Québec’s Laboratory Consolidation Plan Aims to Save $13.5M

Optilab Québec to move 123 labs into 11 lab groups

CEO SUMMARY: In the Province of Québec, an ambitious project is under-way to consolidate the clinical laboratory testing of 123 laboratories into 11 centralized lab clusters. It is one of the largest lab consolidation projects nowhappening in the world. Among the goals of this project is to improve qualityand efficiency while incurring no additional costs. A unique benchmark fortracking improved productivity and lower costs is the weighted unit per hour,or WU/hour. The lab clusters will need to boost this productivity measure byonly 16% to achieve the targeted savings.

IN THE PROVINCE OF QUÉBEC, one of the world’s largest clinical laboratory consolidation projects is underway. The provincial health system wants to consolidate 123 clinical laboratories in the province into 11 groups (clusters) of labs. Each lab group, or cluster, will have a central laboratory facility.

The goal of the project is to generate substantial cost savings and improve quality by funneling all of the province’s lab tests into 11 large test centers while also standardizing lab test menus and methodologies throughout the province. Perhaps most ambitious of all, Ralph Dadoun, PhD, Project Director for Optilab Québec, plans to accomplish the consolidation without adding costs.

In a presentation at the Frontiers in Laboratory Medicine (FiLM) conference in Birmingham, England, in January, Dadoun explained that—just by standardizing equipment within the clusters—the financial objective of the project is to save at least US $9 million annually, and possibly as much as US $13.5 million. Currently $1 Canadian is worth about 75¢ in U.S. currency.

Whether the savings are modest or significant will hinge on the successful modernization of each of the 11 lab clusters. This will be achieved by standardizing instruments and test menus. Plans are to optimize the use of equipment over two shifts (which is not the case today) by using standardized equipment and an increased focus on efficiency and workforce productivity. The primary goal is to wring enough savings so that the entire project is done on what Dadoun calls “a zero budget.”

The projected savings must offset the costs of a new laboratory information system (LIS) to be deployed throughout the province, all renovation and transition costs, and full accreditation to ISO 15189, Dadoun said. Money to fund all of these expenses at “no cost” means that most of the savings will need to come from improved productivity, reduced costs of reagents and normal staff attrition, he added.

“Our mission at Optilab is to develop an integrative clinical lab testing system—a common operational template—for physical laboratories to follow,” noted Dadoun. “The strategic plan is to increase efficiency, particularly in the biggest consolidated lab facilities, to such an extent that we achieve these objectives at zero cost.”

Pathologists and clinical laboratory directors may ask why anyone would attempt to accomplish such a Herculean task. But for Dadoun, there is no other way for the province to deliver laboratory services and maintain state-of-the-art technology to benefit Québec’s population of 8.2 million.

“Why did we embark on the Optilab project?” he asked. “The reason is simple: Our provincial health system doesn’t have any more money to inject. Almost 50% of the provincial budget is allocated to healthcare.

Status Quo Is No Option

“In clinical laboratories, we’re all in the same situation: With no funding, the status quo is not an option if we want to benefit from the latest diagnostic technologies,” Dadoun explained. “By that, I mean it would cost way too much money to reinvest in the present structure in most of the province’s clinical labs with no added value.

“Therefore, we need to have all new equipment in each of the 11 central lab clusters and we need to have a complete standardization of equipment,” he said. “It might take some time to achieve complete standardization, but all the recurring savings generated by the standardization will be re-injected into the project.”

One unusual element of the project is how the labs will measure productivity. Dadoun explained that the success (or failure) of the initiative will be assessed using a measure of clinical laboratory test volume called the weighted unit per hour or WU/hour.

“The WU/hour includes all the components of each test—whether the test is in biochemistry, hematology, microbiology, or pathology,” stated Dadoun. “This metric includes all costs needed to run each test, including reagents and labor needed to run the test, time on the testing equipment, overhead in the lab, and the cost to deliver the test result to the ordering physician.”

Using weighted units per hour allows each of the consolidated lab organizations to compare their productivity to all 11 centralized lab facilities in Québec.

Early this year, Dadoun used the WU/hour metric to assess the average productivity in every lab in each of the 11 clusters. From this assessment, he found that productivity ranged from an average low of 44 WU/hour in cluster 2 to an average high of 72 WU/hour in cluster 11.

