First ISO-Designed Clinical Lab Improves Outcomes, Costs

Big Victory for Kaiser Permanente Northwest Laboratory Division

CEO SUMMARY: In the first 14 months of operation, Kaiser Permanente Northwest’s new automated regional laboratory facility, the nation’s first designed by an ISO-9000-certified lab organization, is yielding big gains in both productivity and outcomes. In its high-volume core lab, productivity more than doubled, while the new laboratory’s average cost-per-test declined by 8.7% during that same 14-month period. As this second and final installment demonstrates, quality management systems like ISO-9000 are proving their worth in laboratory operations.

Second of Two Parts

IN BECOMING THE NATION’S FIRST ISO-9000-certified laboratory to design and build a new automated lab facility, Kaiser Permanente Northwest (KP-NW) Laboratories, based in Portland, Oregon, faced two unique challenges.

In part one of this two-part series, THE DARK REPORT described the first challenge: how to apply the principles of ISO-9000 to create a laboratory design unlike anything seen in the United States today. (See TDR, July 26, 2003.)

In this concluding installment, THE DARK REPORT looks at the other big challenge tackled by KP-NW Laboratories: how to successfully bring the new regional lab facility into full operation, once construction was complete.

No “Traditional” Lab Depts.

As noted in installment one, this new laboratory was not designed to accommodate traditional lab departments. Instead, it was designed around specimen volume and similar work processes. That fundamental difference changed virtually all aspects of how this new lab facility was to be staffed and operated.

Although this design philosophy promised significant gains in quality, enhanced lab testing services, turnaround time, and productivity, it meant new job descriptions and different work processes for the 200+ employees at the new regional lab facility. Simply put, lab administration had to resolve multiple difficult issues with people and operations before it could harvest the significant benefits that would result from its use of ISO methods in the design and operation of the new regional laboratory facility.

KP-NW Laboratories earned its ISO- 9000 certification in October 2000, the same year it received authorization to build its new regional lab facility (February 2000). That new laboratory was designed, built, and put into operation by April 2002. “Independent of the performance metrics, this new lab design has radically changed our management capabilities,” observed Dixie McFadden, Administrative Director of Laboratories at KP-NW. “Our quality system allows the management team to know exactly what’s happening in every function of the lab—and gives us the ability to take the right action, immediately!

“It’s the combination of two things,” she continued. “First, as our entire lab team has learned to work under ISO’s philosophy and methods, we are faster at recognizing both operational opportunities and problems. The ISO tools allow us to implement improvements rapidly.

“Second, having used the ISO philosophy to redesign work processes in our new regional lab facility, we’ve already eliminated many types of problems often found in clinical labs,” observed McFadden. “Additionally, these same work processes are monitored and continuously improved. Collectively, all these factors contribute to higher quality and productivity while allowing us to better control our costs.”

McFadden’s comments will probably resonate with lab directors and pathologists. Too many labs still lack accurate and timely performance data. This makes it difficult for lab management to understand problems when they occur and identify opportunities for improving their lab’s quality of services. At KP-NW, the new regional lab facility, because of its design and quality system, gives its management team those capabilities.

Lots Of New Job Descriptions

The radical design and workflow through he new lab did generate a substantial challenge for the entire laboratory staff. “By moving to a lab organized around specimen volume and work processes, we literally created new job descriptions for almost the entire staff,” noted McFadden. “This was an unexpected outcome from the planning process.

“The skills and experience required for positions did not change,” she continued. “But the actual duties for positions changed, both in how the direct work was performed and in how that position related with others in the laboratory. So we needed to re-bid positions in the new laboratory facility.”

More than 200 people were directly affected by this process. “Certainly lots of the staff had trepidation about this process,” explained McFadden. “They asked us to provide job descriptions prior to bidding for the ‘new’ positions, which we did. Each staff member gave us a first, second, and third choice of their favored position.

“On the up side, 92% of the people involved in the job re-bid got their first or second choice,” she added. “One validation that we had done a good job is that there were no grievances and no appeals.

“On the downside, a tremendous amount of time and resources went into the process of communication prior to the job re-bid, then training after new positions were assigned,” stated McFadden. “To be brutally honest, our ‘shared preparation’ neighborhood turned out to be the biggest challenge.”

