CEO SUMMARY: Without much fanfare or public attention, one lab is achieving recognition for quality and service excellence possibly unmatched in the clinical laboratory industry. In 2003, Sonora Quest Laboratories received Arizona’s Pioneer Award for Quality—the first healthcare provider in Arizona to win that award. Its next goal is to achieve the state’s highest honor, the “Governor’s Award for Quality.”
QUALITY MANAGEMENT METHODS are gaining rapid acceptance within the clinical laboratory industry. One laboratory leading this trend is Sonora Quest Laboratories (SQL) of Tempe, Arizona. It may possibly be the nation’s highest quality clinical laboratory.
It has credibility to make this claim. In 2003, Sonora Quest Laboratories was awarded the “Pioneer Award” through the State of Arizona Quality Awards program. SQL was the only company in Arizona to be so recognized in 2003. It was recognition of SQL’s commitment to continuous improvement and its effective deployment of quality management systems throughout its operations. The Arizona quality awards are based on Baldrige Award criteria.
Sonora Quest Laboratories (SQL) is a joint venture LLC between Banner Health, Arizona’s largest healthcare system, and Quest Diagnostics Incorporated, the nation’s largest clinical testing provider. SQL is also part of an integrated laboratory network that includes Laboratory Sciences of Arizona LLC (LSA), which manages the six hospital laboratories for Banner Health.
What makes SQL’s accomplishment more notable is that Sonora Quest Labs is the first healthcare provider in Arizona to win that award. Not content to rest on these laurels, Sonora Quest Labs is pursuing a more ambitious goal.
“Our entire laboratory organization is actively working to achieve the Arizona Quality Program’s ‘Governor’s Award’ in 2005,” stated David A. Dexter, CEO at Sonora Quest. “It’s the highest level of achievement within Arizona’s quality awards program.”
The significance of Sonora Quest Laboratories’ Pioneer Award extends beyond the accomplishment it recognizes. It is one of those marketplace events which raises the competitive bar in laboratory management. SQL has developed an organizational culture and employee mindset that directly contributes to higher levels of service and customer satisfaction. It is continuous improvement in action.
Managing To Objective Data
That statement can be supported by objective data. “We measure everything,” said Dexter. “If you don’t measure it, you can’t manage it. We know how our customers view us because we measure their satisfaction with our services. We also measure how the market judges the quality of our competitors’ lab testing services. That data tells us we are doing very well, both against our own past performance and against the performance of our competitors.”
A site visit to Sonora Quest Laboratories provides first-hand evidence that Deming-based principles of quality management can deliver higher quality laboratory testing services, at a lower cost, over a sustained period of time. It demonstrates how continuous improvement delivers ongoing benefits.
“Every laboratory understands the importance of delivering an accurate test result in a timely fashion,” observed Dexter. “We have a moral and ethical obligation to deliver error-free services. Four years ago, there were significant operational and financial issues in almost every area of our business. SQL was not competitive in many ways. With great support from Quest Diagnostics, we launched our Six Sigma program as a process improvement methodology to fundamentally reinvent our laboratory operations and to develop Quality as a major competitive edge and as a point of differentiation in the marketplace.
Measurements As A Guide
“Six Sigma provided every person in this laboratory with a goal. It gave us direction and focus. As we made our initial measurements of performance in different areas of the lab, we could then quantify the existing state and begin improving it. Our objective is to perform at the ‘world class’ level,” he explained.
There are several noteworthy attributes within SQL which set its management culture apart from that commonly found in other laboratories. First, it develops a business plan yearly that drives the entire business. “The planning process starts with the executive leadership team identifying relevant goals for the upcoming year,” Dexter said. “At this stage, the business plan outline and basic goals are passed down the management ladder. It reaches the supervisor level and is shared with all employees.
Strategic Business Plan
“Our supervisors and managers are asked to contribute to the plan by identifying how they will achieve these goals and the resources they will need,” he continued. “The plan works its way back up the management ladder. At each stage, it is refined.
“By the end of this process, the entire integrated laboratory organization is aligned behind the upcoming year’s business goals and has an identified and feasible plan to achieve those goals. Execution of the plan is vital to success, and we have a high- performance management team that delivers the expected results,” he said.
A second distinctive attribute is that all employees of SQL participate in an incentive plan linked to achievement of each year’s goals. “Management here works earnestly to align the motives of everyone connected with the laboratory,” observed Dexter. “The best description of our business plan is that it is a road map. It guides everyone toward the goals and keeps us aligned throughout the year.”
