Seven Deadly Sins of Lab Management Are Much Too Common

Survey of lab consultants identifies specific problems

CEO SUMMARY: Pity the poor laboratory manager of today. Lab budgets are shrinking. It is difficult to staff adequate numbers of skilled medical technologists. Baby boomers are now retiring. At the same time, accreditation and licensure inspections are becoming tougher. Recently, an experienced laboratory management consultant polled her peers to identify the specific problems that were most often encountered in lab consulting assignments. The survey identified what Anne Daley of Chi Solutions, Inc., calls the “Seven Deadly Lab Sins.”

IF A MANAGEMENT EXPERT WAS TO COME to your clinical laboratory or pathology group and issue a report card on the organizational effectiveness of your organization, what grade would your lab’s management team earn?

Because the lab industry lacks universally accepted benchmarks or performance standards, it would be a challenge to choose a letter grade to go on your lab’s report card. On the other hand, it is exactly this lack of universally accepted management benchmarks that motivates many laboratories to participate in one of the various peer comparison programs offered by the College of American Pathologists (CAP) and different laboratory consulting companies.

As part of their job, these laboratory operations consultants come into client laboratories and assess the effectiveness of various operational activities. They have access to that lab’s proprietary performance data as part of the consulting engagement. And because their work regularly takes them into different laboratories, these lab management consultants quickly recognize which laboratory organizations are top-performers, simply average, or struggling.

THE DARK REPORT recently tapped that source of management insight and expertise when it invited Anne Daley, a Senior Consultant at Chi Solutions, Inc., of Ann Arbor, Michigan, to deliver a presentation at the Lab Quality Confab last November in San Antonio. Her session was titled “Seven Deadly Sins of Laboratory Practice.”

Daley was up to the challenge. To prepare for this presentation, she conducted a survey of her co-workers. Her goal was to identify the most common management and operational weaknesses that are regularly seen in the nation’s clinical laboratories and pathology groups.

For example, does your lab have a well- defined and well-communicated strategic direction that is integrated with your budget? If not, your lab is probably guilty of committing one of what Daley has come to call the “Seven Deadly Sins of Laboratory Practice.

“Last year, I polled all the consultants here at Chi Solutions to identify the specific types of problems they encounter in their consulting work with different lab organizations,” she continued. “Because we work with so many lab clients, it gives us the opportunity to see the best of the best and the worst of the worst.

“When I tallied the problems identified by our consultants, this list of seven sins emerged,” Daley explained. “These are the seven poor operational practices that were mentioned by 80% of the consultants participating in my survey. One finding of this survey was a unanimous choice of these consultants. They believe the number one sin committed by laboratories in this country is the lack of a strategic direction.

Lack of Strategic Direction

“As it turns out, the other six sins are often symptoms of sin number one,” she added. “So the first commandment of good laboratory management is ‘Thou Shalt Have a Strategic Direction!’”
According to Daley, one reason that lab managers and directors neglect strategic planning is that, in many cases, their parent hospitals also neglect that level of planning. “Stand-alone laboratories and commercial lab companies almost all have a strategic direction,” she emphasized. “By contrast, laboratories that are part of a larger institution, like a hospital or health system, are most likely to commit this sin.

“Obviously, a laboratory in a hospital must align with and support the strategic direction of its institution,” stated Daley, “Therefore, if the parent institution does not have an established strategic plan and strategic direction—or these are not well communicated—then its laboratory administrators and managers are left in the dark.

“But the institution’s lack of a strategic plan doesn’t mean that its laboratory is left rudderless,” said Daley. “We often see that, in such situations, when the laboratory defines a direction—such as building a laboratory outreach testing program—this activity reinforces the hospital’s primary service goals and so that institution will often follow with additional support.

“We often see that, in such situations, when the laboratory defines a direction—such as building a laboratory outreach testing program—this activity reinforces a hospital’s primary service goals and so that institution will often follow with additional support.”

