A recent engagement with a leading health system in the Upper Midwest clearly illustrates how an integrated approach to laboratory management can significantly enhance financial, operational, and strategic outcomes. The health system, spanning multiple hospitals and clinics across both urban and rural settings, faced challenges common in many regional healthcare networks: inconsistent operational standards, high operational costs, and complex compliance requirements.
Our team conducted a comprehensive assessment combining rigorous data analysis with in-depth, on-site evaluations across several laboratory locations. We reviewed detailed financial statements, test utilization and payor data, payroll details, along with reference testing and supply expense. In total, our experts visited 11 different sites, engaging directly with laboratory staff, pathologists, and system leadership.
The assessment revealed significant opportunities, not just in financial terms—though these were substantial, with recurring annual savings of nearly $9.5 million identified—but equally important were the operational and strategic enhancements that we uncovered. Some of the transformative initiatives we recommended included:
Labor Optimization and Productivity Improvement: One major opportunity was labor efficiency. Through a combination of workflow optimization, enhanced productivity standards, and targeted use of technology, we identified potential annual labor savings exceeding $4 million. Crucially, this wasn’t merely about reducing headcount; more impactful was ensuring that each task was performed by the most appropriate staff, driving efficiency while simultaneously maintaining, or even improving, service quality.
Consolidation for Excellence: We recommended consolidating high-volume, automated assays at centralized ‘Centers of Excellence.’ By centralizing specialized and high-volume testing at key sites, the health system could leverage economies of scale, standardize procedures, and reduce variability—leading not just to financial savings, but improved service reliability and patient outcomes.
Strategic Supply Management: Supply costs, averaging $7 per test, were significantly above industry benchmarks. By collaborating closely with the system’s supply chain team to negotiate contracts, standardize consumables, and share vendor information across the network, we outlined a clear path to achieving substantial savings. Our goal was simple: Improve supply efficiency, substantially reduce costs, and redirect resources toward patient care initiatives.
Reference Lab Cost Optimization: The analysis revealed another substantial savings area: external reference testing. We proposed an RFP process to ensure competitive pricing and suggested repatriating certain tests that could efficiently be performed internally. This single initiative alone was projected to yield at least $1.5 million in annual savings.
Financial Transparency and Governance Alignment: Financial transparency and consistency are foundational. We identified opportunities to standardize internal financial processes, notably through a consistent approach to interdepartmental transfers. By ensuring clarity and transparency in financial interactions between the laboratory and other departments, the health system could better align departmental incentives and drive overall efficiency.
Beyond numbers and operational practices, our engagement emphasized fostering system-wide collaboration—’systemness’ as we like to call it. This approach prioritizes clear governance structures, shared learning, and coordinated leadership across all laboratory locations. By centralizing oversight while respecting local operational realities, we encouraged the health system to shift from fragmented operations to a unified, strategic approach.
In summary, the comprehensive evaluation and actionable recommendations provided by Colaborate led to a total recurring financial opportunity of nearly $9.5 million annually, alongside potential one-time savings and cash-generating opportunities totaling between $12 million to $24 million. Yet, the true value extends far beyond financial metrics—it lies in empowering the health system to enhance service quality, improve patient care, strengthen compliance, and ensure sustainability.
At Colaborate, we pride ourselves on our ability to turn detailed analyses into actionable strategies that drive meaningful change. This recent engagement underscores how the right partnership can transform clinical laboratories from cost centers into strategic assets, aligning clinical excellence with organizational success.
If your health system seeks meaningful improvement and sustainable transformation, let’s collaborate. Together, we can uncover the opportunities that lead not just to savings—but to a stronger, more cohesive healthcare organization.