CEO SUMMARY: This may be the shortest lab testing contract honeymoon ever. Just ten days after LabTests became responsible for an exclusive, eight-year lab testing contract covering the Auckland area, problems with its service and operation caused District Health Board (DHB) officials to put the lab on notice. DHB employees are also now working inside LabTests to oversee safety and quality assurance. Meanwhile, the press is airing the complaints of patients and physicians.
FAR AWAY IN AUCKLAND, NEW ZEALAND, problems associated with the transition to a new exclusive laboratory contract with an untested laboratory company have become national news.
On September 7, LabTests, a division of Australia-based Healthscope Limited, assumed responsibility for laboratory testing in the greater Auckland region. Its debut as the exclusive lab testing provider for physicians’ offices in the area proved to both a public relations bomb and a major disruption to physicians and patients.
September 7 was the effective date for the controversial and much-contested exclusive eight-year laboratory testing contract between LabTests, a division of Australia- based Healthscope Limited, and the three District Health Boards that make up the Auckland region.
However, the transition to LabTests from the previous contract laboratory, Diagnostic MedLabs (DML), a division of Sonic Healthcare, Ltd., actually happened in three stages. Stage one happened on August 10. On that date, LabTests opened its patient service centers (PSCs) in the Counties Manukau health district.
This area represents about one-third of the daily patients served under the overall lab testing contract. By August 13, the headline in the New Zealand Herald was “Long waits for blood tests anger patients,” and, since that date, news coverage about the performance of LabTests continued to go against the young company.
Step two happened on August 24, when LabTests initiated service in the Auckland district. These patients represented another one-third of the daily total served by this contract. On September 5, the Herald was reporting “Stall last Labtests switch, say GPs.” Chairman Peter Didsbury of Procare Health, an organization which represents 500 general practitioners (GPs) and 400 practice nurses across Auckland (about half of the GPs and nurses in the area), told the newspaper that the final transition to Labtests should be delayed. He said that significant numbers of patients continued to endure long waiting times for tests, even as physicians sometimes failed to get the results of urgent tests within 24 hours.
12,000 Patients Per Day
The third and final stage in the transition happened on September 7, when LabTests opened its PSCs in the Waitemata health district. Now the laboratory was serving up to 12,000 patients per day.
Press coverage only worsened. On September 10, the Herald wrote “The Medical Association says Auckland’s new community laboratory service is unacceptable and the Government must take action.”
This story was also the first to call attention to the negative impact that the transition to LabTests was having on patient care. Peter Foley, M.D., Chairman of the New Zealand Medical Association (NZMA), was quoted as saying, “The level of service reported to the NZMA is unacceptable in many respects, resulting in a number of patients not receiving appropriate care when they need it.”
LabTests Put On Notice
Developments continued at a swift pace. By September 14, Auckland DHB chairman Pat Snedden announced that, under DHB authority, six senior health officials would be present at LabTests to exercise oversight. These individuals would handle safety and quality assurance and the cost of this would be reimbursed by LabTests. It was also disclosed that the DHB boards not only can terminate the contract with LabTests, but the DHBs have the authority to “forcibly” purchase LabTest’s business operation.
One day later, LabTests’ CEO was sacked. It was announced that Ulf Lindskog would return to work for Healthscope in Australia. He was replaced by Paul Waterson, who is Chief Operating Officer at Healthscope’s pathology division in Australia. Also coming from Australia to help were Dr. John Andrew, Medical Director, of the pathology division, and Healthscope’s Chief Medical Officer, Dr. Michael Coglin.
It is ironic that it took the District Health Boards less than 10 days to publicly acknowledge the serious failures of LabTests and put the company on notice that its contract status was in jeopardy. After all, these same government health officials spent almost four years defending all aspects of the changeover from Diagnostic Medlab to LabTests. Officials of the DHBs are on record repeatedly assuring the public, physicians, and the nation, that the transition to LabTest would be well-handled and the savings offered by LabTests justified any risks involved in changing laboratory companies.
Auckland Is Worth Watching
The unfolding events in Auckland are instructive to both laboratory medicine professionals and government health program officials in any developed country around the world. The disruption and potential for patient harm now happening in Auckland demonstrates how quickly a simple change can cause lab testing quality to fall below acceptable standards.
Based on direct site visits to laboratories in New Zealand during the past year and other studies, THE DARK REPORT believes that New Zealand may be the furthest along of any developed country in undermining the integrity of its laboratory testing services. This is one reason why it is important to track the consequences of lab contracting policies like in those in Auckland.