“Thus, to repent of this sin, when your laboratory is part of a hospital or health system, step number one is to fully understand your organization’s direction,” offered Daley. “If there is no strategic plan, then the next place to look for direction is at the institution’s statements of its mission and values. Use these to establish management priorities for your laboratory that you think will work to the institution’s advantage.

“An effective strategic planning tool for your laboratory can be as simple as a one-page document that states your critical success factors and how you will measure success,” she continued. “It should include something about patient safety and quality goals. It should also include goals for financial performance, customer service, and the lab’s working culture.

Daley says another element of this strategic plan could be a formal, prioritized space plan. “In many labs, when a new piece of equipment is added, it’s put wherever there is the most space,” she explained. “Over time, the result is a lay-out that doesn’t fit the lab’s workflow and uses the space poorly. The lab ends up feeling crowded and this is a drag on both staff productivity and quality.”

To measure progress against strategic goals, Daley recommends use of a “balanced scorecard,” which is a set of metrics established to measure ongoing performance of each identified critical success factor.

Poor Financial Discipline

“Once you establish a strategic direction for your laboratory, the next step is to integrate your goals with your budget,” observed Daley. “This brings us to the second deadly sin, which is poor financial discipline.

“Good financial discipline is knowing the numbers and managing to those numbers,” she said. “It surprises me how often I can ask a seasoned lab director to tell me something basic, like how many FTEs work in their laboratory, and they don’t know the answer!

“It is a fundamental tenet of good laboratory management that you know the level of staffing authorized within your laboratory, the specifics about the monthly budget, and—most importantly—whether your laboratory is on target to meet its financial goals. These are basic things that underpin the financial and clinical success of the laboratory,” commented Daley.

Another major failing in financial discipline is when laboratory management has only a fuzzy idea about the profitability of outreach work. “It is always surprising to arrive at a hospital laboratory and find that neither the lab managers nor the hospital administrators understand whether the laboratory outreach program is making money or losing money,” commented Daley.

“It is common for a hospital or health system laboratory to tell us that they ‘think’ they make a profit on their outreach work,” she added. “But they admit that they don’t know the precise numbers.

“As we gather solid financial data, we determine that many of those ‘thinks’ about the profitability of the lab outreach program are incorrect,” observed Daley. “To correct this deadly lab sin, it is necessary to drill down and understand the core financials of the laboratory outreach program.

“For example, do you know which outreach clients are profitable and which clients are not?” asked Daley. “In situations where a customer refers only stat tests and other work that costs more to perform than it brings in reimbursement, it might be wise to terminate that account.

“At a minimum, this type of client should be made aware that, if they want to continue to send their stat tests to your laboratory, they need to meet a specified volume level to continue to receive that level of service,” she recommended.

Pay Attention to Billing

Daley also advises working closely with the billing department staff, particularly to make sure that they don’t automatically write off the small dollar accounts that typically make up many lab test claims. “Hospital billing departments regularly deal with sizable bills representing thousands of dollars,” Daley said. “To these billing clerks, a $15 or $25 lab bill looks like small potatoes. Yet these small amounts represent a substantial part of laboratory test revenue and can add up quickly. It is imperative that these claims be collected if the lab outreach program is to optimize its financial success.”

Another consequence of the sin of poor financial discipline is that the lab often must struggle to obtain capital for new equipment. “This happens surprisingly often because lab managers fail to thoroughly document the lab’s need for new instrument systems,” she stated.

“In these cases, the remedy is fairly simple,” continued Daley. “Approach the finance department and work with them to assure that the lab’s request for capital clearly demonstrates the need, with compelling data to justify it. When money for capital spending is available, the institution’s CFO is more likely to fund a laboratory request that is supported by an accurate and detailed financial analysis.”

Bad Attitudes—No Accountability

“No laboratory organization can succeed if employee morale is poor,” observed Daley. “This is the third deadly lab sin. In these situations, it is common to find that lab management is failing to hold staff accountable during the daily work routine.”

