EWC14.BO .Wed .7AM - Joseph

RE Part 2: A Preview of Lab Best Practice Metrics as Developed by
Visiun and The Dark Report
 We want your feedback (leave card or email: info@visiun.com)

 What best practice metrics are of importance to your laboratory
management team?
 In consideration, Visiun will provide more extensive metrics from Part

2.
© 2014. All rights reserved.

Five Key Cost-Cutting and Productivity Targets
 Integration
 Outreach
 Automation
 Autovalidation
 Lean
Some principals
Some misconceptions
Key success factors
Measuring success
© 2014. All rights reserved. 2

Integration

Integration
 Scale economies are nonlinear. Unit costs decrease rapidly for the
first several hundred thousand tests.

Integration
The effect of volume increases on productivity is more significant for
small institutions.

Integration
As test volume is transferred to a core lab:
 Core lab unit costs go down
 Satellite lab unit cost will increase
Lab management/CFOs: What!? Why would we do that?
Objectives of integration:
 Lower the overall system operating costs
Increases cash to the bottom line of the health system
 Indices do not really matter – cashflow matters
Politics will come into play:

 Must align incentives to motivate proper behavior
 Transfer pricing must be near market level pricing

Integration – an example
 There is an opportunity to reduce ABC Health System testing costs by
examining integration of non time sensitive testing.
 Eliminating unneeded redundancy will lead to a reduction in the following:
 Capital cost (and borrowing)
 Maintenance contract expense
 Technical and Management Labor
 Training
 Inefficiency of running small batches
 Quality control monitors
 Daily, weekly, monthly maintenance
 Document prep and annual review
 Reagents/Supplies
 Carrying cost of inventory
 Calibrators and controls
 New lot setup/waste
 Proficiency testing and inspection costs (CAP checklists and readiness)
 Correlation studies (min 2x/yr per CLIA)
 LIS Validation
. © 2014. All rights reserved. 7

Integration – an example
 The table and chart below presents a conceptual illustration of the average cost
curve for an individual platform (Immunochemistry).
 (Fixed and variable costs estimated based on various external sources.)
 At approximate immunochemistry test volumes for individual hospitals, the
cost of running separate analyzers at each location would be $2.1M per year.
 If consolidated at a single location, the operating and depreciation cost would
be $1.3M per year (65% of the cost of running the platform at all locations).

Outreach

Outreach
Measuring Success
 Four commonly used criteria for measuring success:

 Reduction of Unit Costs
 Increased Productivity
 Increased Net Revenues
 Profitability/Contribution
 The best measure?

 Hint: The first three don’t matter
 Many managers rely on the first three measures alone

Outreach
It appears from readily available information (additional revenues,
higher productivity, and a reduction of unit costs) that the laboratory
is better off with the additional business.

Outreach
An incremental profitability/contribution analysis is the only valid
means of measuring success.
 Three measures can improve yet the institution is worse off.
 Cash is the only negotiable instrument.

Automation

Automation
 A key strategy for the present and future as the medical technologist
population ages
 Some principles:
 Don’t automate a bad process
 Use lean first

KP Medical Center Automation:
A Recent Presentation at the War College
 War College presentation1: May 2006
 Washington Medical Center
 Currently in the process of removing Total Lab Automation (TLA) system from 7
million test hospital lab
 TLA installation was considered a success. Achieved anticipated Return
on Investment: Payback in under 3 years.
 As laboratory management attempted further improvements in
performance (TAT), found that TLA system was a constraint, limiting
performance improvements.
 Pilot study with TLA track turned off and using lean workflow principles
achieved immediate improvements in TAT.
 Significant improvements anticipated with re-layout of space using a lean
workcell.
1 Presented by Charlotte Taylor, AVP, Laboratory Operations

Automation
 Toyota approach to automation:
 Designed or used the wrong way, automation can inhibit flow
 Toyota avoids levels 4, 5 automation whenever possible

 Capital costs and technical complexity increase dramatically
 Reliability decreases
 If demand increases may need another expensive line

Automation
 TAT projections:
 w/ Front End Automation: 7.5 minute improvement
 w/ Lean (Phase 1): 39 minute improvement

KP Medical Center Automation:
Approach
 Assessment of automation benefits should include:

 Financial benefits (return on investment)
 There is a breakeven point
 Include the less obvious costs/benefits: Searching for add-on
specimens
 Operational benefits (improved turn around time, productivity)
 Eliminates variability in TATs (outliers)
 Improvements in safety and quality (aliquoting: reduction of
errors, safety)

