Nexus News

Thanks for being a subscriber and following the Nexus News. There are articles and research bits for everyone in the industry, from lab manager to marketing director. Be sure to view the article archives for past issues at: Nexus News Archives

Developing an Economic Strategy to Maximize Clinical & Pathology Lab Space

Jared Williams, Consultant, Nexus

Hospital and laboratory space is an expensive resource. Nexus research indicates that the cost per square foot for new lab construction can range from $260 to almost $700 depending on the location and lab type[i]. Renovating lab space is not much different with a price tag of $250 to $350[ii]. Although there has been a slight decrease in costs in the past year, the value of medical space is expected to increase over the long-term.

As laboratories transition from a "cost center" mentality, to a "revenue generating" mentality, this lab space expense is an increasingly important variable in the financial mix[iii]. Other hospital departments have been successful at procuring and/or managing medical space to create revenue generating services, so why not the lab[iv]? To this end, some of the questions facing the lab manager are: how much space should a particular lab function utilize, what is the revenue per square foot, and what is the total cost of operation (to include lab space costs)? These and other questions should be answered to justify lab expansion, and worst-case, to prevent the loss of lab space to other hospital functions.

The following are a few strategies that Nexus suggests will benefit both laboratory management and the vendors of laboratory instruments.

Get Lean with lab design:

Lean has been a hot topic regarding laboratory process improvements in recent years, mainly because it just makes sense. One of the greatest Lean transformations occurs within design. A proper Lean designed laboratory is able to both maximize resources and minimize direct lab costs, thus providing greater value to the bottom line.

Track and continually monitor space-usage statistics[v]:

Laboratory management needs to maintain accurate data on the usage of every lab function. If they find that certain functions, utilizing a space/usage ratio, tend to be high compared to their counterparts, management should consider the benefits of outsourcing those functions and substituting solutions that minimize the space/usage ratio.

A quick example helps demonstrate the space/usage ratio: Suppose two labs utilize two different instruments for the same function yet they perform the same number of tests per week: 100. Instrument (A) demands total space of 100 ft² while Instrument (B) demands 400 ft². More... Read the Full Article

[i] All figures are in U.S. dollars

[ii] Basic analytical chemistry space - toxicology and more technical space can cost upwards of $800 per square foot

[iii] Many Nexus clients are managing labs that are the second or third highest revenue producers for the hospital

[iv] i.e., surgery, radiology

[v] The space-usage ratio is defined as the total ft² or m² of space required in order to perform a particular function divided by the total number of units measured

Tools of the Trade: Value Stream Mapping

The Value Stream Map (or VSM) is a visual tool used to broadly understand the workflow of an operation. Like all management tools, there are slight variances in how they are constructed, but generally they depict the inputs to a system, the outputs and the major steps involved in converting the inputs to outputs. VSMs also depict the flow of information as it is used to support the operation. Finally, the VSM will also track the (cycle) time of how long it takes an item, like a specimen tube, to journey through the system.

The scope of a VSM will depend on the goals of the project. In the clinical laboratory the scope is typically the specimen tube from the arrival time in accessioning to the end point at specimen archive and test result. A VSM could be used to track a nursing position or the path of the patient medical record. If a hospital administrator is interested in improving patient satisfaction, then the VSM might focus on the "patient journey" from admitting to discharge, with the patient being the product.

Regardless of the application, VSM is an important tool. Training for VSM can be performed by Nexus in your operation, or if you are evolving into a Lean culture, Nexus can provide the training needed to create internal experts.

Nexus Event Schedule 2011

G-2 Molecular Diagnostics 2011, April 13-15 in Boston

Executive War College on Laboratory and Pathology Management, May 3-4 in New Orleans

ASM (American Society for Microbiology), May 21-24 in New Orleans

AACC (American Association for Clinical Chemistry), July 24-28 in Atlanta

G-2 Lab Institute 2011, October 19-21 in Arlington

AABB (American Association of Blood Banks) October 22-25 in San Diego

AMP 2011 Annual Meeting, November 17-19 in Grapevine, Texas

Partnerships

Market research partners are being sought for anatomical pathology, molecular diagnostics and general clinical chemistry studies. Contact Nexus for more information (honorariums typically provided): Click to Contact Nexus

Service in Focus: Why Consulting?

After working with thousands of healthcare organizations over the past 15 years, we at Nexus have discovered that there are primarily four reasons that organizations go outside the company in order to use a "consultant".

1. Raw capacity

Sometimes the organization has more work than they can handle in the short-term.

2. Speed

Whenever in-house experts are wrapped up in other projects.

3. Expertise

Expertise is needed that might not be found in the organization.

4. Innovation

Looking through a different lens will sometimes lead to new ideas on products and services.

Nexus has applied industrial engineering, quality initiatives, and management science techniques to the healthcare industry for 5 years with consultants who have been in the industry for 20+ years. Contact us for any needs.