Central region laboratory project
Analysis of submissions
Merrin Blight
November 2004
LECG Limited
www.lecg.com
Central region laboratory project
Analysis of submissions
Table of Contents
1
Executive summary ...................................................................................... 1
2
Introduction .................................................................................................. 3
3
Submission data ........................................................................................... 3
4
The current situation ................................................................................... 4
5
6
7
4.1
Agreement/disagreement with discussion document ..................................... 4
4.2
Key issues ................................................................................................................ 4
4.2.2
Mentioned at least once ............................................................................ 5
Drivers of growth ................................................................................................... 7
4.4
Need to consider .................................................................................................... 8
4.5
Other comments ..................................................................................................... 9
Organising themes ..................................................................................... 10
5.1
Urgency ................................................................................................................. 10
5.2
Accreditation......................................................................................................... 11
5.3
Efficiency and quality .......................................................................................... 11
5.4
Demand ................................................................................................................. 12
5.5
IT ............................................................................................................................. 13
Initiatives ..................................................................................................... 16
6.1
Privacy issues and access to records ................................................................. 16
6.2
Cap expenditure ................................................................................................... 16
6.3
Demand side ......................................................................................................... 17
6.4
Other comments ................................................................................................... 17
Configuration options ............................................................................... 18
7.2
9
Mentioned often ......................................................................................... 4
4.3
7.1
8
4.2.1
View on current configuration ........................................................................... 18
7.1.1
Hawke’s Bay ............................................................................................. 19
7.1.2
Wellington................................................................................................. 19
7.1.3
Hutt Valley................................................................................................ 20
How to improve ................................................................................................... 20
Proposals ...................................................................................................... 22
8.1
8.2
Local ....................................................................................................................... 22
Sub-regional .......................................................................................................... 24
8.3
Regional ................................................................................................................. 24
Benefits, costs and risks ............................................................................ 27
9.1
Outsourcing .......................................................................................................... 27
9.2
Joint venture.......................................................................................................... 27
9.3
DHBs deliver......................................................................................................... 28
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Central region laboratory project
9.4
10
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Analysis of submissions
Other comments ................................................................................................... 29
Preferred option ......................................................................................... 31
10.1
View ....................................................................................................................... 31
10.2
Alternative proposal ............................................................................................ 31
10.3
Implementation and development issues ......................................................... 32
10.4
Other comments ................................................................................................... 34
Reflections ................................................................................................... 36
11.1
Comment ............................................................................................................... 36
11.2
Key themes ............................................................................................................ 36
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Central region laboratory project
1
Analysis of submissions
Executive summary
47 submissions were received in total, made up of 8 from Hutt Valley, 21 from Hawke’s
Bay and 18 from Capital and Coast. Some were from individuals and some from groups.
There was general agreement on many of the issues and concerns raised in the discussion
paper “The Future of Laboratory Services in the Central Region”, including broad agreement
about the benefits of integration, but disagreement on some facts and the preferred option
(e.g. disagreement between the private and public sectors over where the work could be
done). There was only one submission from a PHO and further comment is being sought.
Submissions repeated a number of key issues. These included:

Retaining qualified and experienced staff during shortages, and keeping
workloads reasonable and competence and morale up.

Making sure there is adequate staff and equipment on a day-to-day basis and for
back up/civil emergencies.

Implementing demand-side management through referrer education, an improved
request form and an updated schedule.

Introducing a single data repository or mechanism for all providers to access all
results (regardless of the outcome of the project) to prevent duplication of testing,
save money and assist patients.

Introducing a region-wide IT system.

Compliance with accreditation requirements.
Submissions noted a number of inappropriate drivers (for example ordering groups of
tests when only an individual test is required) and appropriate drivers of growth (such as
screening programmes).
Suggestions were made on what should be considered when looking at laboratory
services including patient needs, short-term costs versus long-term gains, the need for
evidence, existing strengths and past experience.
Comments were made on suggested levels of urgency and impacts on it like clinician’s
expectations; how to meet accreditation requirements; how to improve efficiency and
quality and ways to manage demand.
There was near unanimous agreement on the need to improve IT systems to solve many
of the problems recognised in the discussion document, such as duplicated testing.
Submissions noted that privacy issues should still be dealt with.
Views differed on the current configuration, but ideas on how to improve it were similar
such as integrating some non-urgent specialised tests and building on existing
relationships.
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Analysis of submissions
Local integration showed through as the preferred option in the immediate term in many
submissions, with many suggesting sub-regional integration in the future. Soft integration
was also raised as an option by many – meaning cooperation and sharing of information
between laboratories. Regional integration was often misunderstood to mean
centralisation – for instance, being run out of Wellington, rather than a single
management entity providing services from multiple sites.
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2
Analysis of submissions
Introduction
Following the release of the discussion document “The Future of Laboratory Services in
the Central Region” in October 2004, laboratory staff and management, health providers
and other interested parties were invited to make submissions on their views on the
paper, some of the key issues facing labs and resulting themes, the situation now and
some of the possible options for the future, as well as any other comments they felt were
relevant.
This paper aims to help inform further analysis of the options the future of laboratory
services firstly by drawing out key messages from these submissions received, using
quotes where relevant, and secondly by commenting on some of these findings. It is
organised following the format of the feedback form supplied to staff.
3
Submission data

21 submissions were received by Hawke’s Bay DHB

18 submissions were received by Capital & Coast DHB

8 submissions were received by Hutt Valley DHB
Some of the submissions were from groups of people, for example the microbiology staff
at Wellington hospital or the lab staff at Hutt Valley, so low numbers should not be seen
as reflecting a lack of interest in the project.
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Analysis of submissions
4
The current situation
4.1
Agreement/disagreement with discussion document
Generally submissions tended to agree with many of the issues and key concerns in the
discussion paper, but disagree with some of the facts or presumptions in the paper or the
preferred option. However, there were some in complete agreement and some in
complete disagreement.
Those that agreed, said for example:
“appears to be a reasonable reflection overall, with a few exceptions”. (SUB033)
“I agree that there will be advantages for patients if hospitals and community labs
work together … there are financial gains to be made if the laboratories work
together. The existing system has a number of unnecessary duplications in staffing
and resources … ”. (SUB041)
“The authors of this paper are to be congratulated on the clear synopsis they have
provided with regard to the current situation. There is agreement with most of the
points…. Apart from the preferred solution.” (SUB043)
Those that disagreed ranged from “concerns around accuracy of the volume data for tests
and $.” (SUB013), the range of services provided by community laboratories (SUB013), the
need (or lack of need) for restructuring (SUB015), the approach taken and involvement of
clinical and pathology staff (SUB01) and (SUB011); the impacts of reducing competition
(SUB016), the focus on physical laboratory sites not markets served (Wellington Medical
Laboratory, Valley and SCL all serve Kapiti Coast) (SUB013), right through to a rejection
of the whole document:
“We suggest that the Discussion Document is rejected completely”. (SUB011)
“The conclusion of the document is arbitrary, appears predetermined and ignores
potential solutions for real issues raised, such as local coordination of public and
private pathology services and possible rationalization of pathology demand at a
clinical level.” (SUB004)
4.2
Key issues
Submissions repeated many of the same key issues again and again. These are
summarised in the first section below. The most important appeared to be retaining
qualified staff and adequate equipment for them to use; the need for a single data
repository; and the need to educate referrers to slow growth in spending.
Many other submissions raised important issues, but these were not repeated as
frequently. These issues are summarised in the second subsection below.
4.2.1 Mentioned often

Retention of qualified and experienced staff, particularly due to the shortages of
pathologists in the immediate and medical laboratory scientists in the medium
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Analysis of submissions
term. In line with this, keeping staffs’ competence and morale levels high,
encouraging them to stay working in the industry and in New Zealand, employing
enough staff to cover increased workloads and paying staff fairly were raised.