Autovalidation

Autovalidation
Improved productivity of staff
Improved TAT
Reduced instrument /reagent costs

 Fewer repeats (from delta checks)
Improved quality
 Techs pay attention to a small percentage of total
testing

Autovalidation
A high proportion of labs are achieving

autovalidation rates of 70% or more

Autovalidation
FTEs required for validation of chemistry testing

Lean

Lean
Key Lean Principles:
 Identifying and Eliminating Waste
1. Overproduction 5. Excess inventory
2. Waiting 6. Unnecessary movement
3. Unnecessary transport, Conveyance 7. Defects
8. Unused employee creativity
4. Overprocessing or incorrect
processing

Case D: Operator Walking/Layout
 Workflow for Hgb A1c. Note sequence of processing steps.

Case D: Operator Walking/Layout
Flow Cytometry layout. Re-layout in a workcell with an

83% reduction in operator
walking.

Workcell design
The U shaped workcell is

efficient in both low and
high volume settings

Batching, TAT and VA and NVA Time
 The effect of batch size on TAT and staffing

 92% of TAT reduction benefit from moving from batch of 15 to 3.

Batching, TAT and VA and NVA Time
 The effect of batch size on staffing, VA, NVA work

 Batch size reduction from 3 to 1: a 47% increase in work for an
additional 6 minute TAT improvement

Case K: Process Capacity and Staffing
 At peak times there is a lack of preanalytical processing capacity

 Even the best process will fail to keep pace with demand if there is
insufficient capacity
Routine
Specimens
STAT
Specimens

Case K: Process Capacity and Staffing
 Process capacity for accessioning is not sufficient in the early AM

hours and during much of the day shift.
 “Call-ins” will almost always result in reduced staffing in this area.
 Seven scheduled accessioners are needed to effectively have 6
workstations filled, considering breaks and lunch

Using Metrics for Lean Process Improvement:
Lean
Redesign of Process:
 Step 1: Reduce batch size from 4 to 1

Lean
 Step 2: Change flow: STAT samples no longer go to shelves, but

immediately to accession staff
 Step 3: Re-layout of workstations

Lean
 Results

A Preview of Lab Best Practice Metrics as
Developed by Visiun and The Dark Report

The Performance Insight™ Dashboard:
The Importance of Metrics & Daily Management
 “Quality means doing it right when no one is looking.”

 Henry Ford
 “You can expect what you inspect.”

 "You can't manage what you can't measure."
 W. Edwards Deming
 “If you are observing every day you ought to be finding

things you don't like, and rewriting the standard
immediately.”
 Taiichi Ohno
 Metrics &
The Performance Insight™ Dashboard:
The Importance of Metrics & Daily Management
 “What’s measured, improves.”

 Peter F. Drucker
 Management Consultant,
Educator and Author
“People do what you inspect, not what you expect.”

 Louis V. Gerstner, Jr.
 Chairman of the Board and CEO of IBM

Using Metrics for "Best Practice" Performance:
Some Problems with Metrics
 Some of the problems with metrics

 Not linked to strategic goals
 People cannot affect the metrics
 Long delays, not produced in a timely manner
 Not granular enough – e.g. monthly trends
 Focused only on downstream outcomes or measure only outputs,
not inputs
1 Portions of this section are adapted from Arnsdorf Associates lecture notes © 2003.

Using Metrics for "Best Practice" Performance:
Some Problems with Metrics
 Why have metrics?

 Analyze and redesign the process
 Verify and quantify improvement and from process changes
 Sustain Lean improvements, provide feedback to operators
 Can help motivate the proper behavior
 Indicates when the process is out of control limits
 Helps creates the proper focus on the process – “you measure
what you value”
 Metrics test
 How often are they updated and distributed?
 Does everyone use the same metrics or are they different for
different groups?
 Can you affect them?
 Do they affect your actions/performance?

Key Performance Indicators:
 What laboratory mangers are tracking – from a

comprehensive survey of lab directors
 Goals
 Attainment of Goals
 Including:
 Turnaround Times
 Productivity
 Quality
 Patient Safety
 Customer Satisfaction and Service
 Personnel
Turnaround Times
 Lab managers tracks these tests in high proportions.

 Frequently TATs are monitored on only a weekly or monthly basis.

Turnaround Times - Goals
 TAT targets vary widely across laboratories.

 While the ranges are similar for IP STAT and ED testing, most labs
have shorter targets for ED testing

Turnaround Times - Metrics
 Visiun labs are now meeting and exceeding the performance of the
best lean early adopters.

