1. DRIVE TOWARDS CONSOLIDATION
Economic pressures have resulted in government budgets
becoming more constrained and debt levels rising.
This has affected the public healthcare sector in particular.
Due to decreased budgets for pathology organisations, we
are seeing a trend of consolidation incentives in order to
cope with change.
Finding ways to operate more efficiently and deal with
reimbursement policies has led to the consolidation
trend, where providers are required to do more with less
and cope with the economies of scale. (2014, Healthcare
consolidation on the rise; Dvorak, Katie.)
BENEFITS OF CONSOLIDATION
The consolidation of services enables the organisation
to improve productivity, efficiency and quality, while
achieving savings on their annual budget. In the pathology
industry, the difference in the cost per test between
organisations is caused by two main factors: 1) the scope
of operations; and 2) the deployment of staff.
Bigger organisations can allocate their fixed cost across a
larger number of tests performed. There is also stronger
purchasing power for a bigger company in terms of
equipment and reagents. This means the difference in
equipment cost per test would be twice as much for a
laboratory processing 4-million tests per annum compared
to one processing 30-million tests, for example.
Equipment utilisation can fluctuate between 20% and
80% and this can be improved significantly through
consolidating more tests on to fewer analytical platforms.
The management of demand and capacity becomes more
effective through allocating resources against sample
arrival peaks, as well as absorbing more samples at times
when traditionally no work is being processed.
A further benefit of consolidation is an increase in the
productivity of current staff in the laboratory, as well as
more effective allocation of the required FTEs and the
use of their skill-mix. (DoH, Consolidation of Pathology
Services, 2009.)
UNDERSTANDING THE CURRENT
ENVIRONMENT
In our experience, having completed multiple
consolidation projects across the world, we have
realised that most organisations have either analysed or
implemented the merger of specialist departments around
technology where possible. This has made it troublesome
to extract additional savings through consolidation, which
is why we are likely to see movement toward a future
where technology alone does not drive consolidation.
Understanding consolidation in the current environment,
especially within the public sector, becomes more difficult
as savings start to lessen and become harder to achieve.
The next savings are not as obvious as before and there is
a greater risk to the organisation in achieving the benefits
of consolidation. This is where accuracy and certainty are
critical factors.
There have been successes and failures through a
standard route of trial and error in consolidation
within pathology organisations. However, when the
risks become greater than the perceived reward of a
successful consolidation project, there are two options
for an organisation to follow: 1) do not proceed due to
high risk and cost of failure; or 2) be absolutely certain
about the impact of change through consolidation prior to
implementation, in order to realise quantified savings.
How can a pathology director be absolutely certain
that the consolidation incentives will be realised in
their laboratory?
CONFIDENCE IS ESSENTIAL
When a consolidation initiative is taken on board by an
organisation, it is important to understand the exact
impact of volume changes with regards to resource
capacity and predictable turn-around time (pTAT).
There are multiple variables in the pathology laboratory,
rendering accuracy in decision making critical. Our clients
also cite the importance of knowing not only where
resources become available, but also the increased impact
on existing resources performing current tasks in
specific departments.
HOW PINPOINTBPS™ CAN HELP
PinpointBPS™ is a service that identifies real improvement
and cost-saving opportunities in complex environments,
such as diagnostic laboratories. PinpointBPS™ is based on
Lean and Six Sigma principles and it has been specifically
developed to provide pathology directors with the
required level of accuracy and detail to support
every decision.
Through PinpointBPS™, we have the capability to analyse
the technical feasibility of consolidation in depth within
an organisation. This has enabled identification of exact
departments where the minimum required resources are
needed due to workload changes and where resources
can be reallocated to achieve maximum savings.
The certainty provided by PinpointBPS™ enables decision
makers to follow through with implementation while
understanding the holistic impact of change initiatives
on their laboratory.
LTS has extensive experience in
understanding the operations of the
diagnostic industry, as well as long term
specialist modelling and decision support
knowledge. This enables LTS to offer your
organisation PinpopintBPS™ as a viable
continuous improvement asset resulting
in trust, accuracy and certainty to support
your decisions - from feasibility through
to implementation.
OUR
POINT
OF VIEW
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ISSUE
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www.LTSconsulting.com
POWERED BY
CONFORMITY IN
CONSOLIDATION
BY ANTTI LEINO, SENIOR INDUSTRIAL ENGINEER
How are the public pathology laboratories
dealing with decreased operational budgets
and sustaining increased test volumes, while
managing to keep their service up to the
required quality?