When Does Cost Cutting Affect a Lab’s Quality?

Pathologists understand that any lab’s quality and performance requires a careful balancing act

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CEO SUMMARY: Many lab professionals note the irony that a laboratory so publicly committed to Six Sigma quality management methods is now identified with the single largest episode of systemic failure in lab test accuracy. Looking in from the outside, some pathologists suggest that a decade of aggressive cost cutting and the current campaign to remove another $500 million of costs in 36 months, may be a contributing factor in the 18-month period of systemic deficiencies.

FOR A COMPANY that consistently brags to Wall Street and the public of its Six Sigma prowess and how that translates into quality in lab test accuracy and service execution, the first weeks of 2009 have been an unpleasant taste of a possible new reality for Quest Diagnostics Incorporated.

Should future developments validate that a new reality exists, then there will be interesting ramifications for the entire clinical laboratory profession in the United States. Lab administrators and pathologists should be alert to these consequences.

For the nation’s largest lab company, 2009 opened with a firestorm of media reports and public reaction to Quest Diagnostics’ acknowledgement that it had reported inaccurate Vitamin 25(OH) D results for an 18-month period on tens of thousands of patients. (See TDR, December 22, 2008.) The question is: does this systemic testing failure of an internally-developed assay, run in a high volume setting, represent just a tarnish in the Six Sigma armor so proudly worn by Quest Diagnostics in recent years? Or, are the revelations about ongoing problems in its Vitamin D testing program a major chink in that armor—a first public hint that an operational tipping point may have been reached?

After all, Quest Diagnostics, with revenues of $6.7 billion in 2007, is currently in the midst of a widely-publicized three-year effort to eliminate $500 million in costs by the start of 2010. That’s 13.4% of 2007’s total revenue. Moreover, this is just the latest and biggest cost-reduction effort enacted by Quest over the past 11 years.

Has budget-cutting at Quest Diagnostics possibly reached a point where it constrains the ability of its technical team to perform the pre-analytical and analytical stages and achieve a consistently superior analytical result—a lab test result which is accurate to the full potential of the diagnostic technology?

Lab Quality Requires Money

Pathologists, Ph.D.s, and laboratory scientists know an immutable truth about lab test quality. It takes money and resources to produce high quality lab test results which are the product of a careful execution of all protocols in specimen collection, specimen transport, specimen preparation, and specimen analysis. Skimp on any single step in the process, and the integrity of the result can be compromised in minor and major ways.

This is the financial quandary that confronts laboratory scientists every day in every laboratory across the globe. They understand the requirements and protocols that must be performed on every specimen and across all the different types of laboratory tests to ensure high quality, reliable results. At the same time, they recognize that their lab’s budget constrains additional steps that would increase reliability of the test result. They also know that the training and experience of their staff plays an essential role in achieving high quality in their laboratory.

Specimen Integrity

Similarly, when phlebotomists collect the specimen; when couriers transport the specimen; and when accessioning receives the specimen and preps it for the testing bench—within each of these steps exists many opportunities to either compromise specimen integrity or enhance the specimen for the analytical stage. In other words, a specimen can be compromised if the worker lacks proper skills and experience, or is overworked and tempted to take shortcuts. Alternatively, skilled staff members, given adequate time to do their job with each specimen, can play a major role in delivering a superior quality specimen to the testing bench.

Simply put, a high quality, reliable lab test result requires sufficient funding, a trained and capable staff, with adequate manpower to properly handle every specimen during each shift. The other requirements are properly-maintained equipment, plus reagents and consumables that are of acceptable quality to properly perform the assay. Give short shrift to any of these variables, and a laboratory will lack the inputs required to practice a high quality of laboratory medicine.

Now the public knows that Quest’s internally-developed home brew assay failed, for a period of one and one half years in clinical use, to produce accurate, trust- worthy results at the standard expected by the profession and the public. Thus, Quest Diagnostics set itself up to be asked one big question: “How did this happen?”