The need for adequate staff and equipment as well as back-up staff and
equipment. On a day-to-day basis and in a civil emergency, such as an earthquake
in Wellington.

Creating a single data repository for results that can be accessed by private labs,
hospital labs and clinicians in the public and private sector was a key issue raised
by many, regardless of the outcome of the proposed integration, to prevent
duplication of testing, save money and assist patients.

The need for demand-side management via education of referrers, reformatting
the request form, allowing laboratories to refuse to retest within certain
timeframes or complete certain tests, and updating the schedule; in order to stem
the growth in spending, which is pushing budget constraints.

A region-wide IT system accessible to GPs, specialists, other medical staff in the
hospital and in the community. This will assist patient care and help prevent
duplication of testing.

Compliance with stricter IANZ accreditation requirements.

Different focus of hospital and community labs. Community labs are seen to be
driven by profit, hospital labs are seen to be driven by service. Many submitters
questioned whether the two could share a common goal.
“Private labs are always profit driven and will only provide services that
generate profit. Their clients are the non-hospitalised section of the population
and therefore their services are mostly non-urgent. In comparison the hospital
labs clients are the portion who are sicker or hospitalised. Thus their services
are mostly urgent and are expected to provide every possible service that may
assist clinicians for in-patient monitoring/treatments irrespective of the cost.
Hospital labs are non-profitable”. (SUB031)

The current duplication of services, equipment, staff and testing across the region.
Particularly in areas where low volumes make smaller batches uneconomic.
4.2.2 Mentioned at least once

A guaranteed, reliable ongoing testing service, with consistent test quality and
service.

The need for onsite pathologists for immediate diagnostic testing, e.g.
cytopathologists, to test biopsies and thereby avoid unnecessary surgical
procedures. (SUB002)

The need for onsite pathologists (anatomic, cytology, histology) to attend clinical,
radiological and pathology conferences; assist with medical education and
registrar rotations, particularly if Hawke’s Bay becomes a teaching hospital; help
with audits; query reports; allow fast turn around times; assist interpretation and
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Analysis of submissions
decision making; promote learning; post-mortems; hold informal meetings; give
urgent advice; guide biopsies and needle aspirations; meet professional standards;
meet guidelines e.g. Breast Screening weekly meetings.

The gains in efficiency that have already occurred.

The view that specialist tests should be handled regionally.

The resources to deal with an ageing population and workforce to deal with an
increased workload.

Some certainty is required for planning and development.

Adequate funding for improved technology, capital replacement and IT.

The need for evidence to show that integration will reduce costs

Other regions play a role too, e.g. Palmerston North manage some of Hawke’s
Bays work, Christchurch is a reference laboratory for Hawke’s Bay.

The need for pathologist input into the day-to-day operation of laboratories, as
occurs in the private labs.

Training and development for staff. External training courses, conferences,
seminars, extramural studies and workshops are an integral part of hospital labs.
(SUB008)

Developing guidelines for better patient care. (SUB016)

Lack of controls on community spending. (SUB033)

The need for backup on site. (SUB033)

Inconsistencies in the schedule between attributed costs and actual costs. The
distinction between schedule and non-schedule tests is out of date. Needs
complete revision and mechanism for adding and deleting tests. Total costs are
still very low compared with international levels. (SUB036) Off schedule tests
“dumped on” hospitals without sufficient funding. (SUB033)

There should not be restriction of tests needed for good management of diabetes
etc. (SUB041)

Can address problems noted in discussion paper in other ways. (SUB023)

Much larger sample collection infrastructure needed in community than in
hospital labs – so there are different staffing and service requirements. (SUB023)

There are good reasons to change the way we are doing things, but not by
structural integration. Closer working relationships would achieve more than
restructuring. That would create new problems and upheavals without significant
gain. (SUB026)
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4.3
Analysis of submissions
Drivers of growth
It has been suggested that one of the driver’s of growth is inappropriate ordering of tests
due to lack of knowledge and lack of control. (SUB041) suggested that this should be
assessed to check whether it is really a problem. There may be controls in place already
through the auditing of GP requests by the Ministry of Health and GP’s limited budgets.
“Growth in laboratory test volumes should not be viewed in isolation but must be
considered in the context of health outcomes. Spending on laboratory tests reduces
downstream health spending”. (SUB043)
Inappropriate drivers mentioned include:

Out–of-date test schedule, that is not standardised nationally, and does not
respond quickly to different tests, different costs etc.

Profit incentives encourage increased workload (however hospitals have still faced
this despite not using a fee for service system).

Over reliance on laboratory tests instead of clinical diagnosis.

Emergence of new tests without education in how to use these.

Ordering groups of tests not individual ones.

Over-ordering of tests to minimise liability.

Incentives paid to GPs (and opposing views that these do not even cover practice
nurses costs in taking specimens and make it more convenient for patients).

Design of test forms – tick boxes encourage inappropriate testing.

Ordering trendy tests.

Over-ordering tests because of shortages of medical staff.

“Patient education and expectation of blood tests by ‘media’”. (SUB016)

Slow turnaround times and poor access to results.

Lack of minimum retesting intervals.

Lack of electronic test ordering protocols.

The culture of requesting tests.
Submissions also noted key appropriate drivers of growth - Government recommended
initiatives, amended best practice guidelines or increases in particular conditions or the
awareness of their risks e.g. Chlamydia, hepatitis, diabetes, cervical screening, obesity
(SUB036), “Increased accessibility to GP’s under PHOs and the increasing emphasis on
preventative care is likely to be causing the higher volume of laboratory work” (SUB048).
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Analysis of submissions
Other comments were also made, such as growth encourages investment in improved
infrastructure (SUB042), and that laboratories only respond to demand and do not drive it
(SUB036), measures to reduce growth have had at best temporary success, and that there
are many complex reasons that doctors order excessive tests.
Another noted that growth in community lab testing is partly due to increased
management of patients in the community. It is more accurate to look at combined
hospital and community growth rates. (SUB018)
Another disagreed with the inference that a substantial portion of growth is ‘bad’ or
inappropriate. Every other developing country has shown similar trends. Growth is
significantly less than Australia. Would be happy to work with Government in
identifying and eliminating “bad” growth. (SUB026)
4.4
Need to consider
Interested parties were asked what other facts the discussion paper should consider.
Some of these included:

The needs of patients.

The different types of work done by hospital and community labs, with different
referrers and different levels of urgency.

What DHBs consider a core service that must be retained in DHB ownership and
control. (SUB043)

Short-term costs vs. long-term gains.

The new problems that integration may raise.

The specific concerns of referrers/clinicians and their knowledge of what is
needed in a laboratory service.

Actually quantifying savings, this is difficult if costs cannot be accurately
identified (SUB003). Preparation of a business case that is relevant to real life.
(SUB011)

Potentially increased workloads for pathologists if do not or cannot recruit more
staff (SUB006) or decreased work satisfaction and potential loss to overseas
markets if lost opportunity for private practice. (SUB015)

The views of staff during the process, and taking measures to listen to and consult
with staff, help reduce their stress during change, support them and make them
feel valued. (SUB008)

Past experience, e.g. when hospital labs were directed to collect outpatient
samples, it was very expensive to provide collection facilities and quickly reverse
them. (SUB036)
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Analysis of submissions

The levels of service already provided by community labs, e.g. they perform free
services for the patient such as house calls without reimbursement. (SUB042)

Whether reference laboratory work could be done cheaper in the central region.
(SUB035).

