KEY POINTS:
The Winner Is Announced
Money was not the only consideration in the tender process ... I am confident the new provider, Labtests Auckland, will be up and running by July 1, 2007
- Garry Smith, CEO, ADHB, July 20, 06.
If they have put a bid in on the suspicion that by buying we are going to have a firesale, then that was an extraordinarily unwise assumption to have made
- Dr Arthur Morris, CEO, Medlab, July 20, 06.
If the bid has been given on the basis of a different structure that impedes service delivery to primary health care providers, that's not comparing apples with apples
- Dr Arthur Morris, July 20, 06.
This is not an auction. It's about having a level playing field. Everyone has bid on the same level of information
- Garry Smith, July 20, 06.
Any hiccup on delivering pathology services by July 2007 start-up would seem like a potentially significant political problem
- Stockbroking firm Ord Minnett, July 20, 06.
I would have difficulty imagining it could be done with less [staff]
- Dr Arthur Morris, August 12, 06, after Labtests announces a reduction of 138 in medical laboratory staff.
The Reaction
Public health organisations may have been sent consultation documents but their members were not consulted
- Dr John Malcolmson, Letter to the Editor, August 18, 06.
It came out of Toyota manufacturing. There are some innovative ideas that we've got that came out of other sectors, and have never been applied to health before and we are going to apply them
- Dr Tony Bierre talks to the Listener about the new lean thinking. September 2, 06.
I'm applying for licensure in Australia right now
- American pathologist Dr Jeffrey Winslow, September 8, 06.
They can either work for the new company ... or drive a taxi
- Wayne Brown, early September 06.
Fortunately there is a world-wide shortage of pathologists - each is required to train for at least 13 years - and I will not have to retrain as a taxi-driver. But if it were my only option, I would be out there with my Auckland street map
- Dr Claire McLintock, Ponsonby, September 12, 2006.
[DHBs and the ministry] are confident that the fair and open tendering of lab contracts should not negatively impact on the number of pathologists working in New Zealand
- Health Minister Pete Hodgson, October 10, 06.
The Explanation
Stakeholders were sent consultation documents, including public health organisations that represent GPs.
Public notices were placed in newspapers and information carried on the web.
Feedback from stakeholders was incorporated into the tender.
A confidential tender process makes it legally impossible to disclose or discuss content. The process was signed off by Audit New Zealand. The evaluation team included several highly qualified medical, scientific and managerial people.
This included a nationally respected, independent pathologist and a practising GP who is also part of Counties-Manukau District Health Board.
In the end, the case for change was too compelling. The contract will not be revisited by the district health boards.
They are pleased with the progress that has been made by Labtests Auckland to be ready for next July
- Garry Smith, chief executive, Auckland District Health Board; Dwayne Crombie, chief executive, Waitemata District Health Board; Ron Dunham, acting chief executive, Counties-Manukau District Health Board, Letter to the Editor, August 16, 06.
The Court Case
The logical conclusion is that the same level of work will have to be done by about half the number of people who currently do the work
- Medlab lawyer Jack Hodder, February 14, 07.
Fewer people will have tests, patients will have their diseases go undiagnosed (sometimes with serious and even life-threatening consequences), and the costs to the district health boards will go up as a whole
- Submission from Medlab to the High Court, February 14, 07.
The error made is that the DHBs did not consider the conflict/insider information problem until they were almost committed to signing the contract with Labtests. By then it was too late
- Medlab lawyer Adam Ross, February 16, 07.
The evidence shows that when the contract for community laboratory services was subjected to a competitive process, [Medlab] believed it was in an impregnable position and initially offered [the health boards] little more than a roll-over on existing terms
- Grant Illingworth, lawyer for the district health boards, February 20, 07.
There was never an occasion when he [Dr Bierre] took and misused confidential information
- Paul Davison, QC, Labtest's lawyer, February 23, 07.
There has never been a requirement in the Labtests contract that doctors were going to be required to change anything that they are currently doing, and start taking samples because they are required to do so.
It was nothing more than a goal to say that within two years Labtests was hoping to have moved from the current 30 per cent of doctor samples to 50 per cent
- Paul Davison, February 23, 07.
The Judge's Ruling
It is the people of Auckland, most of whom are likely to require laboratory testing at some point in their lives, who have the biggest interest in a fair decision-making process.
Dr Bierre was making use of information that he had acquired in his capacity as an ADHB member that would not have otherwise been available to him.
Throughout his time as an ADHB member he was interested in securing ADHB funding for his own laboratory, which amounted to an attempt to further his own private financial interests. There is no allegation that the decision-makers were biased.
It can be inferred that the consortium gleaned a significant and improper advantage from the involvement of Dr Bierre.
The issue is not so much what Dr Bierre should have done, but how the ARDHBs should have reacted.
I do not regard the RFP [Request for Proposal, or tender] document as a consultation document. It was not designed with consultation in mind.
These errors were not minor. They were major faults in a procedure that was of importance to the people whom the ARDHBs serve.
I conclude that the decision to enter into the Labtests contract, and the contract itself, should be declared invalid.
- Compiled by Phoebe Falconer
