer death among women in the United States. Worldwide, it is the top cancer killer of women. The detection of gynecological cancer isn’t just a business for Kaye it’s something of a crusade. After Kaye lost a close friend to cervical cancer, he says he became committed to fighting such cancers through improved detection methods. “Cervical cancer, when found early, is more than 95 percent treatable,” said Kaye. “Yet many women don’t go in for regular pap smears, so it’s sometimes caught too late.” Kaye, who has a long background in laboratory sales and marketing, and his wife, Randi, launched PathNet with $100,000 of their own money and a $200,000 loan from the Small Business Administration. The personal funds came from cashing in their 401Ks. That cleaned out their life savings, a risky undertaking, especially considering the couple is raising two young boys. But Kaye said his research indicated the market was ripe for a new laboratory that would employ the soundest and most advanced screening and research methods, with an eye toward expansion through acquisitions and mergers. Many small laboratories, plagued by quality control and liability problems, had been going out of business, and few were coming along to take their place, Kaye said. “We saw a need to consolidate the marketplace or, as Wall Street says, ‘roll ’em up’ into larger, regional entities (with) better patient management,” Kaye said. He began by purchasing the client lists of several small cytopathology labs that had gone out of business due to money problems. Using the marketing insight he gleaned from his jobs at Los Angeles-area pathology labs (he was vice president of Cancer Screening Services in North Hollywood in the late ’80s and worked at Sherman Oaks-based HemaCare Corp.), Kaye scrutinized the lists to determine which clients he should try to keep. Then, he made another risky move he raised prices, reasoning that customers would pay more for highly skilled technicians, better customer service and the best equipment and latest technology. The gamble paid off. “We got an expected amount of attrition because of raising prices, but it was a good investment,” Kaye said. “We were able to keep the clients we wanted to keep.” Today, Kaye has his eye on seven cytopathology firms he hopes to acquire four in Southern California, one in Fresno, one in the East and one in the South. Some of those firms would be folded into PathNet, while others would remain operationally independent, he said. Either way, significant savings should result, further bolstering PathNet’s bottom line, Kaye said. In addition to his duties at PathNet, Kaye is executive director of the National Cervical Cancer Coalition, a non-profit group whose goal is to spread awareness of the pap smear and newer detection technologies, and push for higher reimbursement for such procedures from insurers and the federal government. Currently, the federal government reimburses less than $8 each for a pap smear, though the actual cost can be much higher, said Dr. Juan Carlos Felix, a consultant to PathNet and director of pathology and chief of ob/gyn pathology at Women’s and Children’s Hospital, part of Los Angeles County-USC Medical Center. Newer detection methods include the so-called thin-layer technology, which also is available through PathNet. With the traditional pap smear, bad cells can be hard to detect because they are not properly preserved on the slide, or because they are clumped together and concealed by inflammation, Felix said. The thin-layer procedure, approved by the Food and Drug Administration in 1996, allows the technologist to get a better view of the sample, which appears as a “smooth, evenly distributed layer of cells,” Kaye said. Kaye is pushing the government and insurance companies to reimburse for thin-layer technology, which currently is generally not covered even among those who “reimburse for Viagra,” he said. Kaye also is interested in detection technology of the future. The National Institutes of Health recently authorized PathNet to participate in research on chromosome-based analysis of cervical cancer. “It’s really exciting going right to the person’s DNA and making a determination,” Kaye said. “The end product would be a DNA diagnostic marker for cervical cancer and would be cost effective in the marketplace.” Felix said he is impressed by PathNet’s efforts to become an important player, as gynecological cancer detection moves “from traditional medicine into the realm of molecular medicine.” Felix also commended PathNet for its comparatively high rate of re-screenings, which are performed as a routine method of quality control. “They’re not just another cytotechnology laboratory that wanted to do the same old thing,” Felix said. The company also performs hundreds of free screenings each month for the Venice Family Clinic, one of the nation’s largest free clinics. Karen Lamp, the clinic’s assistant medical director, said the screenings provide cancer detection for the poorest women in the county those on general relief, the homeless, and the working poor. “I don’t know what we would have done without PathNet,” she said.

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