Martin Johnston: Health chiefs learn an expensive lesson

Photo / Greg Bowker

Learn by doing. That's what Auckland's health chiefs have achieved, at risk of public safety, in their laboratory contracting fiasco.

For nine weeks, Aucklanders have endured the substandard pathology service delivered by Labtests in the name of saving the district health boards $15 million a year.

Now the savings have shrunk with the rehiring of Diagnostic Medlab to take pressure off Labtests.

The DHBs in 2006 chose Labtests, a new company, over the well-trusted DML, sparking huge opposition from the GPs who must use the service on behalf of their patients.

Predictions that the level of service would fall were dismissed and at the end of protracted court action, appeal judges upheld the new contract.

It now seems obvious that the opponents of the change were right to say that switching from one big monopoly provider to another in just six weeks was far too ambitious - and that having two providers, as Christchurch does, is a good way to reduce single-supplier risks, even though it can add costs.

Waikato pathologist Dr Ian Beer, an adviser to the DHBs on how to get out of the mess they have created, summed up the foolishness yesterday: "There's only one way to eat an elephant. Mouthful by mouthful, and this was done in one whole three-course meal."

Auckland DHB information technology chief Johan Vendrig, the head of the safety and quality team sent in to help fix problems at Labtests, said it would take months to get the company up to speed, given the relative inexperience of its collection centre staff, a problem being addressed by extra training and competency measures. "Labtests overestimated the number of people that were going to be available to them one to two weeks into the contract."

This overestimation goes to the core of Labtests' problems and the DHBs' willingness to give it the sole-supply contract. It suggests a naivete about the degree of animosity between Labtests' and DML's Australian parent companies, Healthscope and Sonic.

The awarding of the contract was overseen by board chairs Wayne Brown, Kay McKelvie and Pat Snedden, their multi-board deputy Ross Keenan, and chief executives Garry Smith, Stephen McKernan and Dwayne Crombie.

Of them, only Mr Snedden and Mr Smith remain at the DHBs. Mr Snedden is appointed by Health Minister Tony Ryall, who will leave him in the job to solve the laboratory problems. But the axe will hover.