Labs in U.S. and Australia Learn from Each Other

Laboratory management meeting in Sydney brings together innovators from four continents

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CEO SUMMARY: Australia just conducted its first summit meeting on laboratory management and a near sell-out crowd showed up to learn the best and latest. For the Americans in the audience, there were several surprises. First, Australia has a highly-competitive laboratory sector, comparable in many aspects to the private sector here in the United States. Second, several states are far along at creating a single, statewide regional laboratory network with a single lab data repository.

WHEN IT COMES TO TRENDS in healthcare and laboratory management, Australia and the United States have much in common. That was the consensus of attendees at The Business of Pathology (TBOP) conference conducted November 8-9, 2007 in Sydney, Australia.

Speakers from laboratories in Australia, Singapore, United States, and United Kingdom covered a range of topics in laboratory management, ranging from early successes with Lean and Six Sigma methods and regional lab consolidation to solutions to the shortage of skilled workforce and how labs can best support the electronic medical record (EMR) systems used by office-based physicians.

Laboratory Management

This event was co-produced by the Association of Australasian Clinical Biochemistry (AACB) and THE DARK REPORT and, like the Executive War College, focused on issues in laboratory management. Emphasis was given to how innovative lab leaders in Australia, the United States, and several other countries are developing solutions to problems common to all labs, including inadequate reimbursement, shrinking workforce, and the creation of regional laboratory networks and organizations to better align laboratory resources with the healthcare needs of the local communities.

Lab executives and pathologists in the United States may be surprised to learn that the Australian healthcare marketplace has much in common with the healthcare market in the United States. There is a flourishing independent laboratory sector, with lots of competition. Also, just as in the United States, in recent years public and private hospital laboratories have begun to develop outreach programs to compete against commercial labs for specimens originating from physicians’ offices and clinics.

The reason for these similarities is the Australian healthcare system, which has several common characteristics with healthcare in the United States. It is a system with universal coverage provided by the government that can be supplemented by private health insurance. There is a network of public hospitals. Private physician groups and private hospitals provide services and are generally reimbursed by fee-for-service arrangements. Independent commercial laboratories compete for the lab test referrals of office-based physicians and may also provide services to private hospitals. Thus, just as in the United States, there is continual competition for laboratory testing business.

Ahead Of U.S. Laboratories

That’s one reason why several laboratory initiatives are pushing Australian laboratories past their American cousins. For example, the government health plans in several states are creating regional hospital laboratory networks which standardize testing, consolidate work into primary lab facilities, and support a common laboratory test data base.

The obvious goal with a single lab test data repository in states such as Western Australia and Queensland is to support a central electronic health record (EHR) for every patient. Progress on this goal is relatively swift because public hospital labs form the backbone of the universal health system and take their strategic direction from the government health authority.

One interesting development related to controlling utilization of healthcare services is a recent law enacted in Queensland. It requires a physician to access and view the results of every laboratory test he or she ordered. The electronic system keeps a record of the time that the physician accessed the results.

Controlling Test Utilization

This is a relatively new development and the consequences of this legislation have yet to be fully determined. However, it is a different approach to the same problem seen in the United States: are physicians ordering tests which are unnecessary? If so, how can a system be developed to encourage them to improve the effectiveness of their test ordering patterns?

One area of laboratory operations that is progressing in Australia is the acceptance and use of quality management techniques, such as Lean and Six Sigma. TBOP organized an entire day around this subject and it drew almost an equal number of attendees as the full two-day conference.

From the Australian side, case studies were presented by Sullivan Nicolaides Pathology (a Sonic Healthcare Ltd. lab division) of Brisbane and Pacific Laboratory Medicine Services (PaLMS) of St. Leonards, near Sydney. From the U.S. side, Fairview Health of Minneapolis and Ortho-Clinical Diagnostics provided case studies of Lean and Six Sigma.

One fascinating difference surfaced in how Australian and American labs implement their Lean and Six Sigma projects. The Australian labs take a “do it yourself” approach while the American labs frequently engage experienced consultants to come in and run the first projects while training lab staff in quality methods.

Quality Programs

This revealed that American hospital administrators seem to be ready to invest money in quality management that they knew would be recouped from the savings generated by the improvement projects. Australian hospital administrators are more conservative about hiring consultants. Thus, their laboratories tackle process improvement projects which are smaller in scope and generate proportionally less gains than their American counterparts.

Another interesting difference is that Australian hospitals, clinics, and laboratories are using different software products than the most common products sold in the United States. Efforts to integrate clinical data repositories and enable patient healthcare information to flow across the continuum are progressing at rates that are faster than in the United States.

It was an informative week in Australia and one key lesson emerged: Australia’s mix of public hospitals and private lab companies are just as progressive as their counterparts here in the United States.

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