How Quality Turns Your Lab from a Cost Center to a Cost Saver


How Quality Turns Your Lab from a Cost Center to a Cost Saver

In a contemporary culture where everyone wants the best bang for their buck, it’s important to keep in mind that quality shouldn’t be viewed as an expense, but as an investment.

For laboratorians, the challenge lies in minimizing costs while maximizing value. Streamlining processes, encouraging collaborative communication, making smart hires and building a reporting culture are the keys to transforming your facility from a cost center to a cost saver.

“As an industry, we need to move beyond the checklist mentality of just meeting minimum requirements,” says Jennifer Dawson, Vice President of Quality and Regulatory Affairs for Sonic Reference Laboratory in Austin, Tex. “This will allow us to reduce costs associated with rework and inefficiencies, as well as increase the level of patient safety and decrease the number of errors.”

Article highlights:

  • Encouraging lab specialists to participate in committees and to interact with hospital employees in other departments can open lines of communication to help determine exactly which and how many tests are best for each patient, saving everyone time and cutting down on unnecessary expense.

  • Focus on the “why,” not the “who.” Looking at errors as a process instead of someone’s fault and getting away from a blame-and- shame mentality helps nurses and other staff feel more comfortable about coming forward.                           

  • Good enough is no longer good enough. Don’t settle for the bare minimum when it comes to providing quality. Strive for excellence.

Contributing Lab Leaders

Les Duncan

Jason Majorowicz

Quality Management Coordinator

Mayo Clinic

Joel Shu, M.D., MBA

Dr. Joe El-Khoury

Co-Director, Clinical Chemistry Laboratory

Yale-New Haven Health

Richard Gentleman

Josephine Foranoce

Laboratory Director of Operations

Florida Hospital Altamonte

Les Duncan

Patty Eschliman

Laboratory Manager

Madonna Rehabilitation Hospital, Lincoln NE

Joel Shu, M.D., MBA

Jennifer Dawson

Vice President, Quality and Regulatory Affairs

Sonic Reference Laboratory, Austin TX


Volume vs. value

With greater expectations constantly being placed upon lab employees’ shoulders and fewer dollars available for support, how do you keep up with workload without sacrificing quality? Jason Majorowicz, Mayo Clinic’s Quality Management Coordinator, says smart spending ultimately generates better outcomes for patients, but it requires a group effort.

“You have to go to the experts — the physicians, the lab directors, your MDs, your PhDs, and lean on their expertise,” he explains. “You have to take a team-based approach and bring everybody to the table to talk about what makes sense from a clinical perspective and a scientific perspective for that patient.”

When productivity and grade is mostly measured by volume, convincing senior leaders to shift their mindset and look at processes from a value standpoint can be tricky. Encouraging lab specialists to participate in committees and to interact with hospital employees in other departments can open lines of communication to help determine exactly which and how many tests are best for each patient, saving everyone time and cutting down on unnecessary expense..

“There's a lot of overuse and abuse of our laboratories, and it's driving our volumes, but it's not driving good patient care,” Majorowicz says.t.

Eliminating waste

These days, physicians can order tests as easily as they order fast food. Majorowicz says he’s seen studies that show the average physician may order between 40 to 75 tests per patient from a menu of nearly 3,000 options. Positioning the laboratorian as a resident expert instead of an order taker can help lower the number of unneccesary tests, therefore reducing wasted time and money for everyone.

Dr. Joe El-Khoury, Clinical Chemistry Laboratory Co-Director at Yale-New Haven Health, says his lab has worked hard to collaborate with and educate physicians to assure they’re requesting the right tests for the right patient.

“We had challenges in getting everybody to the table to have that discussion,” he admits. “We really needed to support our top-level clinicians in our hospital to be able to push this forward and have that meaningful discussion.”

After a few trial-and-error endeavors, Dr. El-Khoury’s team has made tremendous strides during the past two years in reducing duplicate testing and eliminating the use of tests that are now obsolete.

Making smart hires

Hiring quality employees is another way to save money while boosting value, and as a lab leader, the onus is on you to make the best choices. Team up with human resources before posting any openings to define exactly what and who you’re looking for, and to create a mission statement you can communicate to prospective candidates.

“The core value part is really about allowing them to understand ‘this is my expectation of you from a behavioral point of view,’” says Josephine Foranoce, Laboratory Director of Operations at Florida Hospital Altamonte.

After making the hire, occasional check-ins make sure both sides are getting what they need to succeed. If there’s a problem, solve it. And if the situation dictates, you have to be willing to cut your losses.

“You will have to have some conversations with staff who are not living the mission and not living the values; therefore affecting the culture in your little world amongst this big world that we all live in,” Foranoce says. “Your institution and your laboratory has to invest in employee engagement. You don't want them leaving because they just don't like it there.”

Building a reporting culture

Yes, mistakes can be costly, but they’re don't have to be costly over and over again. Create a culture where employees don’t feel like they have to withhold reporting for fear of repercussions, and then follow through with event management.