Daley has a clever way to sniff out poor attitudes among staff in a laboratory. “As you walk around the lab, look to see if the laboratory staff has posted a number of the Dilbert or Dilbert-like cartoons in public areas,” she suggested. “Consider that the lab staff may have posted those cartoons because they see correlations between the message of the cartoon and their direct working environment in the lab.

“When you ask staff members working in that area what the message of the cartoon is, the answer is often a candid assessment of a longstanding problem in the laboratory that management is allowing to go unaddressed,” explained Daley. “Any emotions associated with that problem will become clear as the staff members discuss why that particular Dilbert cartoon was posted in that work area.

“Don’t overlook the impact that a staff member can have if they are marking time until retirement,” she said. “With laboratorians now averaging around 55 years old, there are a lot of folks who want to simply mark time until retirement.

“Anticipate the consequences of retirement or the unexpected departure of a highly-experienced lab staffer,” she noted. “Among your staff, encourage knowledge sharing. Make sure at least two people in your laboratory are competent in every key activity or process.

“It is good management practice to identify a successor to a staff member approaching retirement, then take active steps to provide that person with the experience and training he or she needs to be ready to take over when the existing staff member retires.”

Focusing on Productivity
Ahead of Quality and People

“It should surprise no one that, at a time of shrinking lab budgets and the shortage of qualified technical staff, a disturbing number of laboratories have a primary focus on productivity,” declared Daley. “Putting productivity ahead of quality and people is the fourth deadly lab sin.

“In the daily rush to handle ever-increasing volumes of specimens, it is very easy for quality to suffer and for employees to become overworked and overly-stressed,” noted Daley. “The good news is that, over the past decade, the new management methods of continuous improvement and Lean offer lab managers the tools needed to improve this situation.

“Remember, it was W. Edwards Deming who consistently pointed out that people want to do good work, and it is the system that is responsible for most of the bad work and the quality problems,” she stated. “In your laboratory, no one comes to work planning to mess up. If they are not performing to expectations, it may be due to an inefficient work environment. Too often, processes are poorly defined and/or the staff has not been well trained.

“Correcting this deadly lab sin starts with a careful definition and documentation of each work process,” Daley said. “Next, train people to do that process the same, standardized way.

“Better documentation will also benefit your laboratory in another way,” added Daley. “In recent years, CLIA inspections have increasingly cited laboratories over the lack of documentation of process. Thus, making the effort to improve the documentation of your lab’s processes will improve consistency in performance as well as contribute to better outcomes when your lab experiences its next inspection.

“There is another management strategy that is useful to correct this deadly lab sin,” she continued. “It is essential to create a viable career path for those entry level people in your laboratory who are most likely to leave.

“Take specimen processing as an example,” said Daley. “These people have one of the least attractive jobs in the lab. Yet the work they perform involves some of the most critical steps in the technical process. However, too often we short-change their training.

“On the other hand, by nurturing these individuals and providing them effective training, the quality of work done in specimen processing will improve,” she added. “We should encourage and celebrate a career path toward becoming a technician or technologist.”

“Feast or Famine” Process Flow

“The fifth deadly lab sin is found in laboratories that continue to operate from the
‘batch’ mindset and are organized to react to the flow of specimens arriving in the laboratory,” observed Daley. “We call this ‘feast or famine’ process flow.

“This deadly lab sin can be corrected by adopting the management methods of continuous process flow and quality management principles,” she said. “In fact, over the past decade, laboratories have used these techniques to create a new operational paradigm.

“In recent years, CLIA inspections have increasingly cited laboratories over the lack of documentation of process.”

“Most laboratory managers now recognize that batch processing slows down turnaround times, but they continue to do it,” explained Daley. “Recently, I visited a lab where the entire staff went to lunch at the same time.

“During that entire hour, work was backing up!” recalled Daley. “Mapping your lab’s work flow is the first step to correcting this deadly lab sin. Identify the bottlenecks and match staffing levels to the demand.

