Whether planning a new, start-up laboratory operation, or performing an analysis of current testing, (including input for decisions on whether or not to purchase new or replacement instruments), it is important to do a realistic assessment not only of 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 laboratory’s operational capabilities. The first step is to perform a Cost/Benefit analysis of your present operation, and of the proposed changes to the test systems to determine economic and logistical feasibility..

  1. Determining the Feasibility of Adding New Tests

The Cost Benefit Analysis[i]

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:

  • Type of patient population served (related to physician clients; and specialties represented)
  • Types of client physicians (medical specialties represented)
  • 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
  • Complexity of present and proposed testing.
  • 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

Additional strategies to determine appropriateness of test offerings, and instrumentation needed[ii].

  • 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.
  1. Conduct an external assessment[iii]

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?

Of course, providing the highest level of service for your patients may justify costs associated with the above considerations, but it is vital to ensure that your instrumentation can handle the changes in projected demand in terms of test volume capacity, variety of tests offered, operating times and staffing. This may require adding or upgrading automation. Automation has long been regarded as an important means for clinical laboratories to achieve greater operational efficiency, test accuracy, method standardization, total data handling and reduced turnaround time; in short, an improved quality of patient care.

Until recently, the expense and complexity of an integrated laboratory automation system has been a deterrent to implementing automated systems of any kind. However, current generations of automated equipment do not require commitment to total lab automation, and may include modules designed to automate only a portion of a laboratory’s operations. This development of new generations of automated stand-alone and bench top equipment has made automation a more viable option for labs of all sizes—and in many cases, a necessary option for labs seeking to remain competitive in today’s marketplace[iv].

  • Steps in Determining the Right Automation for Your Laboratory[v]
  1. Questions to ask when deciding how much automation is needed

The amount of automation needed depends on the type and size of your laboratory. Some considerations include answers to the following questions: are you in a physician’s office lab, a clinic lab, a specialty lab, a hospital or reference lab? Are you in a stand alone lab or a centralized core lab? What are the number and types of specialties tested? And what is the extent of automation already present? If all you are looking for is increased throughput and you don’t really have to deal with diverse assays and readouts, then you might want to think about modular components. So with a few nonintegrated pieces of equipment, you can get the throughput you need without a huge investment, or additional space required.

  1. Seek assistance to determine the level and type of automation that best serves your needs

Once operational goals are defined, talk to fellow professionals and industry representatives about the types of automation available; visit area labs if they have systems that interest you. Get critical information related to versatility, robustness, technical support and training; this is going to be very important in getting the infrastructure up and running.

  1. Set priorities for automation based on realistic budget limitations

Once you have taken care of the above, and determined your needs, start getting quotes on systems needed. Budget negotiations will begin, with sets of reality checks on what is doable and what is not. Decisions should be based on priorities set in advance.

  1. A few more points to remember

Always choose a vendor who can provide prompt, affordable service to minimize any downtime. Remember the data management involved. There are different sets of tools for data processing, data mining and data visualization, and you need to think about how you are going to track and analyze this data. Finally, create an infrastructure that can be easily modified or expanded for other applications.

  1. Plan for downtime for routine maintenance and equipment breakdown

With time and experience, you can estimate how much “buffer” time you need to build in for preventive maintenance and downtime. In a centralized core lab, you can get historical data to help you plan things out and have good backup systems in place.

  1. Consider purchasing a service contract[vi]

An additional consideration is whether to buy a service contract. A service contract can include many services beyond a general warranty, such as software updates, calibration, certification, preventative maintenance, priority service, and/or additional discounts on upgrades. Service contracts can be costly, and you can either discuss options with colleagues or make your own informed decision. Several reasons why you may chose to purchase a service contract could include reduced hassles if your equipment breaks, faster/priority repairs and a predictable expense in your budget. If a piece of equipment is critical to your work, you use it frequently, and major repairs are very expensive, a service contract may be worthwhile. In terms of budget, you will know exactly what you are going to pay in advance and will not be blindsided with a major “surprise” expense.

Recognize the strategic 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 better forecasting of future service needs, and making 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[vii].

Laboratories are discovering that they are well positioned to provide medical guidance and direction for clinicians who are trying to maneuver their way through the increasingly complex world of laboratory testing. To efficiently manage laboratory test utilization requires both ensuring adequate utilization of needed tests in some patients and discouraging superfluous tests in other patients[viii].

The key role of competent management in accomplishing these goals[ix]

Effective laboratory planning requires competent management .. It is through the application of management skills that you 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.

Successful management can motivate 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, automation, growth, re-alignment, and even repositioning of the lab in the community.

[i] The Cost Effective Laboratory: The Changing Landscape of Laboratory Testing. Laboratory Testing Matters. August 2015.

[ii] R. Saunders and A. Westerink. Sidebar: The Strategic Value of laboratory Outreach. Nov 1, 2014.

[iii] Strategic Planning For The Clinical laboratory. Martha Robbins and Associates. Clinical laboratory Consulting.

[iv] G Tufel Right-Sizing Laboratory Automation. Clinical Lab Products. December 17, 2014.

[v] M. Ferrer. Ask the Expert: How to Automate Your Lab to Best Fit Your Needs. Lab Manager. January 2011.

[vi] K Huey. Starting a New Lab: How to Develop a Budget and Buy Equipment. American Physiological Society (APS).

[vii]R. Saunders and A. Westerink. Sidebar: The Strategic Value of laboratory Outreach. Nov 1, 2014.

[viii] Dr. Curtis Hanson and Elizabeth Plumhoff. MAYO CLINIC: Test Utilization and the Clinical Laboratory. May 2012.

[ix] How To become A Good Lab Manager by Elizabeth Sandquist. ASBMB Today. October 2013.

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