There is no magic management bullet which transformed Sonora Quest Labs. “Any quality management system like Six Sigma is tough to implement,” offered Dexter. “Every individual working in the laboratory, from entry-level to CEO, has to learn new ways to conduct business, to measure outcomes, to improve work processes, and to relate to customers. The easy path is to go back to the ‘old ways.’ The tough path is to stay with it until these management methods and techniques are mastered.”
Benchmarking The Best
A third unique attribute is the intense measurement of all work processes and outcomes. SQL regularly uses outside specialists to conduct surveys and measure services. “We want to know what ‘best practice’ and ‘world class’ is for every function and service in our laboratory,” said Dexter. “In addition, SQL is able to benchmark metrics with Quest Diagnostics business units. Also, the LSA managed hospital laboratories are all benchmarked nationally for key metrics, with similar hospital laboratories, according to size and degree of acuity.
“For example, we pick up and deliver packages, just like Federal Express and UPS. We maintain a customer service department, just like the major credit card companies. Outside experts help us learn what they do which makes them ‘world class’ in these functions, so we can improve to that level ourselves,” he explained.
A fourth attribute is the full-time staff SQL maintains to support its quality management programs. “Six full-time employees are dedicated to quality,” stated Jean Hammelev, Executive Director of Quality. “We know there is payback from this investment because we measure the gains they produce.
“As measured by outside experts, our customer satisfaction scores show sustained improvement each year.”
“Over the four years of our Six Sigma journey,” continued Hammelev, “more than 50 people within SQL have earned their Green Belt designation. We are actively doing ‘champion’ training for 100% of our managers and supervisors. This shows how the learning process grows outward, encompassing ever greater numbers of people in our laboratory.”
The educational process within Sonora Quest Laboratories is reinforced by a requirement that 100% of staff members undergo training annually in areas of quality, customer satisfaction, safety, and compliance. Anything short of 100% compliance with this training impacts a portion of all employees’ incentive payout.
Do the employees of SQL like their work environment and like using Quality management methods to improve processes? “The answer is yes! We know this because we measure it,” said Hammelev. “We have 1,800 employees throughout our integrated systems and 98.8% of them complete our employee satisfaction survey. We’ve also experienced a significant decline in employee turnover. Several years ago, the voluntary turnover rate among laboratory employees was 36% per year. That’s now fallen to about 11%.”
“You can’t have a quality laboratory operation if you don’t retain and continually train your employees in quality and customer service,” added Dexter.
Dexter pointed out that employees are supportive for another reason. “We read their satisfaction surveys and they know we act upon their requests and suggestions,” he said. “The Gelfond Group measures us in this area. SQL has achieved ‘world class’ in the past two years for employee satisfaction. The Gelfond Group told the Board of Directors of Sonora Quest Laboratories that SQL achieved world Class employee satisfaction in two years—faster than any company in the history of their 25,000 company database! We are very proud of this accomplishment.”
Benchmarking The Best
The most important unique attribute has been saved for last. That is customer satisfaction. “Our entire laboratory is organized around the ‘Voice of the Customer’,” declared Dexter. “Voice of the Customer is incorporated into each Six Sigma project we do. We strive to be error-free, on time, every time. Our Customer Satisfaction Index has improved significantly and we are now approaching world class.”
“As measured by outside experts, our customer satisfaction scores show sustained improvement each year,” said Joyce Santis, COO at Sonora Quest Laboratories. “Because our Six Sigma projects are driven by the Voice of the Customer, improvements they generate are noticed by customers. This shows up in the customer satisfaction surveys and by unsolicited comments they make to our sales reps and client services staff.”
“There is another important group of customers that knows about our continuous quality improvement. It is the payers. They no longer say that laboratory testing is a commodity,” commented Dexter. “We worked hard to change that attitude. We have the data to prove it. We meet quarterly with each of our payers and show them the metrics that document our performance and our improvement from earlier months.”
Benchmarking The Best
THE DARK REPORT offers Sonora Quest Laboratories as a unique example within the laboratory industry. It is an early-adopter lab that has pushed the quality management principles articulated by W. Edwards Deming farther into its organization than any other laboratory known
to THE DARK REPORT.
There are many invaluable lessons in laboratory management to be learned from the experience of Sonora Quest Laboratories. It is employee- friendly. Once lab employees understand how the new management philosophy uses hard data to drive decisions and improvements to the work flow, they become more supportive.
It is customer-friendly. By surveying customer expectations and focusing operational improvements on issues that matter to customers, the lab’s service quality improves. Customers notice these changes. In the case of Sonora Quest Labs, client physicians and payers also recognized these improvements.
Most importantly, the disciplined implementation of quality management systems into this laboratory has supported strong revenue growth and profitability. This financial strength allows the lab to pay performance-based incentives and invest in the resources it needs to remain competitive.