Health-lab double act tipped to cost DHBs

Problems with Labtests have led to changes to the delivery of laboratory services in Auckland. Photo / Dean Purcell

Taxpayers are likely to pay more for community laboratory services in Auckland under a patch-up arrangement to rehire Diagnostic Medlab because of problems with Labtests.

Auckland District Health Board chairman Pat Snedden is to reveal the details of the changes, on behalf of the region's three health boards, this morning. The announcement was to have been made yesterday.

The changes are designed to address the shortcomings of Labtests, the company the three health boards picked to replace Diagnostic Medlab as the sole provider of community laboratory services in Auckland.

On September 13, reacting to complaints about Labtests, Mr Snedden sent in a seven-member team of senior health board officials to take control of safety and quality.

Despite undertaking to give a public update after a fortnight, he has said nothing on the team's progress.

But the Minister of Health, Tony Ryall, said improvements were still needed in the laboratory service.

Board officials have been negotiating with both companies to take up to 10 per cent of the work off Labtests and return it to Diagnostic Medlab.

It is not known how long the arrangement will continue, or how much it may cost, but Diagnostic Medlab is likely to have sought a premium as it has no interest in aiding Labtests' survival. And the health boards will have wanted to reduce the price they are paying Labtests.

A senior health board source said yesterday: "This is cost-neutral for us," then minutes later phoned the Herald back to say: "We may not be quite as cost-neutral as we thought."

But the source would not say how much more taxpayers might have to pay, indicating Mr Snedden would reveal this today. Labtests declined to comment last night.

When the health boards announced in 2006 their eight-year, $560 million contract with Labtests, to start the next year, they promised substantial savings. (More than two years were lost to court action before the changeover began in August.)

Auckland board chief executive Garry Smith said at the time of the announcement that the boards would save $15 million a year.

The Herald understands the boards have reached agreement with Labtests to alter their deal, allowing for a new contract between the boards and Diagnostic Medlab.