New Auckland labs contractor on lookout for spare equipment

Auckland's new community medical laboratory service wants to use any spare capacity in the region's public hospital labs to reduce the equipment it needs to buy.

Labtests Auckland has won a $560 million contract from the region's three health boards to provide non-hospital laboratory testing for eight years from next July.

It will replace Diagnostic Medlab, which is disgruntled at losing the contract that will earn it nearly $79 million this year for collecting, processing and returning results on more than eight million tests.

Diagnostic and its predecessors have provided pathology services in Auckland for more than 70 years.

The Medical Association yesterday backed Diagnostic's concerns that the instability created by the changes risked driving pathologists and laboratory scientists elsewhere in New Zealand or overseas.

The health boards say the new contract will save $15 million a year, money they will spend on other health services. Some of the savings will come from reducing the number of collection centres from around 85 to 43.

Labtests hopes to hire Diagnostic staff and buy its Ellerslie laboratory but understands Diagnostic is unlikely to want to sell.

Healthscope, Labtests' Australian majority owner, estimates it will cost $18 million to establish the service "from ground zero".

Labtests chief executive Tony Bierre said yesterday that he would approach Diagnostic within days about buying the Ellerslie facility, but had also been looking at buildings suitable for a laboratory in Penrose and Greenlane.

"We need to work in with the district health board laboratories to see whether we can make use of equipment that exists in the city.

"We've had talks with major equipment suppliers and they assured us that once orders are in place equipment delivery times will be in the order of three months.

"We want to use the fixed-cost infrastructure in the most efficient way. So before Labtests commits to new buildings and new equipment, we want to make sure that if there's spare capacity, spare machines there may be ways where we can innovatively use the spare equipment."

Auckland has five medical test processing plants: at Auckland City, Middlemore, North Shore and Waitakere Hospitals and the Ellerslie laboratory.

"Does a town like Auckland need the capacity that it's got? Part of what the DHBs have been trying to do is ... reduce duplication. There aren't that many cities in the Western World that have that sort of duplication."

But Dr Tony Barker, the clinical director of LabPlus, the Auckland City Hospital laboratory, did not know of any plans for equipment-sharing or if his lab had spare equipment to offer.

A meeting had been arranged with health funders today but his pathology work would prevent his attending.

A Middlemore source said its lab had only "bits and pieces" of spare capacity.