Media release from the Auckland region's DHBs

Labtests and Diagnostic Medlab will share a new contract to bring about immediate improvements to community laboratory testing in the Auckland Region.

The Auckland Regional District Health Boards (ARDHBs) have announced that before the end of October the contract will be split between the new and former provider saying this was the most considered solution to address stress in the testing service. Under the arrangement, 10% of the existing Labtests' contract will transfer to DML. This will be private sector work, which is in the more complex range of the contracted services and requires a large pathology workforce, covers private hospitals, private specialists, private home visits, fertility treatment and rest homes.

Announcing the new shared contract arrangement, the chairman of the ARDHB's Governance Committee, Mr Pat Snedden said:  "This change will take pressure off Labtests enabling them to deliver a safe and reliable high quality mainstream service to their contract specifications. Diagnostic Medlab can utilise its existing workforce to take on the private hospital and specialist work. Dividing up this work under the supervision of the ARDHBs is the most considered route to ensuring delivery of a measurable, high quality, safe service," said Mr Snedden.

The contract with DML for this work will run for four years. The Labtests' agreement is for eight years from the 2007 start date of the original contract.  Labtests' contract will continue to cover all community pathology for the three DHB regions. Both Labtests and DML will be held to identical quality standards for delivery of their respective services and these performance standards will be available on a monthly basis to clinicians and the public.

"Our key objective is simple; a safe, reliable, high quality community laboratory testing service with measurable performance outcomes and to achieve that as quickly as possible," said Mr Snedden.

"Utilising the former provider's staff and facilities to ease the pressure on the new provider and inject the extra resources that are currently available but not being used is the best, most pragmatic and practical outcome. We are confident this will also be seen as such by the medical community and by the Auckland public.

"The ARDHBs have shown leadership here by encouraging the existing and former providers to put aside their commercial rivalries to come together to serve the best interests of the public which is a very good outcome."

As part of the process, both providers will be reporting to the medical community and the public on an agreed set of key performance safety and quality indicators and progress to achieve them. "These will be issued monthly and will enable clinicians and the public to see for themselves the improved standards which the new contract will deliver," said Mr Snedden.

The KPIs cover:
• Collection centre waiting times and volumes
• Call centre performance
• Home visit performance standards
• Laboratory turnaround times for urgent and non urgent tests
• Reporting of urgent and critical results
• Reporting of non-urgent results
• Complaint resolution
Mr Snedden said the ARDHBs were confident both providers would deliver.

"To support this confidence we have had a very eminent pathologist, Dr Ian Beer, in the last two weeks in the labs of both providers assessing the capacity of each to deliver on this new arrangement.

"Dr Beer has been through a recent change of community lab providers in the Waikato and has first hand experience of the transition complexities of such a change. He acknowledges that this Auckland change is much larger than that in the Waikato which was not a new start-up, but even there he says it has taken three to four months to bed down to the satisfaction of clinicians.

"This Auckland change is just over two months in transition from going live so his view is valuable in giving a professional insight and perspective on what time might be required to get complete satisfaction  with this new provision of service."

The announcement comes four weeks after the ARDHBs moved a senior specialist team into Labtests to identify and rectify problem areas.

"It is clear after several weeks of the new service,  Labtests found themselves under stress with regard to managing volumes, getting results to clinicians at the right time and place, managing the very customised service aspects of  service such as home visits, having the right ratio of fully trained to trainee phlebotomists and turnaround times on urgent results. As a result concerns arose about their ability to consistently operate within the expected contract expectations. When you have a level of performance variability a service is seen as less safe and we cannot afford to let that happen."

Mr Snedden said the QSTAT team had already made considerable progress working alongside Labtests to lift standards over the past month. "Although we are not there yet Labtests is committed to meeting the contract expectations. I am confident they will do so."

Mr Snedden said the ARDHBs had also spent the past month developing a lasting solution that would not only help to speedily fix the current problems but would also provide long term durability.

"Our overall approach with the support of Labtests has been to introduce another provider to the market to reduce pressure on the current service and to ensure high end and more complex work is dealt with to jointly agreed standards.. This new dual provider contract arrangement increases market capacity and safeguards an essential pathology and scientific workforce while at the same time providing the ARDHBs and providers with flexibility into the future."

Mr Snedden said the new contract would cost more with the addition of a second provider but the ARDHBs accepted that as the cost of this new intervention. Under the two provider contract, the ARDHBs would be paying $71.4 million a year for eight years, compared to the previous amount of $67 million a year. The annual savings would be reduced by $4.4 million a year.

"The new contract remains capped subject to small indexation to allow for population growth, and will still achieve savings to the public purse of over $80 million (previously over $100 million) over the eight years of the contract.

"While this is costing more, we are increasing the number of providers, safeguarding an essential workforce of pathologists and scientific staff and ensuring the measurable delivery of a quality service to clinicians and the general public."

Mr Snedden said the ARDHBs wanted Aucklanders to have a service they can trust.

"We accept it will take time to win back that trust and that it will only be won when clinicians are satisfied about service standards. The contract sets those standards and enables them to be enforced. The key indicator to recovering that trust is when clinicians and the public are satisfied about service standards. We are confident both providers will deliver."