“It’s all about trust; it’s about getting people to actually report things in the first place,” Dawson says. “Once you get it into the event management system, you are accountable as the quality person to actually do something about it. If you don't do anything about it, they’re not going to report anymore.”

Focus on the why, not the who. Looking at errors as a process instead of someone’s fault and getting away from a blame-and-shame mentality helps nurses and other staff feel more comfortable about coming forward.

“Sometimes we have an expectation built within ourselves or the culture we work within that says you must be absolutely perfect,” says Patty Eshliman, Laboratory Manager of

Madonna Rehabilitation Hospital in Lincoln, Neb. “And yet if we share within our team that we have missteps and it’s okay, you give them permission to take risks. That’s when you're going to see innovation.”

Overlooking failures — including near-misses — and neglecting to report them prevents opportunities for learning and improvement.

“It all starts with what the leadership supports,” Dawson says. “I do a two-hour onboarding with my staff and teach them about Systems Thinking and Just Culture, and I empower them in order to report. I'm not the one sitting at the bench doing the work, so you have to get them to understand how important their role is in laboratory improvement.”

After all, you can’t fix it if you don’t know it’s broken.

Going beyond your comfort zone

It can often be a hard-sell to get administration to approve the purchase of new machines and equipment, even if it’s ultimately for the greater good. That’s where you need to enlist allies in the workplace.

Eschliman recently worked with nursing staff in her hospital to procure a microbiology analyzer that would allow for in-house urine and blood cultures in the hopes of lowering incidences of catheter-associated urinary tract infections and blood sepsis. She got the nurses on board by pitching the idea as a way to impact patient care through faster turnaround times.

“And then the light bulb went off that if I can work with pharmacy and get the patients on the right antibiotic right away, imagine the downstream cost savings, let alone the good antibiotic stewardship plus not contributing to the super bugs,” she explains.

Getting the correct drug to the appropriate patient faster decreases length of hospital stays while increasing the bottom line — a win-win. It’s a matter of communicating the benefits to the right people in the right way to generate buy-in.

“I think people who sometimes go into the laboratory field are somewhat introverted; they like to work behind the scenes,” says Eschliman. “And we've created a perception that all we do is push buttons on the analyzers. We have to explode out of that and show that we are so much more. We are the knowledge experts.”

Participating in patient rounding presents another opportunity for laboratorians to shine. Foranoce assembled a team of eight lab staff to accompany physicians on rounds to interact with patients and ask them to rate the courtesy of the technician that drew their blood. Lab staff were also asked to spend a few minutes with nurse managers and charge nurses to ask them how the they think the laboratory is doing and solicit suggestions for improvement.

“They began to see us as partners in the care of the patient, rather than this data-producing department somewhere in the hospital,” Foranoce says. “It was great for the team that was on the floor. They learned so much.”

Focus on best practices

Good enough is no longer good enough. Don't settle for the bare minimum when it comes to providing quality. Strive for excellence.

“We’ve been focused so much on just keeping the lab in business and complying with minimum regulatory requirements that we haven’t been focused on excellence and best practice,” Dawson says. “All the benefits of focusing on best practice have positive impacts on the financial health of the lab and, most importantly, patient safety.”

Calculating ROI

So how do you calculate the value of quality? It’s not like there’s a standard return-on-investment measure to rely on. Or, is there?

Dawson feels that capturing the cost and the cost savings associated with a best practice quality program helps prove real financial return on investment for its implementation, in addition to already recognized benefits.

“If your quality isn’t there, you’re repeating tasks,” Majorowicz expounds. “If you’re repeating tasks, you’re throwing your reagents away.  If you’re putting out results that need to be revised, you’re losing trust.”

It’s easy for administrators to understand dollars, but unlike in manufacturing where every widget has a value that’s easy to quantify, defining the value of reputation, time, labor or patient harm can be nearly impossible. That’s where cost avoidance comes into play. For instance, if you’re making the case for a new instrument that costs upwards of $10,000, take the long view and estimate savings on repeat rates over five to ten years.

“We have control over the amount of rework that’s done in the lab, and we can actually quantitate that,” Dawson points out. “At Sonic Reference Laboratory, we capture the cost of poor quality with every single event; that way I’m able to go and explain to the CEO, the president or the C-suite what the return on investment for the quality program is for each individual initiative.”

Dawson is also working with the ASQ and a software company to develop a spreadsheet that standardizes costs, putting a dollar figure on redraws, reagent loss, reputational damage and other factors to illustrate the costs poor quality creates.

Additional resources

  • Hospital and Commercial Lab Partnerships
    By Advance Healthcare Network for Laboratory
    A Q&A session discussing the challenges and mutual advantages of the Hospital and Commercial Laboratory partnerships.

  • How satisfied are physicians with labs
    By Anne Ford
    This article shows the results from a study done asking physicians how satisfied they were with 16 laboratory service characteristics.

  • Laboratory 2.0: Changing the Conversation
    By Lab Leaders
    How do Labs increase their strengths to increase their economic impact, survive and thrive as business centers and not just cost centers? This article discusses the solutions that will grow your lab in the right direction. 

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