The training of future technologists and jobs for current students. (SUB028)

Hospital laboratories employ predominantly medical laboratory scientists, while
community laboratories employ more technicians. (SUB044)

“There have been some notable successes of a smaller scale in IPAs such as
Pegasus who through partnering initiatives with funders and stakeholders have
managed sustained reductions in laboratory costs by the application of clinical
practice guidelines.” (SUB044)

Commercial consequences of structural integration. Community laboratories have
large investment in staff, equipment and other overheads. Financial commitments
cover much longer period than to September 2005. Cannot adopt short-term time
horizons. (SUB026)

Should deal with actual staff numbers not FTES to avoid understating industrial
relations implications. May lose key staff in restructuring. (SUB026)

Backup can be provided on site or off site, depending on the area. Alternative
locations are useful for security, accessibility during a disaster and for industrial
disputes. (SUB026)
4.5
Other comments
Submissions made other comments including:
“Taxpayers should not be required to invest in infrastructure which already exists
in the private sector without demonstrable commensurate operational savings”.
(SUB043)
It would be good if patients only needed one lot of blood tests and results could be
accessed by different providers. (SUB028)
“In most large public hospitals a high percentage of the work is reported with no
clinical input. Most senior scientists are in fact de facto pathologists.” (SUB033)
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Central region laboratory project
5
Organising themes
5.1
Urgency
Analysis of submissions
Nearly all submissions agreed that facilities for urgent 24/7 testing on site at hospitals
must be provided.
Many submissions agreed in theory with the functional view of urgency table included in
the discussion document, as an appropriate tool to determine what must be kept on site in
a hospital laboratory. There was some disagreement about what should be included and
the timeframes. E.g., including microbiology CSFs and urgent histology in the under two
hours category (SUB033); gram stains, ZN stains, fluid microscopy and blood cultures
(SUB003).
Other issues were raised about urgency:

Clinician’s expectations – what they are used to versus what they require – doctors
can get used to getting non-urgent tests done ASAP (SUB028), while others think
that every test is urgent (SUB037).

Cost effectiveness.

Timeliness for efficient inpatient management – managing unstable patients,
avoiding unnecessary admissions and allowing discharge as soon as possible,
allowing quicker treatment, arranging follow up treatment, limiting psychological
effect on patient. If the urgency requirements were followed exactly e.g. histology
4-8 day turnaround instead of current 1-2 day would reduce service to the
hospital, increase use of hospital beds, change use of further treatments and
prolong anxiety for patients waiting for results. (SUB014)

Timelines in the community should also not be compromised, so that community
based alternatives to hospital care and patient safety are not threatened. (SUB004)

Current timelines, e.g. 95% of anatomic pathology reports are available in the data
repository within 48 hours (SUB005); 95% of histology/cytology reports are
available in less than 24 hours.

The ability to perform testing quickly does not make them urgent. (SUB030)

Sometimes tests are ordered in case somebody might want them, quicker turn
around times would help avoid this. (SUB017)

Urgency cannot be assessed by principle only – individual patient needs might be
different. (SUB010)

Urgency should be discussed in depth with clinicians. (SUB045)

The way non-urgent tests are handled in a modular system may need
improvement. (SUB035)
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Central region laboratory project
Analysis of submissions

Should label each test as urgent, acute or routine. (SUB013)

A critical mass of staff is required to run a 24/7 service. (SUB044)
5.2
Accreditation
Laboratories will soon be required to meet IANZ standard ISO15189. These accreditation
requirements make pathologist oversight and lab supervision a key issue. They require
effective quality management systems, technically valid testing methods and competent
staff. (SUB044). The standards will require more pathologists (SUB028), with greater
pathologist input and an expanded role (SUB010), quality control programmes and staff
training (SUB042). The guidelines should improve consistency and help meet the demand
for high quality healthcare that patients and the government expect. (SUB04) They will
make it harder for standalone labs, and require more sharing of knowledge and resources.
(SUB045)
Submissions seemed to differ on whether individual laboratories in the region would be
able to meet those requirements. Ranging from the “not so onerous” (SUB010) to serious
problems for parts of Hawke’s Bay and Hutt hospitals (SUB006) and (SUB036). Private
laboratories are generally seen as better able to meet the requirements as they are able to
pay their pathologists more (SUB006), but not in all areas (SUB036).
There are creative ways to deal with accreditation requirements. Wairoa and Hawke’s Bay
hospital labs are IANZ accredited. Handled international pathologist shortage by
negotiating with IANZ, so less pathologist visits are needed if senior scientists attend peer
review meetings at Canterbury Health laboratory. (SUB014)
Integration is seen as a way to help with the current lack of pathologists (SUB031),
particularly if community and hospital laboratories are combined, or areas become more
compact (SUB035). While others are concerned that pathologists are already overworked
(SUB035) and would continue to be if labs were merged without employing another
pathologist (SUB036)
Conflicting views emerged on whose responsibility it was to provide this support – with
one submission arguing that a private laboratory should support their hospital laboratory.
(SUB009), while another stated that “Hospitals need to sort out their own accreditation
process and the private sector should not be compromised”. (SUB016)
5.3
Efficiency and quality

Preventing duplicated tests would improve efficiency.

Local integration may improve service quality, for example by making tests only
currently available through hospitals more widely available. (SUB041)

The laboratories are already seen as very efficient internationally and providing a
responsive, quality service. (SUB003), 035, 043 This was noted for both community
and hospital laboratories, but the former was emphasised.

Quality must not be compromised. (SUB035) If services are reduced stakeholders
should be kept informed and given alternatives, as it can have long-reaching
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Analysis of submissions
implications, on haemophilia patients for example, (SUB034). Look at external
quality control results. (SUB028)

The equipment in many labs could cope with more work. (SUB037), 005

Reducing competition may reduce efficiency. (SUB016)

“Improved efficiency and quality are not necessarily comfortable bedfellows.”
Palmerston North improved efficiency but not quality. (SUB030)

Some issues that impact on efficiency are not within laboratory’s control, e.g. when
sick patients need off-schedule one-off tests done (SUB028), when 24 hour or on
call services are required. It can be unfair to compare hospital and community
laboratories in terms of cost efficiency when hospitals have to provide these
services, face high institutional overheads etc. (SUB036)

Increased workloads would lead to improved efficiency and improved quality as
more staff training occurs. (SUB045)

Private labs are perceived as better at patient services/phlebotomy, but with the
same funding and effort put in, they could be just as good. (SUB037)

Consistent test prices, that include callout tests etc would help. (SUB035)
5.4
Demand
The discussion paper recognised that there is a growing demand for laboratory services,
some of it appropriate, some of it inappropriate. Submissions made a number of
suggestions about how to manage this growing demand, the key two being to redesign
the test order form and to educate referrers about appropriate test ordering.
The request form needs to be redesigned and simplified, so that individual tests rather
than groups of tests are ordered, and that they are seen as requests not demands.
(SUB033), (SUB045)
Referrers need education and feedback from pathologists on appropriate test ordering, for
example through CME events. A set of clinical guidelines on all lab tests would also help.
(SUB010)
“We need to provide help and direction to the requesting doctors not just beat
them over the head because they request too many tests. Patient safety is
paramount”. (SUB037)
The submissions recognised that there are complex factors involved, and these are
medical decisions, medical specialists, pathologists, GPs and DHB staff need to work
together to decide.
Submissions also noted that the ordering of tests is outside laboratories’ control.
“Laboratory has no direct influence over tests requested, including types or
volume. Laboratory should not be penalised for something outside its influence –
service provided to best meet the needs of the patient; if clinician directs level of
service required, we are obliged to fulfil this”. (SUB010)
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Analysis of submissions
Other points included:

