Labtests problems no surprise

One of the issues dominating newspaper headlines over the past several weeks has been the performance of Labtests, the new provider of medical laboratory services in the Auckland region. We’ve heard about long waiting times for tests, long waiting times for urgent lab test results, difficulties in accessing testing facilities and errors in tests conducted and reported. These are entirely predictable consequences from the contracting approach pursued and, in fact, the Green Party did predict them.


Of course this initial period of Labtests’ operation was always bound to be subject to intense scrutiny, both arising from ‘hypervigilance’ on the part of funders and an anxious public, and from an intent on the part of the previous provider, DML to oust Labtests and reclaim its previous role. Had this level of scrutiny been applied to DML’s performance for a comparable period in the past, it remains to be seen how many errors or adverse events would have been detected.

Service deterioration

Nonetheless, some deterioration in service quality seems incontrovertible. It seems clear that doctors have experienced unacceptable and dangerous delays in accessing test results and speaking with pathologists. The reduction in collection centres (certainly justifiable in some areas) has resulted in whole areas being left without collection centres. Some collection centres are in entirely inappropriate locations (for example, the one I saw on Waiheke Island – the only one – that requires scaling two steep flights of stairs to get in).

Achieving savings by cost-shifting

Certainly saving $15 million on the contract (if indeed the promised savings are realised), to be made available for other health services, is not to be sneezed at, and at least one columnist has suggested that the previous service was inappropriately ‘gold-plated’. However, where a provider is able to reduce its price for a service by reducing access to that service or compromising timeliness then these savings are achieved by shifting cost  to users of the service, and thus shifting the boundary between publicly and privately-funded health services, without consultation with the public.

This doesn’t just apply to the health sector, but to all public services. We need to find ways to ensure that we receive as much value for money that we can where services are contracted out, without achieving this simply by shifting costs onto those members of the public who need those services.

About Kevin Hague 163 Articles

Green Party Member of Parliament

3 Comments Posted

  1. We should learn from the way the French manage their water. There are 130,000 local authorities in France and they own their water infrastructure. BUt they each franchise out the management to the five private companies who manage the systems. The franchises are for fifteen years and have different start and finish dates. Each year about 10% come up for tender and about 6% of the total change hands. So each company is continually sharpening its pencil.
    Similarly, Auckland should have been divided into say fifteen “blood farms” and tendered out on a 15 year franchise basis so that only one would come up for tender each year. Competitive bidding, comparative performance monitoring, and no major disruptions for staff etc.
    I promoted this several times but no one listened. Why do we not learn from other people’s experience?

    Of course we don’t need Medlabs or anything any more. Just pretend you are a dog and find out what modern technology can deliver outside the medical union.

  2. Hypervigilance Kevin? – You are THE Man, no doubt – look after these fond isles will you? Something far away beckons me….

  3. A few years back I was involved on a UK based PPP outsourced deal that was changing providors. As soon as the result of the bid was known (ie we lost) then a team was set up to migrate the organisation from being under our wing to being under the newcomer.

    Thus as the service transitioned from the old supplier to the new there was no disruption to staff or clients.

    And in this Auckland malarky it’s DML who have been getting off scott free here; they appear to have made no attempt to manage the transition from them to Lab Tests in a seamless manner, rather trying their best to capitalise on the situation making it worse in whatever way they can.

    Next time this happens I hope (a) someone remembes to write transitional arrangements into the contract, and (b) we remember how damaging DML were to the handover process.

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