Using the beginning of this year as the baseline, this existing level of productivity showed that the average of all labs in the province amounted to 66 WU/hour. When the transition to the new system is complete in three to five years, Dadoun expects the average productivity of all province labs to hit 76 WU/hour, which he called the 90th percentile of productivity today.

Realistic Productivity Target

“This level of productivity is a goal perceived as being realistic even in the lab community,” he commented.

Last year, Dadoun began implementing the consolidation plan in earnest. “One first step in this project was to make significant investments in two major labs, both in Montréal,” he said. “One of those labs is at McGill University Health Centre. MUHC is a new hospital with a new lab that just opened late last year.

“The other is at the University of Montréal Hospital, on the French side of the city,” he explained. “In that hospital, we have a new lab as well.

“Each central lab in the 11 lab clusters will be evaluated on its ability to process a high throughput of tests over 16 hours for every day of the year, and the cluster will be asked to achieve a productivity at the actual 90th percentile,” he said.

The goal of reaching the 90th percentile is not a firm target. “There is some flexibility, but we will ask them all to aim for this level of productivity,” commented Dadoun.

“The reason for the flexibility is that it’s important to acknowledge that each lab has different particularities,” he added. “Some smaller labs handle lower volume than the larger labs and the weighted unit per hour (WU/hour) will account for that variation.

One Size Does Not Fit All

“The beauty of this model is that it takes into consideration the geographical environment and the particularities of each cluster,” he said. “In other words, one size does not fit all.”

During his presentation at FiLM, Dadoun showed slides that explained how the WU/hour metric is used to assess the productivity of each lab cluster.

One slide showed that lower-volume labs had less productivity than higher-volume labs. Productivity ranged from 39 WU/hour in labs running fewer than 1 million WU per year to a high of 78 WU/hour for labs running 6 million WU/hour per year. For labs running more than 7 million WU/year, productivity was slightly lower, ranging from 69 million WU/hour to 76 WU/hour.

With these numbers, Dadoun calculated that the average level of productivity per day for the 11 lab clusters in Québec currently is 66 WU/hour. Then he calculated that, if optimal productivity would be at the 90th percentile, it is feasible to have each lab cluster aim to achieve productivity at their 90th percentile level.

If all the labs raise their productivity at the 90th percentile, the provincial produc- tivity will go from 66 WU/hour to 76 WU/hr, a 16% increase in productivity, he added.

Once this is achieved, it is possible to assess how much each lab within a cluster would need to raise its productivity to further boost the average level of productivity in that cluster, Dadoun said. To do so:

  • the smallest labs (those running fewer than 1 million tests per day) would need to raise their daily productivity level from 39 WU/hour to 54 WU/hour;
  • those labs doing 6 million tests per day would need to increase their produc- tivity from 78 WU/hour to 93 WU/hour; and,
  • those labs running 15 million to 20 million tests per day would need to raise their productivity from 71 WU/hour to 86 WU/hour.

Lab Consolidation Program in Québec Intends to Pursue Two Key Productivity, Cost Measures

GRAPH ONE (above): In the first phase of this lab consolidation project in Québec, the goal is to achieve 76 weighted units per hour (WU/Hr) within each cluster, compared to the existing productivity of 66 WU/Hr, a targeted increase of 16%. For eight of the clusters, this graph shows the existing productivity as bars and the target WU/Hr for each cluster as points in the line. In successive phases, the plan is for all labs in Québec to have productivity in the 90th percentile.

GRAPH TWO (above): Another factor to support the lab clusters working toward the 90th percentile of productivity is to standardize test menus, lab equipment, and install a common laboratory information system and specimen tracking system. This chart shows how, at different test volumes (and economies of scale), these standardized, uniform systems will contribute to reducing the average cost of weighted units per hour (WU/Hr).

90th Percentile Productivity

In the succeeding phase of this ongoing lab consolidation project—after introducing the new LIS along with full interoperability and standardized equipment—the next goal would be to have each lab cluster raise its productivity to the 90th percentile level, enabled by these changes.

For example, boosting productivity to the 90th percentile level would mean productivity would need to go up to 62 WU/hour in lab cluster 1 and increase to 79 WU/hour in lab cluster 11, said Dadoun, adding, “Here we are referring to the performance of the cluster. A cluster is composed of many different size labs. One cluster could have eight labs composed of three labs at 1 million WU per year, four labs at 4 million WU, and the central lab at 15 million WU per year.

