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Laboratory partnership: A strategic relationship that can offer efficiencies and cost-savings over the long haul

Audio Podcast

read time: 3 minutes


Management & Operations

When a healthcare institution chooses to collaborate with an outside laboratory, the goal should not be to hire a vendor, but instead to gain a strategic partner. That was the message from Mike Lukas, vice president and general manager of Health Systems at Quest Diagnostics, on a recent episode of the Diagnostics Dialogues podcast, “Growing as a Laboratory Partner,” in which he spoke about the range of options in forming a partnership, the  importance of trust between a health system and the laboratory, and the need to remain open to changes that inevitably arise as the partnership evolves.

Lab partnerships take advantage of Quest’s size and expertise to offer benefits health systems could not always achieve by themselves. The goal is to offer the institution a customizable arrangement that meets its unique needs. “We serve up a number of choice points that could drive value for their organization, to improve quality or service for their patients.”

Leveraging global purchasing and hiring for partners

To illustrate, Mike pointed out that health systems in the US collectively spend about $47 billion in laboratory services. About 50% of all that is for labor, while another 35% is in the area of supply chain. “So, we can help influence up to about 85% of that spend. We buy more equipment and more lab supplies than probably any individual entity in the world. And we can bring that leverage to bear for our clients.”

Other options include working with Quest to increase automation, develop outreach, and improve logistics, all of which can increase the efficiency and bottom line of the institution’s lab system.

Staffing is a major issue for any lab. Even more than ensuring an adequate number of staff, is ensuring they are highly trained. “Whether we're talking about oncology, or next gen sequencing, or investments in molecular diagnostics, those are expensive, and require highly sophisticated people to run these services.” Healthcare facilities need to ask whether they can build such a service themselves, “and can they afford to build it and run it at a suboptimal scale? Anybody can buy a machine, but keeping current with changes in technologies and the most advanced thinking in diagnostics is really challenging.

Creating, and maintaining, a strategic partnership

Once a healthcare system decides to explore forming a lab partnership, it can take anywhere from 6 months to a year to finalize the details. It involves significant due diligence for each part of the partnership, and extensive conversations to match the services offered to the needs of the institution.

Not only does the deal usually evolve during the negotiation from its initial outline to its final form, “but other things are going to change over time as we have the opportunity to work together. And we develop a process to deal with that change, and to work with it in a fair way for both parties.”

“When you're in a partnership like this, it's not an us-versus-them type of thing. Understanding what the other partner’s goals and objectives are and being continuously focused on delivering on those goals and objectives, is key to the whole thing. It's not a vendor relationship. It's a strategic relationship, which has much more value over the long haul.”

You can listen to the entire podcast episode here:

Use of the terms partner and partnership are not intended to imply that a legal business entity exists, the terms are used to connote a collaboration to achieve an objective.

Page Published: May 05, 2023