Incentives paid for collecting blood specimens should be reconsidered, to allow a
level playing field for everyone. (SUB042) Alternatively, Include phlebotomy costs
on all tests. (SUB035) Supportive of bans on procedures or incentives that are likely
to result in inappropriate demand. (SUB026)

The costs of testing could be transferred to referrers – e.g. transfer costs to wards
to show them the real costs of their tests or give primary care groups testing
budgets to curb inappropriate demand. Part charges for patients have been
suggested but would harm vulnerable patients and may cost more in
administration than gain in revenue. (SUB042)

Continue to identify and analyse what and why tests are ordered, and
inappropriate drivers of growth. For example, pathologists may not want to
manage demand when they are shareholders in private labs. (SUB037)

Could require expensive one-off tests to go through a specialist panel. (SUB045); or
reach consensus that tests can’t be performed if already completed within a certain
timeframe. (SUB030)

Test codes should be standardised. (SUB016)

Computerised test orders that total costs during the request build have been
proven to have a sustainable effect on test requesting patterns. They can also
eliminate redundant test requests or apply restrictions on who orders certain tests.
(SUB014)

Demand management other than through education can create perverse
incentives, e.g. “paying doctors to under test” (SUB013)

And finally, demand management costs money and will need to be properly
resourced to work. (SUB037) Pathologists are busy enough already. (SUB035)
5.5
IT
Submissions almost unanimously agreed on the need for a common data repository and a
shared IT system, regardless of the outcome of the rest of the integration process.
Currently medical staff are often unable to access results as patients move between
providers, leading to duplication of testing. There is room for significant cost savings, as
well as improvements in patient care.
“Many of the problems in the paper with over servicing, duplication of results and
inefficiencies could be addressed by good IT services, use of clinical guidelines or
criteria, electronic ordering of tests, sharing of data and better communication
between hospital and community laboratories” (SUB003)
“The data repository represents a major part of a patient’s record and is invaluable
in reducing medical error, avoiding waste and duplication and improving the
quality and timeliness of care to patients” (SUB044)
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Analysis of submissions
A central data repository is seen as the first step by some, regardless of the outcome of the
integration process, preferably on a regional or national level:
“At the start a central data repository would be an ideal way to being, and will
serve in the best interests of both the hospital and the community”. (SUB006)
“A common data repository is needed whether or not integration proceeds.”
(SUB024)
A common IT system is seen as a prerequisite for integration to work. (SUB024)
Easier access to results would allow better care for patients, as changes can be constantly
monitored and picked up quickly, reducing medical error, improving quality and
timeliness of care, while saving doctors time in following up on patients results. (SUB008),
044 Patients can also receive better care as they move between providers and DHBs.
(SUB035)
Laboratory reports to GPs are not user-friendly and result in re-ordering. Results are sent
separately rather than being compiled, which makes it difficult and time consuming to
sort through. The computer system does not link results closely with re-ordering pages, so
tests are often reordered. (SUB047)
Laboratory staff also need rapid access to results. There would also be benefits for quality
control.
Submissions made suggestions about the type of system to use, e.g. an Éclair type system
which allows common access to results without sharing an IT system. (SUB030)
Some submissions asked for proof that the issues really exist and explanation of how the
solutions could work. “Anecdotally the number of duplicated tests is high but there is
little evidence to prove this” (SUB015) Others noted that if these changes were made,
many of the advantages of integration may diminish. (SUB003)
Others called for decision-makers not to repeat past mistakes in underestimating the
resources and ongoing maintenance required. (SUB036) A key phrase used is
“sustainable”. (SUB043). One suggestion was that the referrer should share the costs.
(SUB042)
The aim of a common platform for sharing information is so that information from
hospital and community laboratories is available in the interests of patients. The aim is
not integration. The arguments for common or compatible IT systems are compelling but
do not require structural integration. Strong arguments for having compatible rather than
one common IT system if there is a system breakdown. Prefer compatible IT systems with
common system definitions. (SUB026)
One submission said the discussion paper is confusing. Should differentiate between
laboratory information systems and common data repositories. LISs register, aliquot and
track samples, create work lists for machines and interface with instruments, enter and
send out results, audit lab practice and rest ordering and provide infection control
surveillance. Results are communicated to clients via Electronic Medical Records for
hospitals and via secure email (usually Health Link) to GPs databases. LISs are crucial and
expensive to change. Each laboratory has a different brand. Expensive barrier to hard
14
Central region laboratory project
Analysis of submissions
integration as combined laboratories would need the same system, even if across various
sites. However, for requestors, how results are delivered is more important, not the LIS. A
common LIS is not essential for sharing results between requestors and providers. It
would allow streamlining of specimen entering and processing. There is a limited data
repository in use at Capital and Coast – with results from the hospital lab and outpatients
tested at Medical Laboratory Wellington and Valley Diagnostics. (SUB029)
Another argued that access is already possible. The current HBDHB central clinical data
repository (CDR) can be accessed by all community and hospital clinicians and could be
extended to cover the community labs, without changing laboratory information systems.
(SUB014)
15
Central region laboratory project
Analysis of submissions
6
Initiatives
6.1
Privacy issues and access to records
If laboratories in the central region move to a common data repository and/or a shared IT
system, results will be available to a wider group of people, raising important privacy
issues that need to be resolved. A workable method of gaining informed consent and/or
educating patients will be required. Suggestions include blocking out sensitive
information, such as STD reports; regularly tracking use of the system and actively
dealing with breaches; and learning from other regions who have already dealt with it,
like Auckland. It is the other side of improving access to results.
Integration of IT “raises considerable issues of privacy of patient information
which have yet to be addressed in any meaningful way. It seems that each
individual test would require patient consent to be added to any shared database
and this would require significant explanation to patients at the time of testing and
be an added compliance cost for the person instigating testing. General
Practitioners would not welcome yet another task that must be undertaken in the
consultation, especially as there would appear to be no new funding stream for this
task.” (SUB015)
6.2
Cap expenditure
The discussion document suggested adjusting the contracts to cap demand expenditure.
Submitters did not comment a great deal on this topic, however, some of the views
included, that it was a good idea as there are limited funds that should be used for the
best health gains, but that it is easier said than done, particularly as only pathologists can
really tell a doctor that they don’t need a test done. Some questioned how successful it
had been in the past. Suggestions included zero-based funding with user pays to limit
demand, or incorporating fuller costs including phlebotomy and call out costs in future.
There should be room for appropriate increases for inflation and where there are health
outcome benefits and potential reductions in overall health expenditure.
If a new capping model is used it needs to allow for funding growth for “good drivers”
and inflation. E.g., the Australian model builds in 4.5-5% annual growth in funding to
cover demographic changes, policy changes, clinical changes and inflationary changes – it
appears sustainable. Over the last 12 years there has been a significant real price reduction
in New Zealand. Arbitrary caps do not appear appropriate or sustainable. (SUB013)
One submission said that capping demand is a crude option, that could distort and lead to
perverse incentives, and preferred a fee for service model. (SUB018)
A community laboratory said they are willing to enter into an appropriate capping
arrangement including risk sharing. Funding levels need to be realistic and sustainable for
the funder and the provider. E.g. average fee per test after inflation dropped 11.2%
between 1997/98 and 2002/03. Bulk funding can be unrealistically low if it does not take
into account indirect costs. Need risk sharing arrangement in place. (SUB026)
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Central region laboratory project
6.3
Analysis of submissions
Demand side
See section on demand above.
6.4
Other comments
“There must be an accompanying review of services extending beyond laboratory
testing such as growing demand for home visits, urgent testing, longer collection
hours, faster turnaround, payment for collection etc. These services come at
additional cost to the laboratory and may not be indicated for optimal patient
care.” (SUB043)
“How is competitive pricing for laboratory testing going to be managed if there is
only one provider and one purchaser per DHB/region?” (SUB032)
Savings are not a linear function of test volume reduction due to fixed costs.
(SUB036)
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Central region laboratory project
Analysis of submissions
7
Configuration options
7.1
View on current configuration
Views on the current configuration were made both generally and relating to specific
regions.
General comments included:

There are too many laboratories, with insufficient workloads leading to
overcapacity in automation and duplication of facilities. Particularly for Hawke’s
Bay and Hutt.

