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A courtroom battle for control of medical testing in Auckland has been told that three health boards are endangering Aucklanders' health.
The boards were accused of breaching their legal obligations in awarding a $560 million contract for medical diagnostic services to an Australian-led consortium.
The company which lost the contract, Diagnostic Medlab, is seeking a judicial review in the High Court at Auckland of the decision to award it to the consortium.
It told the court yesterday the new contract would result in a significant reduction in the quality of medical laboratory service and "a corresponding risk to the health of the Auckland regional population".
It wants the consortium contract set aside and the selection process repeated. Until then, it would continue with the service it has provided since November 2000.
The Medlab bid is opposed by the Auckland, Waitemata and Counties-Manukau district health boards and the Labtests Auckland consortium, led by Healthscope, which runs private hospitals in Australia.
The case has reached the court after a bitter six-month struggle between Labtests and Medlab.
At the start of a two-week hearing, before Justice Raynor Asher, Medlab claimed that it would show that serious and irreversible harm would be done to the diagnostic service that serves 1.4 million Aucklanders.
Its lawyer, Jack Hodder, said the court must intervene to uphold Parliament's intentions that the health boards' powers be used for their proper purpose and in accordance with the law.
He said the boards did not consult users of the service, were poorly informed, could not and did not ask the right questions, and pursued an unfair process leading to a bad decision.
Medlab performed tests ordered for patients by GPs, private specialists and other health practitioners who were not working in public hospitals.
The health boards ran their own laboratory services, but could negotiate laboratory service agreements with providers of services to GPs and others.
Awarding the contract to Labtests Auckland would result in a drop in service quality and reduced access to the service, Mr Hodder said.
Reduced access was implicit in the $16 million difference in the prices quoted by the two companies for collection and transport of samples.
Much of the price difference came from Labtests' plan to halve staff and collection rooms.
It planned to have 161 collection rooms staff, compared with 293 now employed by Medlab, and would reduce collection rooms from 80 to 43.
A workforce that was highly skilled and scarce world-wide would be reduced. For example, the number of pathologists would be cut by 36 per cent to 16.
The present 12-hour turnaround time for non-urgent tests would be extended to 48 hours, and GPs would be encouraged to collect samples to compensate for loss of collection rooms and staff.
Mr Hodder said the boards did not tell Medlab they were contemplating such a substantially different service and reduction in level of quality in the new contract.
Medlab performed 35,000 tests a day and employed the equivalent of 650 fulltime staff.
Mr Hodder said that, long before the contract was awarded, the boards had decided on their "strategic vision". It had little to do with primary healthcare but a great deal to do with their desire to save money and eventually take over all community laboratory testing services.
Mr Hodder said that, by accepting Labtests Auckland's tender, the boards had bought a service that did not comply with the quality standards stipulated in tender documents.
Medlab is producing evidence from nine witnesses, and the court will also hear from the Harbour Primary Healthcare Organisation, which represents GPs, organisations, private specialists and pathologists.
The contract is due to take effect in July.
Who is saying what
Diagnostic Medlab claims the decision to award a medical laboratory contract to a rival medical testing consortium will:
* Nearly halve the number of medical test collection staff, from 293 to 161
* Cut the number of collection rooms from 80 to 43
* Extend turnaround times for non-urgent tests from 12 hours to nearly 48 hours
* Reduce the number of pathologists from 25 to 16.