As noted in part one of this series, the KP-NW laboratory used “neighborhoods” to describe areas organized by function, not by clinical department. ‘Shared preparation’ was a neighborhood designed to handle specimens for histology, cytology, microbiology, special chemistry, and anatomic pathology.

“Shared prep was such a unique design concept that we had no comparable place in our existing laboratory system to train people prior to the opening of the new regional lab facility,” recalled McFadden. “During the first five months of operation in the new laboratory, we struggled to get staff oriented and trained to these new ways of handling the specimen flow.

“Once training had been accomplished, there were clear benefits in both quality and productivity,” noted McFadden. “The radical design concept of shared prep was validated by its performance. Also, during that time, the shared prep teams re-jiggered work processes to take advantage of opportunities not anticipated during the planning stage.”

Two Different Approaches

Another interesting reason why training was a major challenge lies in how each of the two unions decided to handle assignment to new positions. One union used experience and knowledge to establish priority for bids on new positions. The other union used seniority. As a result, many of those individuals needed refresher sessions to insure their skills were appropriate to their new duties.

“The concept of neighborhoods—not departments—caused concern among our pathologists and Ph.D.s,” McFadden stated. “Rightly so, they asked ‘with no conventional lab departments, how will clinicians know which pathologist or lab scientist is the right individual to call with their questions?’ After all, we no longer had the traditional list of department directors.

Helping Clinicians

“We understood that we would have to help clinicians with the transition,” she explained. “That led us to provide orientation programs and materials to our clinicians and improve the visibility of our pathologists and Ph.D.s. Based on feedback, we eventually divided up responsibilities by medical specialty, such as endocrinology, pulmonary, OB-Gyn, and the like. At the pathologist/Ph.D. level, each assumed responsibility for specific medical specialties.”

The radical work flow concepts are easily visible when touring the new regional laboratory. It handles about 6,300 specimens per day and serves Kaiser Permanente’s insured beneficiaries with lab testing for its hospitals, clinics, and medical offices.

“At the front door of the regional laboratory, high-volume tubes go left and lower volume non-tubes go right,” stated McFadden. “In our core lab neighborhood, specimens are tested and results delivered in less than one hour. Also, tubes are loaded onto the automated line at accessioning. At the end, they are racked and carried by ‘sneaker power’ to an automated storage system.”

Inventory is kept in an automated storage system, driven by bar codes. “By design, our inventory forces FIFO (first in, first out),” observed McFadden. “Our payback on this automated inventory system will take less than 48 months. Its design is the result of how ISO-9000 methods changed our thinking.”

Problem-Solving Help

Another sign of this change in management perspectives is easily seen in a walk around the laboratory. At numerous work stations, large posters are hung in visible locations. The poster describes a problem that a particular work team is currently trying to solve, provides relevant information, and invites anyone with an idea or solution to contact the team leader.

“This approach to problem-solving is transforming our laboratory,” noted McFadden. “Each of our team members contributes solutions and ideas for improvements as part of our revamped work environment. Because they have responsibility for fixing things in their own work group, the enthusiasm is infectious.

“More specifically, what drives this new dynamic in our laboratory system is the concept of continuous improvement,” McFadden explained. “Anyone can submit an ‘improvement request.’ This triggers analysis of the situation, feedback, and implementation of a solution.

“How successful has this quality system been to our laboratories?” asked McFadden. “Between May 2002 and April 2003, our 400 employees, working at 21 laboratory locations, submitted 845 improvement requests, an average of 70 per month! The person originating these requests hears back in 14 days and, during that one-year period, 57% of those requests generated an implemented solution. Because measured outcomes are attached to these improvements, we know the cumulative difference this is making in our laboratory’s quality and productivity.

High-Performance Lab

“I am proud to say that this is one of the traits of a high-performance organization,” she noted. “Kaiser Permanente is committed to a collaborative working relationship with our labor partners. Along with the example of the improvement requests above, this includes development of self-directed work teams. Our new social design is a necessary component of our work environment and it con- tributes to this type of staff creativity and initiative.”