One view was that communication and professional support between labs is poor,
while others said that some areas already work well together, sharing pathologists
(Wellington) and agreeing on equipment (Wellington and Hutt). Labs have
different IT systems.

“As the discussion document notes both hospital and community laboratories
have probably extracted most benefits that they can from the existing industry
structure.” (SUB044)

The current configuration works.
“The current model for the provision of laboratory testing has resulted in one of
the most cost effective structure by international standards, particularly in the
community, but with acknowledged efficiency gains in all sectors over recent
years. Any potential restructuring must be given very careful consideration so as
not to loose the gains that have been made.” (SUB043)
“The current configuration works but is clumsy.” (SUB041)
“Primary Care in Hawke’s Bay does not see a pressing need for drastic
restructuring of lab services. would not tolerate a reduction of the current
services”. (SUB015)
“The current configuration is reasonable and provides a relatively efficient and
high quality service by international standards. This point seems to have been
ignored in the analysis and the assumption made that this is inefficient and
wasteful”. The current configuration allows the sectors to concentrate on the
market they know best, provide appropriate service levels, competition between
community providers and choice to referring practitioners. (SUB013)

Each lab has expertise in certain work. (SUB045)

Duplicate labs are mutually beneficial for specialisation and critical back up.
(SUB027)
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Central region laboratory project
Analysis of submissions
7.1.1 Hawke’s Bay

Three laboratories for 150,000 residents is too much. (SUB006) Collection rooms
are very close to each other, analysers and expensive reagents are duplicated. One
laboratory could easily cope. (SUB008)

Services have been “considerably enhanced” with competition between the two
private labs. Turnaround times, collection rooms, satellite clinics, home visits and
urgent testing have all improved. (SUB015)

Services are fragmented and duplicated – the same tests are often repeated in the
public and private labs. (SUB006)

There are good relationships with GPs, including continuing education
discussions, and easy access for the public with a network of collection facilities
and extended hours. (SUB015)
7.1.2 Wellington

“It works currently.” (SUB030)

“I believe the current configuration (2 separate sites) is still favourable because of
the large population they serve plus different level of service urgency they
provide” (SUB031)

Wellington public hospital is a tertiary institution and should remain as a
reference lab for the region whatever merger occurs. Any specialist testing should
be referred there. (SUB038) It is also used as a backup. (SUB035)

Capital and Coast provides clinical pathology services to Hutt and Masterton.
Common protocols, reagents and machines would help it work better. Shared
management or management systems would be required for this to occur. Formal
integration would help to provide better clinical and operational outcomes.
(SUB029)

Close relationships already exist. Medical Laboratory Wellington pathologists
work for and teach at Wellington hospital lab. Medical Laboratory Wellington
does cervical cytology for the hospital, and the hospital does immunohistochemistry for Medical Laboratory Wellington. There is a written agreement
for backup, e.g. during a strike or an earthquake. There is provision for joint
purchasing arrangements to achieve economies of scale when purchasing
equipment or consumables. (SUB026)

Current configuration works well. Two sites are appropriate in Capital and Coast.
Medical Laboratory Wellington is modern, efficient, productive, convenient and
only 2km from Wellington hospital. Effort and expense put into maintaining and
improving sites. Wrong and counterproductive to change efficient and effective
services in hope of forced synergies with subsequent risks. Support integration
through co-operation. (SUB026)
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Central region laboratory project
Analysis of submissions
7.1.3 Hutt Valley

“The current configuration does not facilitate collaboration between laboratories
within local DHBs or across the region… Principally each laboratory operates
independently of each other apart from referred work agreements and using each
other as back up.” (SUB044)

“I feel our local community laboratory is efficient and very responsive to local GP
needs…. I am not at all keen on our local community laboratory being
amalgamated with Hutt Hospital Lab or any larger regional/national facility. In
my opinion they already have a high level of efficiency.” (SUB048)
7.2
How to improve

Minimise duplication of testing.

Common IT systems. Improved data entry and reporting.

Quicker courier between locations.

Integrate some non-urgent tests. Look to specialise laboratories with in line with
areas of expertise. (SUB044)

Refer non-schedule tests to local hospitals instead of outside the region if more
cost effective. (SUB044) vs. No need to switch from Canterbury to Wellington as
reference laboratory for Hawke’s Bay (swift electronic results, pathologist and
technical staff visits on quality and continuing education, bulk purchase of
reagents). (SUB014)

Share professional expertise.

By having a provider who can subcontract other providers. (SUB021)

A stat hospital lab and an integrated main lab. Integrate routine work. (SUB045)
“There is some testing done on all sites that could probably be done over one or
two with the double benefit of improved quality and TAT. E.g. some serology and
immunology and molecular”. (SUB030)

Build on existing relationships and make them closer, rather than structurally
integrating.

Analyse the local utilisation pattern and check resources are being used carefully
(e.g. Kowhai Urine Dipstick project) to control costs. (SUB048)

Recognise that results or service may be different for community and hospital
sectors.

Invest in specialist pathologists. Recruit more clinical specialist resource to meet
accreditation requirements and improve referrer education. (SUB044)

Review where tests are being performed.
20
Central region laboratory project
Analysis of submissions

Get consumers to feedback on expectations of service. (SUB044)

Dr Richard Steele works across three different laboratories and has suggested
using common reagents and regionally coordinating some tests. This would make
results more consistent and improve turnaround times, making tests more
clinically relevant, as well as providing some financial savings. (SUB029)

Combine the strengths of public and private laboratories to best service the people
and improve the community’s health. (SUB008)
o
Community – very good network in the community with GPs, phlebotomy
service, understand customer service management structures enable staff
to get required resources in a timely way
o
Hospital – operating 24 hour service, experienced and highly trained staff
with a high percentage of scientists, high quality service, provide training
and development opportunities for staff.”
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Central region laboratory project
8
Proposals
8.1
Local
Analysis of submissions
The ‘local’ option – integration of hospital and community laboratories within each DHB –
appears to be the preferred option of many.
Views on the option were generally positive - “best option in the short term” and “easier”,
although one asked, “Why destroy a system that works with one that does not?” (SUB006)
Benefits of the local solution include:

“Best meet the objectives and functions of the DHB” and ensure participation,
cooperation and collaboration (SUB001)

Promote integration of primary and secondary care. (SUB001)

Building on integration that has already occurred, e.g. Wellington hospital and
Medlab already work together in some areas and staff know each other. (SUB028)

Makes sense with the geographical location of the population. (SUB010)

Can meet local needs of DHB populations with their different demographics.
(SUB010), 045

Specialist testing. (SUB030)

Quality improvement. (SUB030)

Less investment required (but with less long term potential savings). (SUB032)

Smaller workforce (SUB034).

One database (SUB034).

One site – less equipment duplication. (SUB034).

Single reference range. (SUB034).

