CEO SUMMARY: Although it’s the first ISO 9001-certified clinical laboratory in North America, Quest Diagnostics’ Nichols Institute is a late-comer to the party. Most major diagnostics companies already have ISO 9001 certification. This issue of THE DARK REPORT explores why Nichols’ ISO certification is an industry milestone. Our prediction is that all larger laboratory organizations will travel the same road within five years.
FURTHER CHANGE CAME to the clinical laboratory industry when the Nichols Institute division of Quest Diagnostic Incorporated announced on May 13 that it had passed its final audit and was now ISO 9001-certified.
“The ISO 9000 series of standards was developed to insure management integrity and product quality for certified companies throughout the world,” stated George Pounds, Corporate Director of ISO 9001 at Quest Diagnostics. “Companies operating under these standards are recognized as having consistent quality and good management practices.”
During the last ten years, ISO 9000 certification has become an essential requirement for manufacturers seeking to do business internationally. In many industries, such as computers, electronics, and automotive, any company lacking
ISO 9000 certification is automatically excluded from bidding for business because of contractual requirements established by the buyer.
That is why THE DARK REPORT believes that Nichols’ ISO 9001 certification is a clear signal to the clinical laboratory industry. ISO 9000 standards will eventually force fundamental change to the organizational form and management of clinical laboratories. This change will be compatible with recognized trends toward consolidation, regionalization and clinical integration.
In fact, as the entire healthcare industry transforms from small cottage businesses to large corporate management models, the management philosophy inherent in ISO 9000 standards can facilitate a successful transition. To make this transition, laboratory directors and pathologists will need to acquire knowledge and techniques appropriate for corporate-style management, such as found in ISO 9000 standards. These are designed to complement and enhance the management of businesses and similar organizations such as healthcare providers.
It is market forces which push companies to adopt ISO 9000. The story of how Nichols Institute made the decision to pursue ISO 9001 certification perfectly illustrates this fact.
“At the time Corning Inc. owned Corning Clinical Laboratories [now Quest Diagnostics Incorporated],” said Pounds, “they wanted to imbed quality management systems into all their business divisions. There was a master quality plan, which included ISO 9000. Corning wanted the lab division to begin pilot implementation of this plan by 1997.”
Clients of THE DARK REPORT should recall that Corning Inc. was recognized as one of the best-managed corporations in America through the late 1980s and into the 1990s. It was also one of the first large corporations to embrace quality management principles. Its manufacturing divisions earned Malcolm Baldrige Quality Awards and similar honors.
More importantly, Corning’s growth and profits from such new technology areas as fiber optics were substantial. Quality management techniques, including ISO 9000, were helping the company become a tough competitor throughout the world.
History of ISO 9000 Goes Back To 1959
ISO stands for the International Organization for Standardization, based in Geneva, Switzerland. It represents the standardizing committees for 91 countries throughout the world.
Early roots of quality standards go back to 1959, when the American
Department of Defense issued Mil-Q-9858. By the late 1960s, NATO had established a set of quality standards. Things picked up in 1979 with the formation of Technical Committee 176 by the ISO. The goal was to harmonize international activity in quality management and quality assurance standards.
ISO 9000 standards were drafted in 1984, issued in 1987 and adopted by 26 countries. A major revision was completed in 1984. By the end of 1996, more than 90 countries had adopted ISO 9000 as their national standards for quality management.
In 1990, Corning’s board of directors became serious about getting the laboratory division to adopt quality management principles. Early efforts to introduce these principles were overwhelmed by declining profits in the laboratory division.
In 1994, the laboratory began bleeding red ink. In 1995, Corning’s board installed a non-laboratorian as Chief Executive Officer of Corning Clinical Laboratories. Ken Freeman arrived at the lab division with a keen understanding of how quality management principles could enhance the working environment, boost quality, and enhance profits.
Lab Division To adopt
“Because Corning Inc. was so successful with quality management techniques in its manufacturing divisions,” observed Pounds, “it was logical for Corning to want the laboratory division to adopt these same techniques. After Ken Freeman became CEO, he asked if any of the regional managers would volunteer their laboratory to be the first within Quest Diagnostics to implement this management philosophy. Management of the Nichols Institute division stepped forward.”
Nichols Institute, the specialty testing division of Quest Diagnostics Incorporated, is nationally-known as a development and research center. “It was this fact that made us a natural choice to be the pioneer,” noted Pounds. “After all, we were the center of innovation for clinical testing. Further, we perform a high volume of esoteric testing. Compared to routine testing, it is more challenging to sustain high quality results and consistent reproducibility. Yet the end users of esoteric testing recognize the value of consistent quality and reproducibility.
“For these reasons we believed that ISO 9001 certification would definitely add value to the testing and services offered by Nichols Institute,” he continued. “This was not an idle exercise. It was firmly rooted in the goals to measurably improve quality and increase profits.”
Appreciate The Benefits
“It took us sixteen months to implement the ISO 9001 standards and pass our final audit,” said Pounds. “Although it was not easy, the deeper we got into the process, the more our staff appreciated the benefits. A lot of operational problems were resolved with positive consequences. Systems and processes attributed to the ISO 9001 standards definitely enhance people’s ability to do high quality work.
“Measuring progress is integral to the ISO 9001 process,” Pounds said. “Everyone is surprised and energized by the dramatic improvement across a range of operational areas. Such success motivates everyone to pursue additional improvements.”
According to Pounds, the out-of-pocket cost to gain certification was about $50,000. This included outside training for the staff as well as the cost of registrars and auditors used over the term of the project.
“One measurement of cost savings demonstrates the financial benefits of the ISO certification effort,” said Pounds. “While we were pursuing ISO 9001 certification, the cost per test declined by 5% at Nichols Institute. We know that improvements resulting from implementing ISO 9001 contributed significantly to that achievement.
“Now that we have ISO 9001 certification, the process moves to another level within Nichols Institute,” continued Pounds. “We are using these management processes to continually improve the quality of our testing and service, reduce costs and enhance customer satisfaction.
“Also, I believe continued demonstration of the benefits from ISO certification at Nichols Institute will support ISO certification efforts by the other regional laboratories within Quest Diagnostics,” added Pounds.
ISO 9000 Is A Series Of Quality Standards
ISO 9000 represents a series of quality standards for management and quality assurance. Companies and organizations can certify for different levels of compliance.
- ISO 9001: most comprehensive, covers design, manufacturing, installation and servicing systems and processes.
- ISO 9002: covers production and installation.
- ISO 9003: covers only final product inspection and test.
These three models were developed for use in contractual situations between a customer and a supplier. Another designation in the series, ISO 9004, provides quality guidelines for internal use by a producer developing its own quality system to meet business needs and take advantage of opportunities.