Performance of the new laboratory facility validates the effectiveness of its unique design and ISO-influenced work processes. “During the first 14 months of operation, our average cost-per-test decreased by 8.7% while the average number of tests-per-FTE increased by 12.7%,” observed McFadden.

“These numbers continue to move in the right direction,” she added. “Our new lab facility is designed to support the application of quality management principles, as laid out in ISO-9000 and similar systems. But the real credit goes to the entire laboratory team. The quality management principles of ISO- 9000 have truly given our entire laboratory team a new set of tools. Our staff now has an improved ability to understand work processes and respond with more directed solutions.

“Because of that fact, we expect to deliver continuing and substantial gains in both costs and productivity into future years,” declared McFadden. “And there’s more to come. We are working to optimize our courier runs, which cover 7,000 square miles, to meet or exceed the highly automated laboratory connectivity that already operates in our medical offices and hospital laboratories.

“There’s also the need to support evolving efforts to improve patient safety and the laboratory’s role in providing enriched clinical information to physicians and patients. Within Kaiser Permanente’s integrated health system, our laboratory must be prepared to respond to a wide range of clinical and organizational initiatives,” noted McFadden.

One big home run hit by the new laboratory is the performance of the high-throughput core lab. “The uptime performance of our automated line jumped from 60.5% to 99%,” she said. “During the first 14 months of operation, productivity in this neighborhood more than doubled, increasing by 108%.”

Two Simultaneous Changes

There is another important dimension to the story of KP-NW’s laboratory division. “During the past 24 months, we have designed, built and radically changed all of the work processes in the new regional laboratory facility, even as we changed the organizational culture,” declared McFadden. “I don’t know of any other comparably-sized laboratory in the United States which has simultaneously achieved both goals in such a short time.”

From the perspective of THE DARK REPORT, the accomplishments of Kaiser Permanente Northwest’s ISO-9000-certified laboratory division and its new automated regional lab facility are noteworthy for several important reasons. First, ISO-9000 techniques allowed lab management to change the work culture and performance outcomes in ways that were impossible prior to adoption of the ISO system. Both lab staff and management now have greater control of work processes and outcomes.

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Relevance Now Established

Second, the design, operation, and improved outcomes of the new automated regional laboratory facility is a real-world validation that quality management systems can take clinical labs and pathology groups beyond today’s performance status quo. It is one answer that lab administrators and pathologists can use to further improve their own laboratory’s productivity and outcomes.

Third, the impact of a quality system like ISO-9000 on the KP-NW laboratory division has been so positive that “there is no going back.” Because it gives both lab staff and lab management better control over work processes, outcomes, and overall operations, this philosophy of management is now a permanent characteristic.

Most importantly, THE DARK REPORT observes that other early-adopter laboratories implementing ISO-9000, Six Sigma, Lean, and similar quality management systems are having the same positive experience as the KP-NW lab division. These are the early validations that quality management systems will steadily transform the way our nation’s clinical laboratories are organized and operated.

Measured Gains From New Lab

By applying its ISO-9000 skills, Kaiser Permanente Northwest’s new regional laboratory facility in Portland, Oregon is delivering significant improvement in productivity and quality measures. Listed below are recorded statistics from the opening in April 2002 through mid-June, 2003:

•82.6% of all tests performed in the KP-NW laboratories are performed at the new regional lab
•Cost-per-test decreased 8.7%
•Tests-per-FTE increased 12.7%

Core Lab Neighborhood

(high-volume, high-throughput instrumentation)
•Autoline system uptime improved from 60.5% to 99%
•108% productivity increase, relates to non-tubes handled by Prep & Read
•Routine hematology TAT runs at 13 minutes to 1 hour
•Chemistry TAT runs 30-40 minutes
•TAT for manual testing of coagulation and urines are within 1 hour

Shared Prep Neighborhood

(Consolidation of specimen prep for microbiology, histology, cytology, hematology, and core lab)
•Increased productivity by 50% Read Neighborhood
•Microbiology productivity increased 20%
•No productivity increase in cytology and histology

Automated Storage

(highly sophisticated system of inventory control and specimen storage)
•Increased productivity by 50%
•Decrease in urgent orders saves $30,000
•Reduced expired inventory saves $15,000
•On-hand inventory reduced by $738,000
•FTEs reduced by 10%


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