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Clinical Laboratories and Pathology Groups

Hosted by Robert Michel

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Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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Dark Daily Commentary: Treat lab testing as a commodity and risk disrupting the entire healthcare system

Once again, the pathology profession is seeing the consequences of the “penny wise-pound foolish” philosophy relentlessly pursued by government health bureaucrats. This time it involves the Auckland District Health Boards in New Zealand. Having signed a cut-rate, back room deal back in 2006 to save about NZ$15 million per year on lab testing (against an annual healthcare budget in the region of more than NZ$2.5 billion), these health officials are reaping a harvest of voluminous problems and deficiencies in the community because of problems with their new monopoly laboratory testing provider.

Many regular Dark Daily readers know that, ever since Labtests began its contract as the exclusive provider of pathology services and lab testing to the greater Auckland region late this summer, there has been chaos across the healthcare system. Labtests is a new business division of Healthscope Limited, (SYD:HSP) a public company based in Melbourne, Australia. See Dark Daily e-briefing “Long-Awaited Lab Contract Transition in New Zealand Happens Next Monday”.

Photo: The New Zealand Herald

Photo: The New Zealand Herald

Today marked a remarkable comeback for the beleaguered Diagnostic Medlab  of Auckland, New Zealand. In a press conference this morning, the Auckland District Health Boards announced that it had signed a four-year contract with Diagnostic Medlab, a subsidiary Sonic Healthcare, Ltd. (SYD:SHL) of Sydney, Australia. Full coverage of these events is in the October 12, 2009 issue of The Dark Report, almost ready for distribution.

The publicly-known problems at Labtests range from long wait times in blood collection centers and lousy drawing skills by phlebotomists to patients getting the wrong test results and physicians waiting more than 24 hours for the results of STAT and urgent tests. Problems surfaced and continued from the first day that Labtests opened its doors, back on August 10. Daily news headlines screamed about the disruptions in care and patient safety risks caused by deficiencies in Labtests’ performance.

These problems fulfilled the predictions of many experts who had criticized the Auckland District Health Boards for awarding a monopoly eight-year lab testing contract to Labtests, a newly-created company which had no laboratory in Auckland, nor any laboratory staff! Under the terms of the contract, Labtests would need to build a large laboratory, assemble 400 trained laboratory professionals, install a laboratory information system, and begin serving 12,000 patients per day as of September 7, 2009 at 12:01 a.m. Such a feat had no precedent in laboratory medicine anywhere in the world. Even today, Labtests is operating with just 12 pathologists—five short of its own staffing goals. Diagnostic Medlabs had staffed 25 pathologists, by comparison.

Thus, bringing back Diagnostic Medlab to bail out the chaotic disruptions in patient care must be quite an embarrassment to the health bureaucrats of the district health boards. Since 2006, they have staunchly defended the contract award to Labtests. They have repeatedly assured patients and physicians that the transition to Labtests would go without incident. Just the opposite has happened.

In this great experiment, the citizens of Auckland are the guinea pigs. After all, when government health bureaucrats try unproven schemes to save money, it is patients who pay the ultimate price! This truth is playing out in Auckland, as any casual reader of newspapers and various web blogs can confirm for themselves.

This episode is a warning to other government health plans around the world. Don’t treat a laboratory test as a commodity. One lab’s test result often does not automatically equal the quality and accuracy of another lab’s test result. It does take adequate funding and recognition of the value of lab testing to maintain a world-class laboratory testing service.

Finally, in Auckland, there is likely to be another—as yet publicly un-discussed—consequence from the deterioration in lab testing services at Labtests seen since early September. No one yet knows which assays were performed inaccurately within Labtests, thus causing patients and their physicians to get wrong or unreliable test results.

It may take months before examples of patients getting misdiagnosed based on unreliable test results become public knowledge. As that happens, it will be an additional reminder that treating pathology testing as a commodity, to be purchased from the cheapest bidder, exacts a high price on the patient who is the unlucky one to get an erroneous, and life-changing lab test result.

Your Dark Daily Editor,
Robert Michel

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Related Information:

Labtests loses 10% of laboratory testing contract

Sonic Healthcare’s DML wins new Auckland community laboratory contract

Labtests deal costing DHBs extra $4.4m

Labtests – DHBs step in

DML to take back part of lab contract

New Zealand’s Health System Walks Pathology/Lab Testing Tightrope

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