Editorial: Labtests must deliver after decisive move

Auckland's three district health boards had no option but to take decisive action over the region's struggling new community laboratory service. The appointment of six troubleshooters to handle safety and quality assurance is not just about ensuring Labtests fixes its problems. It is about reassuring Aucklanders, many of whom have been shaken over the failings of what was previously an excellent service. It is also about the district health boards' reputations and the impression that the awarding of the eight-year, $560 million contract to Labtests was a serious blunder.

The Weekend Herald's reporting on Labtests' inadequacies lent much weight to that view.

First, there was the damning verdict delivered by general practitioners, specialists, midwives and patients. They pinpointed delays in reporting results, blood being sent to the wrong laboratory in the wrong tube, poor communication, delays in doing house calls to take blood and long waits at blood collection centres. Such concerns led the Health and Disability Commissioner to suggest "there is a real risk that patients could be harmed as a result of the delays and confusion that seem to exist around reporting of results, in particular".

These developments have prompted calls for the previous provider, Diagnostic Medlab, to be given back the contract or invited to compete in the Auckland market. Neither will happen. The boards will stand by their decision and their assessment of the risk to quality inherent in trimming $15 million a year from the contract. They will demand that Labtests delivers. The appointment of the troubleshooters is evidence of that determination.

It also says much about their level of concern for public safety after a week of intensive monitoring of the service. Even an invitation to Diagnostic Medlab to be a dual contractor is not practical because of potential legal ramifications and, ironically, because of the discarded provider's own record. So badly has Labtests' reputation been tarnished that it would be in no position to compete.

The company's Australian parent company, Healthscope, appears well aware of the damage and the huge significance of the health boards' troubleshooting intervention.

It has reacted quickly, installing its own people in key positions and introducing its own medical team. This has meant sidelining Labtests' chief executive, Ulf Lindskog, who, an ill-considered remark about Medical Association "noise" aside, had impressed by providing measured judgments of his company's difficulties.

Healthscope, however, sees more direct control as the first step to nipping the transition problems in the bud. It has been made aware of the degree of discontent and also knows the health boards can bring more power to bear if matters do not improve.

This includes taking over any of Labtests' obligations and forcing the company to pay for this, ending the contract if Labtests "ceases to provide" any material part of the services and forcibly buying the company's entire community laboratory service. Healthscope's strong reaction would suggest such powers are unlikely to be required.

Clearly the three health boards were overly optimistic in expecting Labtests to perform at full capacity from the starting date. It is to be hoped they do not compound that mistake by losing sight of the motive for the change - the $15 million annual saving. In terms of the boards' overall budgets, that is a relatively small sum.

Given Labtests' flawed introduction and the loss of public confidence in the blood-collection service, it is looking like a bad case of false economy. It would be the ultimate indictment if even the savings fell by the wayside.