New York, NY - New York City Health and Hospitals Corporation (HHC) President Alan D. Aviles announced today that the HHC Board of Directors has approved a resolution that authorizes HHC to enter into an agreement with the North Shore-LIJ Health System to create a new shared central laboratory that will process tests with turnaround times of over four hours for both hospital systems.
HHC projects savings under the project to be $80 million over the next five years and then $23 million annually after that, achieved through efficiencies, increased purchasing power, and the potential for the new lab to be marketed to additional healthcare providers. The project will provide HHC with a new state-of-the-art laboratory while also relocating hundreds of jobs into New York City.
HHC currently operates four core labs, which process tests where results are not required within four hours, and 12 rapid response labs, which process tests where results are required in four hours or less. Together these labs perform about 15 million lab tests per year at a current cost of about $233 million annually. Under this agreement, HHC will consolidate its four core lab operations into the new cooperative lab, which will eventually process about half of all HHC lab tests. The rapid response labs will remain in operation at each of HHC’s hospitals.
The new lab will be the largest, non-profit, hospital-operated lab in the country. The lab, to begin operations in 2014, is expected to process up to 20 million tests annually when fully implemented by 2018. North Shore-LIJ will build the lab at a currently undetermined location in Queens.
“HHC can improve its lab performance for patients and achieve greater efficiencies through a shared core lab with another large health system, realizing substantial cost savings on an annual basis,” said Mr. Aviles. “North Shore-LIJ has extensive experience running a nationally recognized core lab for its own hospital system and has maintained impressive standards in that lab in terms of both speed and accuracy. It is an excellent partner for HHC to join with.”
“We’re delighted to enter into a mutually beneficial partnership involving the nation’s largest public health care delivery system and one of the country’s largest non-profit health systems,” said Michael J. Dowling, president and CEO of North Shore-LIJ. “It provides a unique opportunity for us to build on the success we have achieved in driving significant cost savings in lab services, as well as improvements in quality and service that benefit millions of patients.”
HHC and North Shore-LIJ are similar-sized healthcare organizations with a comparable volume and scope of lab services. The venture would mark the first time in the East that a public health corporation and a private, non-profit health system have gotten together to centralize their lab operations.
HHC currently operates four core labs and 12 rapid response labs, which together perform about 15 million lab tests per year at a current cost of about $233 million annually. Under this agreement, HHC will consolidate its four core lab operations into the new cooperative lab, which will eventually process about half of all HHC lab tests.
HHC will continue to maintain rapid response laboratories at each of its hospitals for tests that require a turnaround of four hours or less. HHC will eventually relocate approximately 162 lab staff to the new shared facility, and anticipates no layoffs from consolidating its four core labs.
The North Shore-LIJ Laboratories utilizes state-of-the-art robotics in a fully automated, 60,000-square- foot facility in Lake Success, NY, that performs more than eight million tests annually. Its customers include physician practices, hospitals and outpatient facilities within and outside the North Shore-LIJ network, nursing homes and clinical trial investigators. The scope of specialty testing includes: flow cytometry, special coagulation, molecular diagnostics, complex microbiology, virology, endocrinology, cytogenetics, molecular genetics, cytology and anatomic pathology.
Under the agreement being explored, the cooperative lab would be created as a separate not-for-profit corporation comprised of representatives from both HHC and North Shore-LIJ. The corporate structure leaves open the possibility for additional healthcare providers to become future members or clients of the lab, which would enhance lab revenues, reduce costs for individual tests, and further amplify the financial benefits gained through group purchasing of lab equipment, information technology, reagents, and reference test or blood products.
The lab will establish a joint standards committee with members of both HHC and North Shore-LIJ to develop quality assurance standards, and ensure compliance with standards set by regulatory agencies.
“The two organizations will benefit from working closely in ways that go beyond just the financial,” said Aviles. “We anticipate sharing and developing best practices to improve quality. Through collaboration both organizations stand to learn from the other.”
Terry Lynam, North Shore-LIJ Health Sysem
516-465-2640, [email protected]
Ian Michaels, Health and Hospitals Corporation