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Stepwise Success

Economies of Scale

Published March 27, 2015 6:39 AM by Scott Warner

Are we seeing the last gasps of community hospital laboratories? Sometimes I wonder. A 2007 article in Clinical Chemistry states, “Many laboratories already outsource esoteric tests to other (reference) laboratories, but outsourcing should also be considered for non-esoteric tests (6). The motivation to outsource should be that a specific test can be done better, more often, and at a lower cost in an external organization. In other words, the external organization has a higher level of expertise, is more efficient, and can take advantage of greater economies of scale.”

The “O” word isn’t new. I’ve heard “economies of scale” so many times since 2007 the phrase has almost lost its meaning. Bigger is better, cheaper, and smarter. It is, in the words of bean counters that are the new agents of change in our industry, “the new normal.”

It’s true that bigger organizations have greater clout with vendors, have more resources, and can do more with less. The greater the ratio of billables to non-billables (quality control, calibration, etc.) the cheaper the cost per test and the higher the productivity of the laboratory. This industrial approach to laboratory medicine makes perfect sense for routine screenings, esoteric testing, and even urgent work if the service can be affiliated with Big Brother or outsourced in a way that doesn’t sacrifice quality.

The laboratory has always been driven by bigger and better technology, but it comes at a price that is increasingly scrutinized. As a pathologist told me recently, “There is nothing unique in what we do.”

Bench techs have a different story. The value of the generalist in a small laboratory is in the details of care: faster turnaround times, multitasking across departments, and a personal relationship with team members that spans disciplines. I’ve worked in medical centers where I have arrived at work in the dark, worked a double, left in the dark, and never seen a soul outside the laboratory. That almost never happens in a small hospital. Local, personalized care has a unique quality impossible with “economies of scale.”

Next, I’ll consider how to make “what we do” unique.

NEXT: Get Out of the Basement

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About this Blog


    Scott Warner, MLT(ASCP)
    Occupation: Laboratory Manager
    Setting: Critical Access Hospital
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