Auckland's district health boards are considering bringing Diagnostic Medlab back into the provision of community laboratory services because of persisting problems with the newcomer Labtests.

The Herald learned today of the explosive development in the ongoing row over the $70 million-a-year contract for community pathology in the region.

Diagnostic Medlab (DML) lost the contract to Labtests in a competitive tender.

The three health boards' spokesman, Auckland DHB chairman Pat Snedden, is preparing to make a public announcement next week. He has refused to speak to the Herald this week.

It is understood the DHBs have been negotiating to contract Diagnostic Medlab (DML) to provide some part of the service currently within the exclusive, eight-year contract held by Labtests.

One source said the DHBs wanted to contract DML for a "small percentage" of the overall community laboratory service. Another said options being considered included giving one geographical area to DML, or possibly all the private hospital work.

Doctors have complained about issues like turnaround times for test results, some results not turning up, and problems arranging house-calls for tests. Labtests says it is working hard to address the problems.

On September 13, two days after Health and Disability Commissioner Ron Paterson had publicly expressed his concerns about Labtests, Mr Snedden announced the appointment of a seven-member team of senior DHB officials who would take control of safety and quality functions at Labtests.

A leading primary care group, ProCare Health, says Labtests is improving slowly, but has a long way to go.

Medical Association chairman Dr Peter Foley said that if DML was brought back to provide some part of the service, "it might be a step in the right direction, a move away from the risks of having a single provider".