Lower risk as can use existing equipment/staff/management. (SUB045)

Pathologists could be more active in management.

Maintain high levels of service. (SUB006)

Can use existing couriers, drivers, phlebotomy service, results delivery. (SUB006)

More comprehensive service to community. (SUB006)

Support and train staff. (SUB006)
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Central region laboratory project
Analysis of submissions

Core part of DHB, DHB focussed on DHB interests, patients and medical staff not
profit, already have Concerto, can recruit more specialist pathologists, already
have capacity, staff are open and realistic about moving forward. (SUB044)

There is definitely room for improvement. Merging Valley and Hutt hospital will
help reduce unnecessary ordering of results. (SUB047)

Similar size laboratories, many staff have worked and trained in both laboratories,
staff savings in core laboratory areas and semi manual areas, perform batches of
tests more frequently, better able to staff 24 hour rosters, management in both
Wellington laboratories are relaxed about it. (SUB029)

Integration can be mutually advantageous. (SUB023)
Potential costs include:

Possible redundancies. (SUB034)

The unavailability of a single site. (SUB034)

Cost of building or finding new premises.

Poorer service if hospital-run. (SUB006) Unable to meet primary care needs.
(SUB003)

Hospitals have not successfully run community labs before, only vice versa.
(SUB003)

Risk of mixing up hospital and community tests – a sophisticated system would be
required to keep them separate. (SUB031)

Wellington Hospital and Medlab Wellington are excellent labs and the first to get
accredited. Mergers wouldn’t necessarily get up to that standard immediately,
especially if major changes in equipment, IT and personnel. If it isn’t broken, don’t
try to fit ix. (SUB036)

Believe stakeholders prefer an autonomous Hutt Valley service that avoids “the
disadvantages that emerge with increased size and complexity” and better serves
the Hutt Valley consumer if they are their sole responsibility. (SUB044)

Doesn’t address need for ongoing clinical support of Hutt and Wairarapa.
(SUB029)
Submissions also queried how it would actually work, who would be in control, who
would be best placed to achieve cost savings.
Suggestions were also made on the mechanism – with provision by hospital and
community laboratories suggested.
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Central region laboratory project
8.2
Analysis of submissions
Sub-regional
The sub-regional option – with some form of integration between Wellington and Hutt
Valley laboratory services – was the second preferred option, after local integration. Some
considered it a good option to work towards in the future, after a period of local
integration, while discussing IT and equipment purchases now to assist.
Submissions noted that the benefits could include:

Clinical benefits. (SUB024)

Staff could work at any site. (SUB028)

Quality outcomes, including common reference intervals. (SUB030)

Access to patient results for the whole region. (SUB030)

Could do specialist tests at one site. (SUB033)

Short distance between Hutt and Wellington. (SUB034)

Geographically and clinically linked (patients see specialists and have tests
performed across the region), pathologist crossover, capital investment degree of
compatibility (hospital labs and Medical Laboratory Wellington) e.g. all chose
Roche integrated chemical-immunoassay analysers so common test reference
ranges and for back up. “Overall we are in favour of this option as the eventual
outcome. We are not convinced that it would be politically appropriate in the short
term.” (SUB029)
While noting:

There would be political difficulties. (SUB034)

Would need common IT, instruments and robust transport. (SUB037)

Needs more analysis first. (SUB036)

Doubts about the acceptability and practical operation. Savings would have to be
substantial to support the significant disruption, loss of local infrastructure and
autonomy. (SUB013)
8.3
Regional
The discussion paper proposed that the laboratory services in the three DHBs – Capital
and Coast, Hutt Valley and Hawke’s Bay, be integrated in some way.
Views on this option were generally very negative, and many problems with this option
were raised. These will be outlined below.
Comment: While many of these are very valid points, there is some concern that some may be
related to a misunderstanding of the type of integration possible for this option. Many submissions
assumed that the discussion paper was proposing that one super lab, probably based in Wellington,
24
Central region laboratory project
Analysis of submissions
should handle nearly all testing for the three DHBs. This is only one option. It would be possible to
run laboratories in each DHB, but integrate the administration, management, IT etc.
Some of the more negative views include, “strong rejection” (SUB004), “little support
from clinicians” (SUB014), “disastrous” (SUB006). Two positive views included “A better
idea than local integration as has the capacity for stronger management due to larger
scale” (SUB033) and “Regionalisation would be relatively easy from the
analytical/technical viewpoint”. (SUB036)With regional integration specialised tests could
be shared around the region and would largely benefit haematology, chemical pathology,
microbiology, but not anatomic pathology. (SUB024)
Many submissions questioned Wellington and Hutt linking with Hawke’s Bay, instead of
Wairarapa or MidCentral, while suggesting Hawke’s Bay would more “rationally and
comfortably fit” with Palmerston North. (SUB017)
“There is no benefit in including Hawke’s Bay – it is too far away. It should
attempt its own regional solution” (SUB024)
In considering a regional solution, submissions suggested thinking about:

The need for three hospital stat labs.

One laboratory to do all specialist work. It would be a true 24/7 service not just an
on-call/overtime service. Specialised staff would be needed to process. It would
avoid the need to split samples. (SUB039)

Fast, effective, reliable transport would be essential.

That the driver should be clinical. (SUB030)

Equipment would need to be updated to handle the increased workload.

Would need to make sure costs don’t outweigh benefits.
Submissions noted many problems with the regional solution, including:

Geographical difficulties in linking Wellington and Hawke’s Bay.

Transportation could be expensive and difficult

Politics, personality and culture clashes. Difficult to get the support of three DHBs
and could be undermined by one unwilling party.

Finding a location for a superlab – near an airport, involved in project and no big
earthquake risk. (SUB032)

Negative impact on Hawke’s Bay’s potential teaching hospital status.

Wellington Hospital doesn’t have the necessary expertise to fill the role of a
reference laboratory like Canterbury Health and Auckland Hospital. (Other
submissions disagree with this)

Remoteness increases risks of delay.
25
Central region laboratory project
Analysis of submissions

Inability to hold regular clinico-pathological meetings, provide advanced registrar
training etc.

May risk losing pathologists and other experienced staff in the disruption.

May not compare with existing system e.g. Hawke’s Bay works well with
Canterbury DHB – shares same IT platform, quick turn around times etc. (SUB006)

“If services lost to another region in the short term, it would be difficult and
expensive to regain them if needed in the future”. (SUB010)

DHBs may lose control. (SUB045)

Unacceptable clinical risk if no onsite pathologist. (SUB001) (This is not being
proposed).

It’s a big step, that brings a big risk. (SUB045) “much too far too soon”. (SUB036)

Bold but probably unworkable. (SUB018)

Clinicians in Hawke’s Bay will not tolerate it. Probably unacceptable politically,
clinically and legally. (SUB013)
26
Central region laboratory project
9
Analysis of submissions
Benefits, costs and risks
The discussion paper noted that integration may occur by way of outsourcing services to
the private sector, joint venture between community and hospital laboratories, or by
DHBs delivering hospital and community services. Some of the comments made are
summarised below.
9.1
Outsourcing
A detailed audit of all testing should be completed first, (SUB038), to make sure that it
will save money and benefit the patient. (SUB010) Test costs would need to be agreed.
(SUB035)
Expertise, equipment and control will be lost over time. It would be hard, expensive and
time consuming getting back in the market again in future. (SUB010), (SUB037) Concern
about lock-in. (SUB044)
The private sector may make it look attractive, but providing bulk and simple testing, but
not 24 hour, non-standard on call testing. (SUB031)
The Palmerston North model of outsourcing to the private sector has had flat testing since
2000 and the lowest prices in the public hospital sector. (SUB018)
Could bring immediate financial benefits but cost in the longer term. Biggest issue is risk
if a provider goes bankrupt (e.g. Cardinal) or exits the NZ market (e.g. St John of God),
makes it difficult to control costs and repatriate the services. (SUB021)
Simplest form of ownership, sole responsibility and risk to supplier, DHB dependent on
monopoly provider (minimise through contract, audit, quality, review, funding growth
parameters). (SUB026)
Some submissions argued that community labs couldn’t perform hospital tests (SUB033)
(and vice versa). Comment: this assumes that laboratories cannot learn.
9.2
Joint venture
Concerns about joint ventures include:

