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Few Medical Laboratories and Pathology Groups Pursue Big Cost Savings by Identifying and Fixing the Recurring Cost of Bad Quality in Their Labs

Concepts of ‘recurring cost of bad quality’ and systemic failures are still new in clinical laboratory management, yet offer the potential for substantial savings to lab managers who learn these techniques and tools

Today, most clinical laboratories and pathology groups feel the financial squeeze from shrinking budgets and decreasing prices for lab tests. This is a big reason why cutting costs is a primary goal for nearly every medical laboratory in the United States.

In their cost-cutting efforts, labs quickly pursue the low-hanging fruit of reducing staff overtime and using Lean and Six Sigma to identify obvious sources of unnecessary costs. But there is a source of huge cost savings that goes unnoticed and unaddressed in all but a handful of the nation’s savviest clinical labs and pathology groups. It is the recurring cost of bad quality.

Few Clinical Lab Managers Trained to Recognize Recurring Cost of Bad Quality

The recurring cost of bad quality exists because much of it is nearly invisible. Even more surprising is that many sources of recurring bad quality are simply accepted as part of the normal consequence of lab tests. As well, few lab managers and clinical laboratory scientists have the training and experience to do two things:

1. Identify the source of recurring bad quality; and

2. Eliminate it in an appropriate manner.

In fact, the “recurring cost of bad quality” is a rather new concept in clinical laboratory operations and is among the important elements to be addressed in a quality management system, such as ISO 15189. That is why many lab professionals here in the United States are still unfamiliar with this important aspect of improving laboratory operations.

One international expert in this field is Lucia Berte, MA, MT(ASCP)SBB, DLM. Berte is President of Laboratories Made Better! PC, in Broomfield, Colorado. For more than three decades, she has been at the forefront of advancing the art and science of quality in medical laboratory testing, from the pre-analytical to analytical to post-analytical stages. “Labs today are at greater risk of having multiple recurring sources of bad quality, and there are several reasons why this is true,” stated Berte.

Medical Laboratories Must Not Compromise Quality When Cutting Costs

“Examples of failures that happen in most labs every day are easy to find,” she continued. “Two that are commonplace are unacceptable specimens for any reason and reporting errors, and each is a source of recurring bad quality that is easily visible.

“But what about the other types of failures, and other sources of recurring bad quality that are overlooked or unrecognized? What about recurring external assessment deficiencies and proficiency testing failures?” asked Berte.

“In addition, most labs have less money today because of shrinking budgets and successive years of price cuts by payers,” she continued. “When a lab takes inappropriate steps to save money, cut expenses, and stretch the available dollars, it also creates the probability that bad quality can creep in.

“For example, what happens when a lab decides to save money by reducing the levels of controls it runs for its different methods? Maybe only later, during a quality control check, is it then determined that the accuracy of those test results is unacceptable and it becomes necessary to rerun those specimens. The cost of this rework is substantial, but it is only captured in the typical lab’s budget for labor and materials, and the true cost of the waste associated with this retesting is never made visible to lab management.”

Lucia M. Berte (above left) is an ASCP certified medical technologist, a specialist in blood banking, and a diplomate in laboratory management. She is certified as a quality manager and quality auditor by the American Society for Quality, and chairs the CLSI Subcommittee on Quality Management Systems. Berte also was co-leader of the work group that wrote the 2012 revision to the ISO 15189 international medical laboratory standard. Anne T. Daley (above right) is President of Daley Consulting LLC in Phoenix. She is an experienced healthcare professional with extensive, practical skills that include operation management and assessment, mergers/acquisitions, quality management systems, process improvement, cost reductions, project management, and leadership development. Daley’s background includes laboratory, pharmacy, and imaging/radiology services in hospital, clinic, and commercial outreach settings. (Photo copyright: Dark Daily.)

Lucia M. Berte (above left) is an ASCP certified medical technologist, a specialist in blood banking, and a diplomate in laboratory management. She is certified as a quality manager and quality auditor by the American Society for Quality, and chairs the CLSI Subcommittee on Quality Management Systems. Berte also was co-leader of the work group that wrote the 2012 revision to the ISO 15189 international medical laboratory standard. Anne T. Daley (above right) is President of Daley Consulting LLC in Phoenix. She is an experienced healthcare professional with extensive, practical skills that include operation management and assessment, mergers/acquisitions, quality management systems, process improvement, cost reductions, project management, and leadership development. Daley’s background includes laboratory, pharmacy, and imaging/radiology services in hospital, clinic, and commercial outreach settings. (Photo copyright: Dark Daily.)

Opportunity for Lab Managers to Address Recurring Sources of Bad Quality

To help lab managers, pathologists, and lab staff gain competency in this new aspect of lab management, Dark Daily is hosting a special webinar, “Reality Check on the True Cost of Recurring Bad Quality in Your Lab—How to Find It, Fix It, and Sustain Major Cost Savings.” The webinar takes place on Tuesday, February 21, 2017 at 1:00 PM EST. Use this link to register.

The webinar will be led by two of the lab industry’s recognized experts in quality and high-performance lab management:

• Lucia M. Berte, MA, MT(ASCP)SBB, DLM: President, Laboratories Made Better! PC, Broomfield, Colo.; and

Anne T. Daley, MS, CMQOE, CSSBB, DLM, President, Daley Consulting LLC, Phoenix.

It is timely for lab managers and lab staff to learn and master the knowledge and techniques of recognizing sources of systemic failure and recurring bad quality in their laboratories, particularly at a time when lab budgets are shrinking and labs must make informed decisions about where, and by how much, to cut costs.

Cost-Cuts to Clinical Lab Operations Come with Greater Risk

Moreover, today there are higher levels of risk associated with cutting costs in the laboratory. That’s because patients and payers are raising the bar on their expectation of quality from the lab that performs their testing. Not only must a lab that is cutting costs be careful to not compromise patient safety and clinical accuracy, but it also must continuously improve, so that it performs every work process to a greater level of quality.

This is where the Six Sigma measurement of quality has a role. Studies have shown that it is common for most labs to perform individual work processes in the range of 3 to 4 Sigma, which is 66,807 and 6,210 defects per million events, respectively. Thus, when attacking recurring sources of bad quality, labs can monitor improvements and demonstrate progress by calculating the Sigma-level performance of that work process.

Moving forward, clinical labs and pathology groups that are clinically relevant and financially successful will share a common attribute: their management and staffs will be adept at identifying recurring sources of bad quality, measuring the recurring costs of bad quality, and fixing those sources of recurring bad quality.

Lab managers and lab staff interested in joining the webinar, Reality Check on the True Cost of Recurring Bad Quality in Your Lab—How to Find It, Fix It, and Sustain Major Cost Savings, can use this link. (Or copy and paste this URL into your web browser: http://www.darkdaily.com/audio-conferences/webinar-reality-check-on-the-true-cost-of-recurring-bad-quality-in-your-lab-how-to-find-it-fix-it-and-sustain-major-cost-savings-22117.)

—Michael McBride

Related Information:

Reality Check on the True Cost of Recurring Bad Quality in Your Lab—How to Find It, Fix It, and Sustain Major Cost Savings

Lean-Six Sigma Medical Laboratories Begin to Innovate in Ways That Add Value to Physicians, Payers, and Patients

Clinical Pathology Laboratory Managers Use Lessons in the Best of Medical Laboratory Quality to Improve Lab Operations and Patient Safety

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