Core Lab: Build New Offsite or Renovate the Current?

Contributing LabLeaders: Michelle Barthel, MT(ASCP), MHA; Eyas M. Hattab, MD, MBA; Myra Wilkerson, MD, FCAP; and Jeff Myers

OPERATIONAL

Article highlights:

When it comes to creating a core lab, most health systems must decide whether to build a new facility or renovate what they have.
Key considerations include financing and expectations for the completed facility.
It's important to accurately project your organization's needs before launching any core lab construction project.

Health systems that rely on a core laboratory for their testing services must eventually answer a difficult question: Does it make sense to renovate that lab so it can continue to handle the demands of your patient population, or would it be wiser to build an offsite facility, especially in light of declining inpatient testing?

We recently brought several LabLeaders together and asked them for their thoughts on the remodel-build debate. The key takeaway from that conversation: The decision depends on the specific needs and circumstances of the organization. They agreed that you may be able to make a business case for either option, but be sure to look from every angle before you do.

A Matter of Funding

First and foremost, suggests Michelle Barthel, MT(ASCP), MHA, System Director of Laboratory Services at Regional Health in Rapid City, South Dakota, consider what the respective projects will cost and ask yourself the question, “Do you have the funds?" Many people assume renovating is cheaper than building from scratch, but that's not necessarily true, Barthel says. Her advice: Run the numbers from start to finish before you do anything else.

Eyas Hattab, MD, MBA, Chair of Pathology and Laboratory Medicine and the A.J. Miller Endowed Chair in Pathology at the University of Louisville, agrees. At his organization, Hattab says, they decided to build a new core lab, but the facility itself was just the beginning. “We made investments in the physical space, we made investments in new technologies, we made investments in IT, and we made investments in logistics." If you don't look at everything before you make the leap, he says, you could “pay the price" down the road.

On Capital Investments

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Myra Wilkerson, Jeff Myers and Eyas Hattab

Investigate the Infrastructure

According to Myra Wilkerson, MD, FCAP, Chair of the Division of Laboratory Medicine with the Geisinger Health System, it's also important to be perfectly clear about any limitations you currently have. In Geisinger's case, Wilkerson says, they had a core lab in the basement of a building that was at least 100 years old. “The walls were a foot thick, and just adding an electric outlet was a major construction project. If you needed a new centrifuge in the blood bank, you were out of luck." They ultimately moved to a brand-new building, she says, in part because the facilities team backed up their argument that relocating was their best option. “They were the ones who were really desperate to get us out of there because they just could not support us with the water supply, and electrical and HVAC that we needed."

Consider the “Value Proposition"

In either case—building a new core lab or renovating a current facility—you may achieve savings for your organization that are difficult to estimate up front, says Jeff Myers, CPA, Vice President of Consulting at Accumen. For example, if you decide to abandon your current lab, “identify the costs that will go away," he says. These could include the costs associated with repairing aging plumbing—as at Geisinger—or even those related to dated technologies and their inefficiencies. On the other hand, if you keep the core lab where it is, you may spend less on courier services because of its onsite location

And finally, suggests Myers, consider the long-term value proposition of potential integration with other health systems. If your organization plans to acquire competitors in the coming years, imagine how a renovated version of your current lab might work in that scenario—and compare it to what you could offer with an entirely new facility.

Be “forward-looking," Myers urges, because any physicians that join your organization in the future will have “expectations around service levels." To build or to renovate? Consider what they would want as well, he says, and then decide which option will best meet everyone's needs.

Contributing Lab Leaders

Michelle Barthel, MT(ASCP), MHA

Region Director

Premier, Inc.

Eyas M. Hattab, MD, MBA

AJ Miller Professor and Chair

Department of Pathology at University of Louisville

Myra Wilkerson, MD, FCAP

Chair, Laboratory Medicine

Geisinger Health System

Jeff Myers

Vice President Consulting Services

Accumen Inc.

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