The geographic isolation of Hawke’s Bay. (SUB010)

Cross boundary issues. (SUB016)

That it is just the status quo if DHBs act separately. (SUB034) Would it make any
savings? (SUB033)

There would be no cost savings for anatomic pathology – because of the one to one
relationship between specimens, staff and pathologists. (SUB024)
27
Central region laboratory project
Analysis of submissions

Hospital pathologists would expect to be paid the same as community
pathologists – up to 50% more than currently. Other lab staff would also expect to
be paid a small increment more. Staffing costs may rise. (SUB024)

The legal framework is unclear. Governance critical for success. (SUB030)
Management by committee would be difficult – who decides? How it is enforced?
(SUB037) Total openness would be required. (SUB045)

Needs to be done in good faith.

Success of a joint venture depends on combining interests with private sector
partner. Only if no other choice. (SUB044)

DHB would need to maintain control. Why not just sub-contract? (SUB021)

Extremely complex if regional, more realistic if local, combine expertise in hospital
testing and community laboratory support, don’t need a physical merger to
achieve scale efficiencies. (SUB026)
Benefits include:

A cooperative approach would cost less to implement and provide better service.
(SUB032)

Service levels would be kept up. (SUB035)

Low volume and non-urgent testing would improve. (SUB036)

Expectation that hospital pathologists would be paid same as private pathologists
in private-public partnership, however gap between salaries has narrowed.
(SUB029)
9.3
DHBs deliver
This option was considered the best by some (usually those in hospital laboratories), but
not others.
Some of the benefits are that:

DHBs retain control and can drive an efficient, timely and cost effective service.
(SUB045)

Continuity of results.

A central site.

More experienced staff.

Foundations already in place in some hospital labs – accreditation, new
equipment, experienced staff. (SUB010)

Marked improvements in service and quality.
28
Central region laboratory project
Analysis of submissions

“different funding models have resulted in different perceptions of hospital and
community laboratories. There is no reason why DHBs could not deliver the
service just as it delivers other clinical services.” (SUB021)

When hospital labs have tendered out in the past these have later returned to
public ownership e.g. Thames, North Shore, Whangarei, Taranaki. Palmerston
North ran at a loss for years. (SUB014)
Some concerns include:

Loss of laboratory services in some rural areas like Otaki.

The time and cost it would take hospitals to develop efficient phlebotomy services,
relationships with GPs etc, lengthening time before payoff. (SUB034) Others noted
that hospitals could learn, they used to provide those services or they could
outsource. (SUB037)

Need for more staff, equipment and resources to cope. (SUB035) Would need to be
a culture shift and focus on front door reception, collection services, turnaround
times, contact person for GPs. Continue customer audits that already occurring.
(SUB014)

Whether collaboration and sharing of information would be a more useful
approach. (SUB038)

Integration must be into a system that is “efficient, responsive and accountable”.
Public hospital management would not improve performance. Current problems
with public hospitals include unempowered management, cultural and union
problems, lack of financial understanding of the cost of their service, inability to
attract and retain sufficient pathologist support, lack of recognition for community
lab provision (SUB018)

If collaboration between DHBs - “joining up several dysfunctional organisations
does not improve matters” (SUB013)

Not feasible, hospitals not use to range of referrers, not a simple process,
integrated hospital and community provision has worked but with private owners
and in provincial locations, restructuring and redundancy costs significant.
(SUB026)
9.4
Other comments
Submissions raised other points, including that

the solution should be whatever suits patients the best. (SUB009)

interlaboratory agreements and building on existing cooperation (such as
laboratory managers meetings) is in alternative. (SUB024), (SUB030)

As long as laboratory referral activity is in line with Referred Services Advisory
Group directives and we can continue the relationship have built with VDL staff
29
Central region laboratory project
Analysis of submissions
don’t have a preference whether provided by a combination of VDL and hospital
or one future integrated provider. (SUB046)
30
Central region laboratory project
Analysis of submissions
10 Preferred option
The discussion paper noted that regional integration via joint venture was the consultants’
preliminary preferred option. Interested parties were asked for their views on this option
and any alternative proposals.
10.1 View
Regional integration via joint venture was not the preferred option in submissions. As
seen from the list of problems under the regional solution above, submitters raised a
number of concerns with this option (such as the level of risk, geographical distance,
equipment differences, high set up costs) and didn’t see many benefits. Submissions
asked for more evidence to support this view.
“I cannot see any advantages of a regional option over a sub-regional or local
option. Parochialism on tests lists, specialties provided, management, structure etc
would be very difficult to overcome. I do not believe there would be greater costsavings”. (SUB034)
“this option would formalise what is happening now but would it last and would
it make any savings”? (SUB033)
Disagree with preferred option. Believe would compromise current service and
would be difficult to implement and sustain. It may also benefit Capital and Coast
more than Hutt Valley due to the size and complexity of the Wellington labs.
However regional collaboration should be encouraged in IT, bulk buying, similar
technology, recognising expertise and minimising duplication of testing. (SUB044)
No evidence presented that “provide sufficient benefits to justify the restructuring
requirements, political challenges, legal challenges and catastrophic effects on the
three private laboratories that are excluded (including their staff).” (SUB013)
The discussion paper proposes that a reduction in the number of labs will increase
efficiency and economies of scale. This doesn’t hold true where there is not
significant spare capacity. For example, it may be the case in Nelson/Marlborough,
but not Wellington. (SUB026)
Alternative views said “Very good. Need to keep lower North Island together as one quality service
provided by DHB/community”. (SUB035)
“Do not disagree with the ‘superlab’ model but believe it needs to be developed
from a national perspective.” (SUB021)
10.2 Alternative proposal
Local integration is the alternative proposal in many submissions.
Other options included:
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Central region laboratory project
Analysis of submissions

Integrate the hospital labs in the region. (SUB028), (SUB036) Merge three hospital
laboratories – Wellington, Hutt and Wairarapa. (SUB029)

Group with Wellington/Palmerston North/Wanganui/Masterton, not Hawke’s
bay. (SUB033), (SUB037)

Sub regional between the four labs in Wellington. (SUB034)

Combine DHBs and expand to do community work (SUB035)

Prefer retaining local community provider but with collaboration with GPs and
funders to find a more cost efficient model. (SUB048)

Oversight not to include soft integration in the discussion document.
“encouragement of continuous close working relations and rationalisation of
services, on a test or system by system approach.” No complicated change of
ownership or meshing of cultures. Cultural and governance barriers low.
Possibility of significant cost savings. Not sure how fed back to funder. (SUB029)

The status quo with a modified schedule, lower volume tests at one site, common reference e ranges,
develop specialties. (SUB036) Address IT, pathologist and schedule issues. (SUB045)
o
“A more evolutionary approach to changes in laboratory services with
better IT support, integration between community and hospital
laboratories (especially sharing of results), provision of guidelines and
criteria for use of high cost laboratory tests and rationalisation of the
schedule versus non schedule testing arrangements (preferably on a
nationwide basis) is more appropriate”. (SUB003)