Failure to Use the Automation
Purchased by the Laboratory

“This is one of the more surprising findings when our consultants were surveyed about the deadly sins they see in laboratories across the country,” declared Daley. “It is very common for labs to install expensive automation systems, but then only use a small portion of their lab automation’s capabilities.

“One simple example illustrates this issue,” she continued. “Many laboratories establish autoverification criteria that are too tight. In turn, this results in unnecessary human handling or excess work.

“Similarly, QC systems criteria are often set so tight that the MTs end up performing excessive repeats,” Daley said. “Another classic example is when paperless systems have been installed in the lab, but the staff continues to keep all that paper around ‘just in case’ and the lab proceeds to pay for long-term storage of the unnecessary paper.

“The message here is, when you buy automation, take the time to optimize all the work processes by inviting the vendor back three to six months after installation to assess your performance,” she recommended. “Take time to learn all the capabilities of the automated systems and use them!

Buying and Storing Excess Inventory

“Did you ever walk into someone else’s laboratory and find yourself stumbling over boxes of supplies stored in hallways and placed under benches?” asked Daley. “This is a good indication that the laboratory has commited the seventh deadly lab sin, which is purchasing and storing excess inventory.

“In the case of your own laboratory, you might want to ask yourself two questions,” recommended Daley. “The first question is: ‘Does my lab appear cluttered?’ The second question is: ‘Does my lab have more than one month’s worth of supplies within the work area?’

“Should you answer yes to either question, your laboratory is most likely buying and storing excess inventory,” she said.

“To address this deadly sin, a good place to start is to work with Purchasing,” she advised. “Together, assess your current supply inventory system. Establish re-order par levels. A good move is to implement a Kanban system, which is a common Lean inventory management tool.

“The next step is to develop Vendor Contract Briefs on all major contracts,” Daley added. “These should include shipping/handling expenses and service maintenance options. Then educate your staff so that they understand the budget consequences of various actions.

“Of course, another useful step is to go searching for those ‘personal’ stashes of inventory that some staff like to hoard,” she said. “They do this so they won’t run out of supplies, possibly as a result of a vendor back-order issue that occurred 10 years ago. Everyone needs to understand why hiding inventory like this creates excessive costs for the lab.

“Another tactic that catches peoples’ attention in a positive way is to conduct an internal ‘rummage-o-rama’,” recommended Daley. “A great example is to tally the black marker (aka Sharpie) population in your lab. You’ll be amazed at how many of these relatively expensive marker pens are being hoarded and hidden. Activities like this help lab staff understand why inventory management is an important management objective.”

Why Problems Are Common

By creating this list of “Seven Deadly Lab Sins,” Daley hopes to call attention to management problems that are common to many labs—and which can be corrected with rather simple and persistent efforts.

In fact, Daley likes to quote a famous American to illustrate why such problems are so common. “Benjamin Franklin once said that ‘common sense is not necessarily common practice’,” stated Daley. “If your lab organization is committing any of these sins, realize you are not alone.”

For lab managers who recognize some of these problems in their own laboratory, Chi Solutions has created several useful tools. These include examples of strategic roadmaps and balanced scorecards and these tools can be downloaded from their website. “There is no charge to use these tools,” stated Daley. “Simply register with the web site, which is www.chisolutions- Next, click the ‘Knowledge Center’ button at the top of the page and select ‘Presentations.’ The tool kit is on that page.”

For laboratory administrators and pathologists, the list of “Seven Deadly Lab Sins” can be the basis for a planning session with all the lab team members. It can help people recognize similar problems in their own lab and how to fix them.


Leave a Reply


You are reading premium content from The Dark Report, your primary resource for running an efficient and profitable laboratory.

Get Unlimited Access to The Dark Report absolutely FREE!

You have read 0 of 1 of your complimentary articles this month

Privacy Policy: We will never share your personal information.