CEO SUMMARY: Evidently the Irish Health Service is satisfied with its decision to outsource all the nation’s cervical cancer screening tests. In recent weeks, it announced that two international laboratory companies would handle Pap testing for the next two years. Sonic Healthcare, Ltd., won a contract to perform 25% of Ireland’s 300,000 Pap tests annually. Quest Diagnostics renewed its contract and will perform the balance. Both lab companies indicate they will build laboratory facilities in Ireland.
IRELAND CONTINUES TO PROVIDE a pioneering case study that involves outsourcing 100% of the nation’s cervical cancer screening tests to overseas laboratories. In recent months it has announced the latest contract awards for Pap testing.
For the contract cycle that runs from August 1, 2010 through July 31, 2012, Ireland’s health service has awarded 25% of the approximately 300,000 Irish cervical cancer screening tests performed per year to Texas-based Clinical Pathology Laboratories (CPL), a division of Sonic Healthcare, Ltd. The other 75% will stay with Quest Diagnostics Incorporated, the commercial laboratory company that was awarded an exclusive contract by the Irish health service two years ago.
For pathologists and cytology professionals in Ireland, the addition of Sonic Healthcare/CPL may be welcome news. That’s because Sonic has announced that it will build a new laboratory in Ireland. Until that laboratory is ready to open, Sonic will perform its share of Irish Pap tests at CPL’s main laboratory in Austin, Texas.
Colin Goldschmidt, M.D., CEO of Sonic, stated that his company’s Irish laboratory would be open and processing Pap tests “within months.” News reports say that Eamon Madden is heading up Sonic’s business interests in Ireland.
Madden was a co-founder of Claymon Laboratories, one of the few private clinical lab companies that operates today in Ireland. Founded in 1991, it was sold to Biomnis, a French company, in 1999.
Quest Diagnostics has established an office in Dublin, Ireland. Robert Quinn is its country director. Quest has indicated that it will build laboratory facilities in Ireland.
Prediction Is Fulfilled
By adding a second laboratory to the global Pap testing outsourcing contract, Irish health officials have fulfilled a prediction made earlier by THE DARK REPORT. This editor believed that, in future tenders, appropriately licensed and accredited clinical laboratories from other countries would surface and bid for the Irish cervical cancer screening test contract. (See TDR, August 31, 2009.)
At that time, THE DARK REPORT speculated that very low cost cytology laboratories in such countries as India and Malaysia might offer lower prices that would be attractive to Irish health officials. It is not known whether such lab companies did enter bids in the latest tender. But what is clear is that the Irish health service decided that putting all its cervical cancer screening eggs in one basket was not the ideal solution. It rectified that situation by awarding Sonic Healthcare a portion of the contract for Pap testing.
Outsourcing Pap Tests
There is an interesting story behind the decision of the Irish Health Service Executive (HSE), which manages all public health programs, to contract with Quest Diagnostics to process all Irish Pap smears—about 300,000 annually—outside the country. HSE cited extremely long turnaround-times as its major reason for doing so. Irish women and their doctors were waiting on average six months for Pap smear results. In some cases, the wait was as long as a year.
Though six Irish labs bid, none of them were awarded any portion of the Pap testing contract. At the time, Irish health officials stated that none of the Irish labs were accredited, nor did any of these labs meet other requirements specified in the tender.
Some months later, however, a telling comment was printed in the Irish Times. Minister of Health Mary Harney defended the decision to exclude the Irish labs by noting that Quest Diagnostics would guarantee a turnround time of 10 days. She then added that the Quest bid was one-third lower than the lowest bid offered by the six Irish labs!
Makeover Of Nation’s Labs
The next shock soon to come to the pathology testing profession in Ireland is a planned total makeover of both hospital inpatient testing and outpatient testing throughout the nation. THE DARK REPORT was first to inform American lab executives and pathologists about the details of this plan. (See TDR, January 25, 2010.)
A year ago HSE formally announced its plan to regionalize all lab services in Ireland, based on recommendations from a study done in 2007 by Teamwork Management Services Limited. At present, Ireland’s 46 hospital laboratories process 58 million tests each year, costing €328 million. There are 16 small, 21 medium, and nine large laboratories, employing about 3,000 full time workers. About 32% of the total work comes from outpatient settings.