Limited joint ventures, revised schedule, recapture non-scheduled tests from
Christchurch. (SUB036)

The “Queensland” type model. (SUB037)

Outsourcing collection. (SUB037)

Integrate community labs. Maintain a lab in each hospital. Refer all specialist
testing to Wellington hospital as a tertiary regional hospital. (SUB040)
10.3 Implementation and development issues

There are a number of issues to work through, and no model to follow
o
“There is no current model for integration of community and hospital
laboratory services by joint venture in New Zealand… For success there
must be alignment of motive and development of mutual trust... Important
issues such as entity structure, facility, staffing, culture change,
management, reporting, capital expenditure, risk management and
governance will all need consideration.” (SUB043)
o
“The change process must be managed in an integrated way, staff strongly
supported and all parties affected by the change communicated with
closely. Whichever option is chosen resources MUST be available during
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Central region laboratory project
Analysis of submissions
and after integration. Lack of resources, support and communication
during this process will result in failure of this venture!” (SUB009)



o
“Staff need to know timeframes for change and have some job security.”
(SUB028)
o
“Implementation issues around integration are immense” Has to be
handled extremely delicately to merge cultures, achieve efficiencies and
keep specialists and GPs content. The process should be evolutionary not
revolutionary. Goodwill and willingness to work through the issues to a
logical conclusion should be encouraged, and the process shouldn’t be
prescriptive or dictatorial. (SUB018)
There will be problems with any form of integration
o
“problems would occur with what ever form of rationalisation is proposed
– personnel, physical site, equipment, IT, range of tests, continuation of
community specimen collection, management structure, pathologists role,
advisory role of senior scientists.” (SUB034)
o
Uncertainty in industry with repeated proposals for change Uncertainty
negative for labs and staff. Large investments involved in staff and
equipment. Staff want security of tenure. Need longer-term stability.
(SUB023)
Integration is expensive in terms of IT, staff and equipment
o
“IT integration initially expensive”. (SUB030)
o
“Redundancies and destabilised workforce with the concern of reduction
in quality and service. Integration could be expensive if clinical staff want
to be reimbursed as they re in the private sector.” (SUB030)
o
Need similar instrumentation in each lab or quality assurance issues.
(SUB040)
There are other options for change
o

Could make changes now with little inconvenience to staff and patients.
Allocate specialist testing to one site – improve turnaround time, reduce
cost, reduce need for equipment. (SUB034)
Decision making/management is needed
o
Who management will be
o
The best IT system
o
Consult with providers. (SUB045)
o
Use staff expertise and build on what we have. (SUB045)
o
Manage the process carefully and in small steps. (SUB042)
o
Management needs to be at arms length from DHB. (SUB042)
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Central region laboratory project

Analysis of submissions
o
Need a cooperative attitude.
o
Approach should include utilising staff, private sector management
experience, clinician’s views, incremental change, acceptable positive
change, current providers as key developers of solution. (SUB013)
Act wisely
o
Don’t make decisions too hastily to the detriment of the service, like in the
past. (SUB034)
o
Don’t underestimate the complexity of the problem. (SUB036)
o
Use common sense, non-aggressive behaviour, close dialogue. Examine
the options in more detail including an advantage/disadvantage/risk
matrix with full details of existing businesses and future scenarios.
(SUB029)

Attrition is acceptable but not redundancy. (SUB037)

Risks (SUB029)
o
Shortage of pathologists. There are several very over committed
pathologists at the moment. Probably expect fairer remuneration or extra
staff to support. Pathologists may group together and try to expert
pressure for improved conditions of employment.
o
LIS. Four different LISs used in Wellington and Hutt. Need to train staff.
Part of culture shock.
o
Loss of DHB control. Lose a degree of direct control over previously inhouse laboratory. Compare loss of direction with financial and clinical
benefits of integration. (SUB029)
o
Loss of goodwill. Much clinical support is done for goodwill rather than
financial reward currently. Many scientists and technical staff in
laboratories “over provide” because of personal work ethics and
commitments. Explicit contracts and fair pay for this support would be
required if allegiances are not transferred with integration. (SUB029)
o
Institute of Environmental Science and Research (ESR) provide tertiary
microbiology testing. Since it is Wellington based, Wellington hospital
laboratory provides less services to prevent duplication. Has held them
back in comparison with Lab Plus and Canterbury Health. Existence of
ESR should be included in the analysis. (SUB029)
10.4 Other comments
Other comments included concerns around:

Heavy investment is expected with short-term community contracts. (SUB043) We
need to think longer term, particularly around IT. (SUB037)

Level of consultation with GPs, those outside the region etc. (SUB016)
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Central region laboratory project
Analysis of submissions

Whether financial constraints and implications have been looked at. (SUB035)

The impact on the patient – the ultimate stakeholder. (SUB045)

“This is a ‘revolutionary’ rather than ‘evolutionary’ approach. Previous
revolutionary efforts to restructure health services have resulted in overestimation
of benefits, underestimation of consequences, breakdown of important informal
networks, inefficiency during the interim/transition periods, stress on staff
involved with loss of key staff and usually result in a failure to realise anticipated
benefits. There is minimal analysis in the paper of the risks of these changes.”
(SUB003)
Others reiterated benefits:

“Community and hospital laboratory integration provides the opportunity for
improved quality systems and make better use of the scarce clinical skills. It has
potential to improve TAT and quality for specialist testing. Harmonisation of
results, common reference intervals and patient result tracking would be easier
than in the current fragmented system. The concern is this opportunity may be lost
in the rush to reduce expenditure.” (SUB030)

“with better management and better integration of demand initiatives the lab
whatever their structure will grow and improve in efficiency”. (SUB031)
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Central region laboratory project
Analysis of submissions
11 Reflections
11.1 Comment
While the submissions were generally very well informed and made well argued and
valid points, there was some disagreement between submissions, for example over the
ability of a hospital laboratory to provide phlebotomy services or the severity of future
accreditation requirements. Some submissions also appeared to misunderstand a couple
of aspects of the discussion document – largely around the details of the options
suggested. For example, there was broad misunderstanding around the way that regional
integration could work – it could involve shared management and workloads, without
requiring one regional superlab.
The submissions indicated a greater than expected level of agreement on the problems
facing laboratory services, and a higher degree of recognition that integration would
provide a way to solve many of these problems.
11.2 Key themes
A few key themes emerged on analysis of the submissions. These include:

Noting improvements that have occurred in laboratory services quality and
efficiency over time and the international competitiveness of New Zealand
laboratories. For some, this raised concerns as to why change is needed, for others
this just placed the desire for change in context.

Acknowledgement of current communication, cooperation and support between
laboratories. Community laboratories in particular argued that this should be built
on, preferring the current known levels of efficiency to the potential risks of harder
forms of integration.

Common recognition of problems and key issues – including retaining staff,
providing adequate staff and equipment for day to day and back up needs,
demand side management, need for all referrers to access results and compliance
with accreditation. A strong desire to improve laboratory services and make them
as high quality, efficient and sustainable showed through in almost all
submissions.

IT needs fixing whether integration occurs or not. This largely stems from the
inability of referrers to quickly and easily access their patients’ results as they shift
between primary and secondary care and between DHBs. A shared repository is
recognised as a solution to this problem, which should result in better patient care
and cost savings through less duplication of testing. A common repository or
shared IT system is also a prerequisite to successful integration.

The submissions raised a large number of sensible concerns about how integration
could actually work and the implications it would have for staff, patients and
laboratory services in general. A number of suggestions were made on how to
meet these concerns during implementation of any changes.
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Central region laboratory project
Analysis of submissions
37