Long-term alliance for pathology equipment and technology acquisition: a paradigm shift for improved quality and efficiency

Objective: Personnel costs are the largest single budget item in the clinical laboratory, other major expenses being equipment, analyzers, blood and blood components, and cost of day-to-day consumables. This report describes our experience with developing a long-term relationship with a single major vendor as a paradigm shift from the traditional multiple vendors, multiple contracts, and recurrent extended negotiations. Our objective was to develop a long-term approach for replacement of effete equipment and upgrades to operations in a pathology and laboratory medicine department in collaboration with vendors providing equipment and services. Methods: Major vendors were invited to visit the department to analyze the workload and workflow and suggest integrated solutions to meet the goals of the department. Multiple iterations of the proposals were evaluated, and a recommendation made to the medical center leadership. The vendor, the medical center, and the department jointly developed a 15-year partnership plan to improve the operations of pathology services. The agreement encompasses a range of management and performance criteria for both sides. The salient items discussed were laboratory staffing, turnaround time, workload change, test insourcing, reference laboratory costs, and scholarly productivity and teaching. Results: The agreement reduced laboratory staffing by 21%, eliminated stat tests by reducing the turnaround time for routine tests to less than 45 minutes for 90% of tests, with an increase of 9.1% in the number of tests, Cost avoidance in salary and reference laboratory costs was $3,424,136/year against an expected target of $2 million in total savings, despite not including cost avoidance from promoting appropriate use of laboratory testing for inpatients and increase in revenue from increase in ambulatory testing. Vizient score in laboratory utilization improved from the 94th to 76th percentile. Scholarly output increased by more than 100%. Conclusion: This model of a long-term alliance with a chosen vendor led to improvements in quality and efficiency.