US consultant urges multiple lab-test providers

Auckland's district health boards should permanently ditch their failed approach to laboratory contracting, which began as a "debacle", an international commentator says.

Texas-based laboratory consultant Robert Michel, the editor-in-chief of the Dark Report, a trade magazine that analyses laboratories internationally, said yesterday the DHBs should return to a multi-provider system. This would benefit patients and referring clinicians.

He said the financial savings of the changes in community laboratory services, around $10 million a year, were tiny compared to the DHBs' combined budgets of more than $3 billion. Laboratory testing was so important the savings were not worth the trouble the changes had caused.

Mr Michel, who will speak at Middlemore Hospital today, told the Herald that pathologists he had spoken to worldwide were interested in the Auckland DHBs' rapid switch from a trusted provider to a brand new company. Such a change, particularly on such a large scale - serving 1.4 million people - had not been tried anywhere else.

"There is no precedent in modern medicine," the Dark Report says, "for the decision by the Auckland DHBs to grant an exclusive lab testing franchise to a company which had no laboratory and no laboratory staff in Auckland - and to have that lab company 'cold start' lab testing services to [thousands of] patients as of 12.01am on the first day of the new contract."

Mr Michel has described it as "probably the single most audacious laboratory contracting project in a developed country during the past few decades".

Because of the huge risks involved, he was not surprised by how badly it had gone.

Under pressure to end Labtests' mix-ups and the risks to patients, the DHBs last month switched 10 per cent of the contract back to Diagnostic Medlab, eroding the $15 million savings on which they originally promoted the Labtests contract.

But DML is signed up only until 2013 and is restricted mainly to referrals from private specialists, private hospitals and rest homes. Labtests' contract continues until 2015 and includes GPs and midwives. The two companies are not competing for the same market.

Mr Michel said the DHBs should introduce a full multi-provider system.