Don't Let Your Lab Get Lost in Transition

Contributing Lab Leaders: Michael Bennett, PhD, FRCPath, FACB; Duane Fitch, CPA, MBA, FACHE; Diana L. Kremistke, MHA, MS, MT(ASCP); James Nichols, PhD, DABCC, FACB; Steven Zibrat, MS, MT(ASCP); and Eyas M. Hattab, MD, MBA

Market Forces

Article highlights:

Clinical labs may be the last to know when their organization is involved in a merger or acquisition.
This lack of awareness can impact care quality and the bottom line.
Labs should seek a role in planning.

Mergers, acquisitions, and expansions are a daily fact of life in today's complex provider environment. The first quarter of 2017 was the 10th in a row with more than 200 major healthcare deals in the U.S., according to a report from consulting firm PricewaterhouseCoopers.

Clinical labs may be the last to know when their parent organization is involved in a deal, and they are expected to throw together a plan to merge or consolidate lab operations after the fact without having been part of the planning or decision-making process. "We've had to put together a package rather quickly after the event has taken place in order to make the lab part of the merger actually work," says Michael Bennett, Professor of Pathology and Lab Medicine at the University of Pennsylvania, chief of lab medicine at Children's Hospital of Philadelphia, and currently the president of the American Association for Clinical Chemistry. "Other forces take over, because we're not part of the initial process."

Duane Fitch, a partner at the accounting firm Plante Moran, concedes that he doesn't give the lab much thought when he advises on healthcare mergers. "These mergers are not being done for that purpose," he says. "Unfortunately, many operating units are left to pick up the pieces. I've put off a lab [IT] conversion because merger talks were under way, and we didn't want to make a decision that would be incompatible, but that was reactive and not proactive."

The lab needs to be part of the planning process to make smooth transitions for patients and the rest of the organization, says Steven Zibrat, Laboratories Manager of Quality for The University of Chicago Medical Center. "We've heard, 'Hey, we're opening up this place on Friday. It's Tuesday—what can you tell me about setting up to collect specimens?'"

How can lab directors make top management understand that it's in everyone's best interest to involve the lab in planning for a merger, acquisition or other major change?Leaders from some of the nation's top labs say it's not easy, but it's worth the trouble. They offer these tips:

Tip 1: Think like the C-suite

"We wanted to become more top-of-mind in the C-suite" after Geisinger Health System opened a state-of-the art core lab, says Diana Kremitske, Vice President of Laboratory Operations there. She and her staff did this by establishing specific financial and operational goals, tracking the lab's performance against those goals, and presenting those quantified results regularly. "The more we can get out in front of them what our value is in the laboratory, the better off we are in the long run," Kremitske says.

Tip 2: Identify benefits

"One of the overall goals of a merger or acquisition is to make two plus two equal five," says James Nichols, Medical Director, Clinical Chemistry and Point-of-Care testing at Vanderbilt University School of Medicine. The challenge for labs is to maintain the benefits they already offer to their organizations, and figure out how they together can add value—through supply chain efficiencies, economies of scale, or the ability to expand the lab's business.

Tip 3: What can you do differently next time?

Combining two different lab information systems or merging an LIS with a new organization's electronic health record system are not overnight jobs. Consolidating staff and getting everyone up to speed on consistent policies and practices? These also are neither quick nor easy. "When we acquire a new organization, we figure out what's working well, and what's not working well," Kremitske says. " Sometimes there are things that you have to fix immediately, or integrate, in terms of quality or other types of issues. Do we integrate with the LIS system? Do we make sure the same information is flowing through all of our laboratories?"

The lab's activities affect every facet of care quality and patient and physician satisfaction. It's probably not the only department lacking a seat at the table during a merger, but considering the potential extra costs, savings, and revenue at stake, it may deserve one more than most.