Relentlessly Cutting Costs

Across the lab industry, some pathologists and lab professionals think they know part of the answer. They believe that relentless cost cutting in the public laboratory companies has reached the point where the integrity of lab test results could be threatened. One pathologist told THE DARK REPORT, “Since the day Quest Diagnostics became an independent company under then-CEO Ken Freeman in 1997, cost cuts have been non-stop. That’s 11 years of taking money out of their operation. At some point, economic constraints mean that Quest is likely to cross the line where, instead of trimming fat, it cuts muscle, tendons, and bones.”

This pathologist has the same source of intelligence on what is unfolding at the national lab companies as many other pathologists. Her lab regularly interviews the best and lesser-skilled med techs from the two blood brothers. Reportedly, the best MTs leave because they are discouraged at the working environment. MTs with lesser skills are regularly laid off in each regular wave of RIF (reduction in force) and they have their own stories to tell.

This is an information pipeline that has functioned for years and is one reason why pathologists in competing labs are aware of how unrelenting waves of cost cutting programs at both the national labs affects staff morale and continually erodes the capability of these lab companies to sustain a superior level of quality in their test results.

Quest Diagnostics’ new reality may be that, following its decade of aggressive cost cutting, it has finely-tuned its capacity to meet expected volume. Unexpected disruptions to the status quo leave this company with less flexibility to respond. Thus, problems with its Vitamin D testing may be a first public notice of this development.

Labs Have Limited Capability to Swiftly Ramp Up Capacity to Handle Increased Volumes of Tests

ONE ASPECT OF THE VITAMIN D STORY at Quest Diagnostics is the role that capacity constraints might have played in its ability to cope with the huge ongoing surge in the volume of Vitamin D specimens which needed to be tested.

In early 2007, as Quest Diagnostics moved its home brew mass spectrometry Vitamin 25(OH) D assay into widespread clinical use, it may have been performing between 125,000 to 150,000 tests per month. This volume is believed to have tripled, reaching 500,000 tests per month by the summer of 2008, just 18 months later.

Here is where Quest Diagnostics’ success at precisely aligning capacity to demand in its lab network may have worked against the company. At laboratories where little excess capacity exists, staff works at full productivity to handle the daily routine. This increases the average stress level of staff, particularly compared with many hospital labs nearby (a source of alternative employment and offering mostly day-shift positions). It also means that disruptive events to the daily routine often have disproportionate consequences, since the available staff has no additional time to divert and respond to unexpected events, including a steady growth in demand.

In the case of Quest’s mass spectrometry Vitamin D program, if it was staffed adequately to handle, say, 150,000 tests per month, then significant month-to-month increases in specimen volume would quickly put that infrastructure of staff and analyzers into a high stress situation.

Moreover, as existing capacity is swamped by the rapidly increasing number of Vitamin D specimens coming in the door, Quest Diagnostics would run up against the capacity expansion constraints familiar to every laboratory. First is equipment. Even if new analyzers can be obtained quickly, it can often take weeks and months to properly calibrate a new instrument and validate its performance before using that analyzer for clinical services.

Then comes the need for staff. Hiring enough med techs with the proper skills is always challenging, but often impossible in tight labor markets. This would be a daunting limitation for Quest Diagnostics. Already employing probably the largest number of Ph.D.s and med techs skilled in mass spectrometry in the United States in its regular mass spec testing program, including, say 150,000 Vitamin D specimens per month, how would it be able to hire enough proficient laboratory scientists at a pace which would allow it to stay current with the growth to 500,000 Vitamin D specimens per month? That would be tripling the mass spec testing staff in just 18 months!

These assessments show how the sheer size of the nation’s largest laboratories create barriers to swiftly responding to major increases in test volume in short periods of time. If Quest’s mass spec Vitamin D program was at full capacity at 150,000 tests per month in early 2007, then a tripling of specimen volume in only 18 months would create significant pressure and stress on both the available instrumentation and technical staff.



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