Turnaround Times - Metrics
 Visiun clients demonstrate exceptional performance in every measure

 90 percent completion – a measure of outliers
 Not just in-lab TATs, but overall TATs, e.g. collect to result.

Performance Insight™ Benchmarking:
Database Overview
Peer Comparisons
 Dashboard users have access to industry’s largest peer

comparison turnaround time database
 Current 270 lab database covers all clinical path procedures
(500 million performance measurements)
 Academic medical centers, teaching, community hospitals
 Children's hospitals
 Lean labs
 Specialty labs (ED, Oncology, clinic)
 Users can network with best practice labs
 Best practices may be result of Lean methods, technology or
both.

Productivity
 Autovalidation
 Productivity
 Order entry
 Phlebotomist
 Receiving
 Technical
 OT hours

Productivity
 Autovalidation – an important part of technical productivity and quality

 Rates higher for OPs, a more normal population

Productivity
 Peak productivity levels for individual receiving staff

Quality
 Specimen Quality:
 Rates of Hemolysis, QNS
 Order entry errors
 Test cancellations
 CAP Proficiency Surveys
 CAP Inspection
 Blood culture contamination rates

Quality

Patient Safety
 Critical value report times

 Proper patient ID
 Hand washing
 Hospital acquired infection rates

Customer Satisfaction and Service
 Physician surveys
 Patient surveys
 Phone response time
 Lost/missing samples
 OP waiting times

Personnel
 Management satisfaction
 Employee satisfaction
 Attrition
 Needle-stick injuries

RE Part 2: A Preview of Lab Best Practice Metrics as Developed by
Visiun and The Dark Report
We want your feedback (leave card or email: info@visiun.com)

 What best practice metrics are of importance to your laboratory
management team?
In consideration, Visiun will provide more extensive metrics from Part 2,
e.g.:
 TATs for key testing
 receive to result, order to result
 median and 90 pct completion
 Productivity of technical staff, phlebotomists
 Critical value report times

Conculsion
 Questions, comments?

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RE Part 2: A Preview of Lab Best Practice Metrics as Developed by

Visiun and The Dark Report

 We want your feedback (leave card or email: info@visiun.com)

 In consideration, Visiun will provide more extensive metrics from Part

© 2014. All rights reserved.

© 2014. All rights reserved. 2

© 2014. All rights reserved. 3

© 2014. All rights reserved.

© 2014. All rights reserved.

Lab management/CFOs: What!? Why would we do that?

Politics will come into play:

© 2014. All rights reserved.

. © 2014. All rights reserved. 7

© 2014. All rights reserved. 8

© 2014. All rights reserved. 9

 Four commonly used criteria for measuring success:

 The best measure?

© 2014. All rights reserved.

© 2014. All rights reserved.

© 2014. All rights reserved.

© 2014. All rights reserved. 13

© 2014. All rights reserved.

1 Presented by Charlotte Taylor, AVP, Laboratory Operations

© 2014. All rights reserved.

 Toyota avoids levels 4, 5 automation whenever possible

© 2014. All rights reserved. 16

© 2014. All rights reserved.

 Assessment of automation benefits should include:

© 2014. All rights reserved.

© 2014. All rights reserved. 19

Improved productivity of staff

Reduced instrument /reagent costs

© 2014. All rights reserved. 20

A high proportion of labs are achieving

© 2014. All rights reserved. 21

FTEs required for validation of chemistry testing

© 2014. All rights reserved. 22

© 2014. All rights reserved. 23

© 2014. All rights reserved.

 Workflow for Hgb A1c. Note sequence of processing steps.

© 2014. All rights reserved.

Flow Cytometry layout. Re-layout in a workcell with an

© 2014. All rights reserved.

The U shaped workcell is

© 2014. All rights reserved.

 The effect of batch size on TAT and staffing

© 2014. All rights reserved. 28

 The effect of batch size on staffing, VA, NVA work

© 2014. All rights reserved. 29

 At peak times there is a lack of preanalytical processing capacity

© 2014. All rights reserved.

 Process capacity for accessioning is not sufficient in the early AM

© 2014. All rights reserved.

© 2014. All rights reserved.

 Step 2: Change flow: STAT samples no longer go to shelves, but

© 2014. All rights reserved.

© 2014. All rights reserved.

© 2014. All rights reserved. 35

 “Quality means doing it right when no one is looking.”

 “You can expect what you inspect.”

 “If you are observing every day you ought to be finding

 “What’s measured, improves.”

“People do what you inspect, not what you expect.”