The healthcare landscape is undergoing dramatic change: hospitals are consolidating into regional networks with highly specialized medical care performed in core facilities;  generalized medical care is being provided in satellite hospitals;  and ambulatory services are  now offered at point-of-care (POC) locations.

Diagnostic laboratory testing is undergoing a similar transformation. Complex, non-urgent tests are performed in core facility laboratories or in reference sites; routine, acute diagnostic tests are performed in core laboratories or in satellite hospital facilities; and point-of-care testing is performed in outpatient clinics, physician office laboratories, retail clinics, and in-home testing[i].

Today, laboratory professionals must make critical decisions based on sound strategic planning that will guide operations and ensure financial viability of their laboratory for the near, medium and long term.   This provides the operational framework to set goals, establish performance measures, and obtain the necessary resources and approvals to move forward[ii].

Whether planning a new, start-up laboratory operation, or performing a cost/benefit analysis of current testing, including whether to purchase new or replacement instruments, it is important to do a realistic assessment of not only what you want to offer your patients, but what you can realistically offer your patients.  The laboratory’s test menu should be aligned as closely as possible with physician expectations and needs, as well as the lab’s operational capabilities.

Recognize the importance of physician / laboratory relationships

One of the ways that laboratories can use their resources more effectively is to strengthen their relationships with physicians. This will enable you  to better forecast future service needs, and  to make the best decisions as to test menu, instrumentation, staffing, including which tests to outsource or  maintain in-house.  These relationships are vital as strategic assets, and, as the demands on physicians continue to multiply, they will increasingly rely on their laboratory partners for diagnostic support.  Physicians increasingly seek a diagnostic resource that can meet all of their testing needs[iii].

Perform a Cost/Benefit analysis of your present operation, and proposed test system changes[iv]

When there are proposed changes to your test menu and instrumentation, it is important to perform an honest cost/benefit analysis.   It is by taking into account the internal as well as external factors in the laboratory environment, that the decisions made will have the best chance of success.

Below are items to consider for your cost/benefit analysis:

  • Instrument capacity for current or proposed test menu (is it “right-sized” for test volume and level of staffing?)
  • Instrument cost (purchase or lease?)
  • Reagent cost (are you obligated to purchase reagents from a particular manufacturer?)
  • Reagent life (expiration dates: days, weeks, months before/after opening packages)
  • Storage requirements for reagents (do you need to buy a new refrigerator or freezer?)
  • Frequency and expense of Quality Controls, Calibration, and Maintenance
  • Tests run singly or in batch mode?
  • Comparison of in-house testing with reference laboratory charges and turn-around time
  • Staffing requirements: number, training expenses; qualifications and experience beyond present staffing; continuing education
  • Proficiency Testing requirements
  • Facility space, ventilation, electrical needs; hazardous disposal requirements
  • Time and involvement of the Lab Director, and the Technical Consultant
  • Document storage requirements / LIS capability
  • Adjusting the front office staffing to handle additional pre and post analytical paperwork and communications

Of course, providing the highest level of service for your patients may justify costs associated with the above considerations, but you must make sure that your instrumentation can handle the projected demand in terms of test volume capacity, variety of tests offered, operating times and staffing.  However, having a laboratory with excess capacity and operating requirements can ultimately bankrupt a practice.  Investigate which instruments can meet your present needs, and for the near future, and be cost effective.

Some additional key strategies that can facilitate the appropriateness of a  laboratory’s test offerings, and the instrumentation needed[v].

  • Analyze test mix and outsource low-volume tests. Don’t be surprised to find low-volume tests (perhaps added to the menu due to a single physician request in the past), which can be outsourced to a reference lab at a lower cost and with a better turnaround time.
  • Project test demand and costs to determine which tests to perform in house. Conversely, analysis of send-out volumes may indicate opportunities to bring certain tests in-house.
  • Partner with reference laboratories. Reference laboratories can provide valuable support in the form of financial analysis, methodology assessment, and provision of clinical samples to help make in-source-versus-outsource decisions and to establish and increase on-site test volumes.

 Don’t forget to conduct an external assessment[vi]

This is an additional tool to use when considering changes to your test menu, as well as determining instrument needs. Consider what is going on in the laboratory industry today, noting trends both locally and across the country and seeing if these factors can be applied to your laboratory’s situation:

  • What current or pending legislation may affect your laboratory?
  • How does regulatory compliance impact your planning decisions?
  • What will be the impact of changes in reimbursement / payment mechanisms?
  • What is the current market for your services? What is the market’s size and location? (Estimating market size and location is a critical component to determine market opportunity. These estimates will drive financial outcomes!)
  • How do these proposed changes enhance the laboratory’s competitive stance?

Finally, a word about the key role of management in accomplishing these goals[vii]

Before you can have effective planning in place, you’ve got to have competent management of the laboratory.   It is through the application of management skills that you gain  the confidence and loyalty of your staff, build a culture of teamwork, trust and quality, and can implement   change with minimal disruption.

Competent laboratory management includes effective communication with the staff;  providing key information and direction for the continuing future development of  the laboratory; and encouraging involvement in the development of strategic plans.

A successful manager can motivate their staff to provide feedback about their workload; instruments and kits used; make suggestions for improvement of, and changes to, their test menu; and provide information about interactions with other offices, departments, physicians, and patients.  These types of information play an important role when developing strategies for cost containment, growth, re-alignment, and even repositioning of the lab in the community.

Originally published by ADVANCE for the Laboratory

[i] Laboratory Strategies: meeting the increasing demand for point-of-care diagnostics.  By Patrick Murry. October 2014. -demand-for-point-of-care-diagnostics
[ii]Strategic Planning For The Clinical laboratory. Martha Robbins and Associates. Clinical laboratory Consulting.
[iii]R. Saunders and A. Westerink. Sidebar: The Strategic Value  of laboratory Outreach. Nov 1, 2014.
[iv] The Cost Effective Laboratory: The Changing Landscape of Laboratory Testing. Laboratory Testing Matters. August 2015.
[v] R. Saunders and A. Westerink. Sidebar: The Strategic Value  of laboratory Outreach. Nov 1, 2014.
[vi] Strategic Planning For The Clinical laboratory. Martha Robbins and Associates. Clinical laboratory Consulting.
[vii] How To become A Good Lab Manager by Elizabeth Sandquist.  ASBMB Today. October 2013.

About The Author

Irwin is Quality Advisor for COLA Resources, Inc (CRI®). where he provides a wide range of technical assistance to laboratories across the country. He previously held the position of Executive Director at Community Response, a community-based organization that provides HIV/AIDS support services in metropolitan Chicago. Prior to that position he was the Laboratory Manager of Crittenden Memorial Hospital, West Memphis, AR. He holds a Bachelor of Science degree from Brooklyn College, a Medical Technology degree from Good Samaritan School of Medical Technology, a Master of Science degree from Colorado State University, and a Master of Business Administration degree from the University of Memphis.