Central Plains Laboratories (CPL) was formed as a joint venture between Hays Medical Center (HMC) and Park City Solutions (Chi) upon the purchase of the pathologist-owned Hays Pathology Laboratory in Hays, Kansas. HMC wanted improved service with expanded blood banking for its regional open heart program. Chi was selected as a venture partner for its expertise in laboratory management and outreach marketing. Both HMC and Chi were committed to best practices in laboratory testing, high customer service levels and expanding the market area.
The challenge included:
- Making major instrumentation changes.
- Improving service levels for HMC inpatients.
- Improving service levels for CPL’s outpatient customers.
- Expanding the market and creating a profit.
Since the beginning, the CPL staff had the expertise and dedication that made CPL a regional laboratory of note. A strong management vision and direction, employee empowerment and accountability, as well as marketing and client support leadership, were key elements in achieving success.
As the managing partner, Chi provided:
- The CEO.
- Compliance monitoring.
- Marketing and Sales Management expertise.
Chi also had the capability to provide specialized expertise when needed. Changes were implemented to put CPL on the fast track to:
- Provide HMC with service levels needed.
- Increase employee satisfaction.
- Expand market penetration.
- Improve profit contribution.
As a result of these changes, profits quickly rose. Profit improved even with the burden of major computer installation problems that continued into the third year of the program, which led to an aborting of the installation.
Initial goals were to:
- Commit the supervisors and managers to team management.
- Empower them to make decisions affecting their area’s productivity while being accountable for their personnel and financial resources.
- Emphasize value of each individual within the organization and necessity of each position no matter what the degree of education.
This focus resulted in reducing the employee turnover by 50% while improving productivity and service for HMC.
Results and Value
Concurrently, measures were taken to:
- Reduce cost-per-test.
- Improve workflow.
- Install new equipment for all chemistry and immunology testing.
- Upgrade hematology instrumentation
This not only reduced cost-per-test and gave faster throughput, but also provided excess capacity to keep ahead of the growing business. A new laboratory facility was designed to facilitate the workflow. When the laboratory operation was relocated with a new equipment “go-live” over a weekend, most of HMC’s physicians did not even know, because there was no interruption in laboratory services.
CPL’s CEO, contracted from Chi, had a background in commercial laboratory management and marketing. He understood that key to any laboratory’s success in outreach, Operations and Marketing must work together as a team to determine what is best for the targeted markets. The Chi Marketing Consultant worked closely with the CEO and CPL Management Team Leaders in gearing the laboratory towards the needs of the commercial outreach market. This affected the decisions in making:
- Instrumentation changes
- Shifts and staffing
- Courier routes
- Client service levels
- Billing capabilities
The Marketing Consultant hired and trained the CPL sales representatives which resulted in doubling the average new sales productivity per representative. Technical service representatives were trained and put in place to work with clients over large geographic areas and to help the pathologists be involved with nearly 70 hospitals in six states.
Client service was emphasized:
- The culture of “the client comes first” was adopted.
- The value of the individual was enhanced throughout all areas of the organization–whether it meant a hospital inpatient, clinical outpatient, or employees.
- Employees were made to understand that the smallest thing mattered and every position within the laboratory is necessary to provide the client the needed support.
During the third year of the joint venture, a well-respected and successful regional laboratory made an overture to acquire CPL. HMC capital needs led to an agreement and a sale of CPL that same year. Sale proceeds resulted in a tripling of the original investment.
HMC continues being served through a laboratory outsource contract which protects its interests for excellent laboratory services. The result of this venture was a huge win-win conclusion for all parties.