“Another cluster could have 16 labs between 1 million and 1.5 million WU per year and a central lab at 18 WU million per year,” he said. “We will not ask these two clusters to have the same performance level, but both will reach their 90th percentile productivity.

“That’s the beauty of a system which takes into consideration the particularities and composition of the lab clusters,” he added. “That’s why I emphasize that one size does not fit all. And that’s why Optilab will focus on the performance of the cluster.

Saving Time and Money

“If all labs in all 11 clusters can raise their productivity to their 90th percentile level, then all labs in the province will have reduced annual work time by approximately 700,000 hours,” he said. “The vast majority of the labor reduction, if not all of it, will be through normal attrition.”

Now that the metrics for measurement are in place, Dadoun explained that the next part of the laboratory consolidation project involves elements most clini- cal lab directors know well. One is to buy, test, and validate a laboratory information system (LIS) for all 11 lab clusters. The second is to develop, test, and validate a specimen-transportation system that allows the labs to trace the location of all patients’ specimens.

“The health minister wants one LIS for the entire province,” he said. In December, the ministry requested—and the province is evaluating—those bids,” added Dadoun. “The decision is expected by the end of this year.”

Same LIS in All Clusters

The planned implementation of the LIS is within five years, he said. “In the meantime, some lab clusters are in a transition phase and implementing a middleware approach,” he added. “Currently, three clusters—including one that has a university teaching hospital laboratory—are in the process of implementing some middleware. Two other lab clusters are running the same LIS that was recently upgraded.

“Because this is an operation running at what we call zero cost, each cluster needs to provide a 10-year auto-financing plan,” Dadoun said. “The auto-financing plan includes all costs that Optilab incurs, including those for the LIS, the cost of a transitional LIS (if needed), the cost of all renovations, and the cost of implementing ISO 15189.

“The objective is that all savings will come within three to five years from a variety of sources, including more efficient use of reagents and supplies, and a decrease in the numbers of older lab-testing equipment used throughout the province,” he added. “It’s possible, however, that we could see some variation from cluster to cluster.

Optilab Québec’s Accomplishments to Date

LAST YEAR WAS SIGNIFICANT for the Optilab Québec project because it accomplished several significant milestones in the effort to consolidate 123 lab operations in the province into 11 lab clusters, said Ralph Dadoun, PhD, Project Director for Optilab Québec.

For example, in March 2017, “buy in” from the leaders of the province’s laboratory community had been achieved.

By April 1, 2017, all human resources and payroll functions had been transfered from the associated labs in the province to the central laboratory. In effect, this step meant that all lab employees had a change of employer and were now working for one employer in the province, he explained.

At the same time, the operational, equipment, and capital budgets for the 11 lab clusters were approved.

By the end of June 2017, the province had created a province-wide Department of Laboratory Medicine and the department appointed administrative and medical directors for the province.

Auto-Financing of a Cluster

“To date, each of the 11 lab clusters has submitted an auto-financing plan and those plans are being reviewed and revised,” he explained. “The auto-financing plans will be reviewed every year and adjusted, if needed, to hit the budgeted goals while adapting to new realities.”

Within 24 months of the Ministry of Health and Social Services’ approval of the financing plans, Dadoun expects that the first three lab clusters will be fully operational and as many as five clusters might be fully operational.

In conclusion, Dadoun explained, that while all of these steps are significant, perhaps the most significant is the goal of achieving full accreditation to ISO 15189: Medical Laboratories, for all 11 lab clusters. Recently, health ministry officials signed the contract and implementation will begin in early next year.

“At this early stage, if we have only three lab clusters fully operational, then, ideally I would like one of them to include a major university hospital with all the complexity of a university teaching hospital,” stated Dadoun. “And I would like one to be from one of the largest regions in the province that has small labs spread widely.”

There are several novel concepts in this province-wide lab consolidation endeavor. First, use of the weighted units per hour (WU/hour) as a productivity measure makes it possible to compare labs of all sizes and economies of scale in a consistent and equitable manner.

Second, Dadoun and his leadership team have created an objective and fair way to compare the predicted productivity goals versus the actual productivity attained in each cluster. This is a benefit to the provincial health authority because it makes it possible to publicly show performance against goals.

Contact Ralph Dadoun at 514-909-0610 or ralph.dadoun@ssss.gouv.qc.ca.

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