HSE proposed consolidating the inpatient and acute care work at a handful of large laboratories, most likely the current nine largest hospital laboratories. These would be the “hot” labs—providing rapid TATs, usually less than four hours. In addition, three free-standing “cold” labs would be built to do the 32% of the work that comes from general practice clinics and physician offices.
More Lab Tenders Expected
Since announcement of the reorganization plan, Irish pathologists have been concerned that HSE would extend the international outsourcing of lab work to the routine tests slated for the “cold” labs.
In December of last year, the Irish Medical News reported that Minister Harney told the Dáil (the lower house of the Irish Parliament) that HSE intends to put the work out to bid internationally as part of the reconfiguration of laboratory services proposed in the Teamwork report. She said stakeholders had been consulted on the issue.
“One would hope that the public service [existing Irish labs] would be successful in that tender, but clearly it must compete on the basis of quality, turn-around time, and cost,” said Harney. “That must be the future because if we waste €200 million on this [pathology testing] service that could be used in areas where we have deficiencies, be that in the child protection area or the many other areas where there are deficiencies, no one could defend that.”
Those comments launched some interesting rebuttals. Fine Gael (United Ireland Party) health spokesperson Dr. James Reilly responded to Harney’s statement with concern that the plan would cost thousands of Irish jobs and result in the loss of indigenous expertise.
Another physician concerned about the consequences of the HSE’s major restructuring of the nation’s pathology laboratory services is Dr. Bill Tormey. He is Chairman of the HSE Dublin North-East Regional Health Forum. In January, he responded even more strongly than Dr. Reilly.
Tormey called the idea a massive mistake. “This is a catastrophically stupid thing to do because they [HSE] are separating out the investigation of treatment of patients in primary care from those in secondary care and tertiary care,” warned Dr. Tormey. “ I think that the…Committee on Health should bring in the people responsible, including the Minister, and question them as to their motivation, their competence, and what they intend to achieve.”
Appropriate Lab Structure
The Irish Medical Times (IMT) reported that an official of the HSE countered back by noting that the external review upon which the laboratory restructuring plan was based had the objective of “recommending the most appropriate structure and arrangements for the delivery of laboratory medicine services across the full spectrum of care, including primary, community, secondary, and tertiary care.”
The HSE spokesman noted in the IMT that the “hot lab” (hospital laboratory) element of the national lab restructuring plan recognizes the need to process tests “from patients in regional hospitals receiving acute ‘round-the-clock’ care through dedicated ‘hot’ labs which will provide more access to clinical laboratory medicine advice and more direct care of the patient.”
Dr. Tormey’s response, as published, was to criticize the separation of outpatient and inpatient laboratory testing services (currently both provided almost exclusively by the hospitals in each community). He claimed that this plan “flies in the face of the amalgamation of the NHO and the PCCC at the Health Service Executive level and is reflective of the chaos of the HSE.”
Dr. Tormey’s Proposal
Dr. Tormey, who is a pathologist and specialist in general internal medicine at Beaumont and Connolly Memorial Hospitals in Dublin, has his own proposal for improving lab testing services in Ireland. He advocates establishing a core laboratory service in each hospital. This would be available to all patients and general practitioners on an equal basis in their local community, with the exception of some specialist clinics.
Across the globe, all pathologists and laboratory administrators recognize that decisionmakers in Ireland are debating the two fundamental models of clinical laboratory testing. One is the consolidated model, where economies of scale are achieved by aggregating as much test volume as possible into large testing centers.
The second is the integrated care delivery model, where the objective is for the local laboratory to support local care—whether inpatient or outpatient—by doing the work as close to the patient as possible. One benefit is that the same laboratory performs the tests and maintains a cumulative record of the patient’s test results, even as the local lab’s pathologists and laboratory scientists contribute their knowledge and expertise in support of clinicians and patients.
Irish health policy makers face the classic conundrum in clinical laboratory management. Centralized lab testing does generate a lower cost per test. But it misses the opportunity to do pathology testing in near-patient and point-of-care settings, where a faster answer can improve patient outcomes and contribute to a much lower overall cost per episode of care—and those savings can often far outweigh the added cost of doing pathology tests in a high-volume central laboratory.