2+2=5: How the Lab Can Realize Unseen Benefits from Mergers and Acquisitions
Laboratory consolidation has become a nearly-constant discussion in today’s healthcare environment. Managing a consolidation is a huge challenge for a lab leader—but your goal should be more than just to combine two labs into one larger lab. A successful lab merger should create a cumulative effect where the sum is greater than the parts.
Dr. Eyas M Hattab, MD, MBA, of the Louisville School of medicine says: “When it comes to lab consolidation, there is no one-size-fits-all approach that will be successful. You have to take a good look at your goals and see what you want to achieve. That is the start of maximizing the benefit.”
And while each lab is different, there are some core areas that should absolutely be part of your consolidation formula.
- As laoboratories face mergers, it is important that the combination lab be greater than the sum of its parts
- Lab Leaders round table members provide specific advice on how to succeed in areas of: personell, space, equipment, processes, and culture
Contributing Lab Leaders
Duane J. Fitch CPA, MBA, FACHE
Partner, Healthcare Management Consulting
Eyas M Hattab, MD, MBA
AJ Miller Professor and Chair, Pathology and Laboratory Medicine
Diana L. Kremitske, MHA, MS, MT(ASCP)
VP Laboratory Operations
Steven Zibrat, M.S., MT(ASCP)
Manager of Laboratories Quality
A leaner staff is the obvious place people consider, but that overlooks the real opportunity. A lab merger is an opportunity to widen and enrich the talent pool for both labs. You want to capitalize on the expertise in each lab and try and find ways they can compliment one another.
Also important is that your training of personnel goes much further. Staff members that have new skills and knowledge can bring that knowledge to your larger, merged laboratory system.
And when you think on a big picture level, the merged hospital system now has access to more laboratory expertise than ever. That’s the biggest potential for impact. The combined clinical expertise of your newly-merged lab staff can elevate care across the expanded organization.
Hospital space is at a premium. A merger offers an opportunity to make better use of that space. You need to think beyond square footage, and really have a vision for what a merger can mean for laboratory space. A merger can be a remarkable opportunity.
Many labs want to modernize, but space is a limiting factor. They see the advancements in automation, throughpout, and workflow efficiency—but an outdated space holds them back.
As you strategize about physical space, consider finding ways to reconfigure and upgrade your technology and processes. A modernized space means greater efficiency, greater volume capabilities, better communication, and greater ability to bring new testing capabilities on site.
A merger is more than moving lab equipment around. It can help create the space you need to upgrade the capabilities of your entire laboratory system.
When merging labs, it is essential that you standardize across equipment. The decision of what platform to standardize on is one that should be considered very early in the planning process.
Dr. Eyas M Hattab warns of the consequence if you fail to standardize: “If you fail to integrate and continue to work using multiple platforms, you are shackling yourself and not maximizing the benefits of consolidation. You may have put the labs together under the same name, but in truth, they are still separate laboratories.”
Equipment standardization is a product of consolidation that will pay off for years to come. When you work with a standardized platform across all your equipment, patients and clinicians move seamlessly across care settings. Every year you will have lower reagent costs, fewer contracts to manage and pay for, less training requirements, and less staff time validating instruments.
The lab is a heavily regulated environment. So if you have multiple labs, with multiple policies and procedures, you are at risk for creating more work for everyone. Your combined labs could be less efficient due to the merger. Failure to streamline process is a common mistake and it can be a serious cause for headache.
Be sure that you are streamlining processes. This is an enormous source of leverage for making the combined lab better than the individual parts.
Your goal is to create a singular lab with single, unified procedures. Look at quality assurance, look at documentation, look at each process. Pull in members of both laboratories to lay out a single process that brings in the best from both laboraties.
And the roll out that single process across the newly-merged laboratory. A single process means less work for everyone and helps prevent duplicating efforts.
And once you’ve streamlined…refine. Expect that each process will need to be tweaked and revised as you work through the merger. Over time you will continually get leaner and more efficient.
“There are opportunities in such a consolidation to learn from one another, and to make each better because of it.”
Steven Zibrat, M.S., MT(ASCP)
Manager of Laboratories Quality
University of Chicago Medical Center
When you bring two labs together, you want to make sure everyone rises to the level of the higher functioning lab. This influences the entire organization and creates instution-wide impact. But this will only happen when it is approached deliberately.
An exchange program is an effective tool for making this happen. Take members of each lab and have them spend a day or a week working in the lab they are merging with. Create working groups that bring together members from both laboratories. Merging cultures is a deliberate action, and needs to be part of your strategic plan.
The benefits are well worth this effort. Strong culture improves performances, reduces turnover, and affects your lab’s reputation across the organization. Make sure you are getting the cumulative benefits of a strong culture.
Adding it all up
Consolidation of two laboratories is most assuredly a challenge. But with proper planning, you can work to have the combination of both labs be far stronger than the sum of the individual parts.
Consolidation of the Microbiology Laboratory Services: A Mini-Review of Finances and Quality of Care
By Hemangi Shah, MHA (CDC)
A literature review that evaluates the impact of consolidation of microbiology laboratories on hospital finances and quality of care.
Point-Counterpoint: Consolidated Clinical Microbiology Laboratories
By Robert L. Sautter and Richard B. Thomson, Jr.
An interesting back and forth discussion on the considerations and impact of laboratory consolidation.
Changing needs, opportunities and constraints for the 21st century microbiology laboratory
By J. Van Eldere
A fascinating look back at what thought leaders were predicting for the future of the lab. Written in 2005—see where they were wrong and where they were right on target.