Leverage RFPs to Optimize Lab Improvements

September 2021 - Vol.10 No. 8 - Page #8
Category: Urinalysis Analyzers

As the laboratory industry has evolved over the last decade, the utilization of requests for proposal (RFPs) has ballooned in frequency. This process has largely coincided with the ongoing consolidation and standardization of large hospital networks, physician-led practices, and national reference lab providers.

Regardless of practice, the process of acquiring new technology has been challenged in the last 12 to 18 months by the rapid and volatile fluctuation in instrumentation requirements to accommodate COVID-19 test offerings. In partial response, a forthcoming 2% cut in CMS reimbursement was recently paused through the end of 2021, but the cut is likely to return in 2022. These circumstances necessitate stringent research and stakeholder collaboration for capital equipment acquisitions in order to maximize purchasing power, especially when utilized effectively at corporate levels.

Furthermore, it is important to keep in mind one key component of a proper RFP process; the result of due diligence may be that no acquisition is made at all. That said, if a new instrument, analyzer, or system has been deemed a benefit to laboratory operations, the RFP process should identify the best solution. Committee members may choose not to move forward with the corporate RFP recommendation, which is more likely in a federated business model. More centralized business models may require all members to adopt and then implement the RFP product or service.

Important Features to Consider

From a fundamental aspect, the RFP process takes its current spend (determined through analysis) and compares it to the proposed spend of two or more vendors. Recently, Dennis Winsten presented several key features of a return on investment (ROI) analysis, pre-implementation baseline (PIB), and post-implementation audit (PIA) in MLM medlabmag.com/article/1758). 1 Indeed, several variables and key performance indicators (KPIs) must be used to quantify the likelihood and magnitude of success once a new acquisition has been implemented and validated. Typically, these metrics are gathered and documented through regular meetings among the key stakeholders, as well as institutional laboratories organized by a corporate entity. These identified KPIs may address:

  • Direct and indirect material reduction
  • Direct and indirect labor reduction
  • Safety improvements
  • Turnaround time (TAT) improvements
  • Increased capacity

Overall, there are four cumulative metrics that should be determined and weighed into the decision. A percentage out of a total of 100% for all categories can be assigned to each metric. RFP committee members can then assign overall ratings on a scale from 1 to 5, for example. These values are compiled and used to compare various vendor options.

  1. Total Cost of Ownership
    • Total cost for products
    • Standardization of testing
    • Additional pricing or rebate incentives
    • Cost of instrument/service
  2. Operational Solution and Performance Management
    • Geographic footprint
    • Breadth and strength of services
    • Fees at risk for performance
    • Technology/capabilities
    • Potential automation solutions
    • Continuous operational improvement
  3. Value Add Partnerships
    • Innovation and added value
    • Potential partnerships
    • Cultural fit
  4. Quality Measures
    • Quality of instruments and reagents
    • Quality of service
    • Service response time
    • Service effectiveness and efficiencies
    • Service level agreements

Some of these challenges can be summarized into a cause-effect comparison chart, such as in FIGURE 1, which displays potential questions that may arise followed by the impacted stakeholder or other factors that need to be considered. In this way, the level of potential impact for various challenges can be sorted and tackled methodically across multiple RFP committee members.

Larger scale RFPs often organize data into a matrix-style spreadsheet that lists information including the examples in FIGURE 2. These charts should include overall spend for consumables, controls, calibrators, reagents, and service. The charts also incorporate standard straight-line depreciation for various proposals to show how equipment depreciation matches with the listed costs. This enables all RFP committee members from partner labs to calculate individual ROIs and design an effective equipment purchasing and/or reagent rental agreement.

This example in FIGURE 2 shows the five-year outlook for two options from the same vendor. As shown, there is an initial one-time capital purchase, although this is typically depreciated using straight-line methods over at least five years. In this comparison, vendor #1 option B is the most cost-effective decision, but this is not always the clearest decision. Over a five year period, one option for lab A, for instance, may be more cost effective than lab B. These considerations must be weighed and discussed.

Two types of analysis are used when evaluating capital expenditures: 1, a narrative description or justification of the need and intended use, and 2, quantitative techniques to determine the financial feasibility of the project.2 While the strongest cases successfully defend using both types of analysis, the former type should not be discounted solely based on quantitative analysis. There may be other non-monetary benefits waiting to be realized in other areas of the organization. Moreover, a short-term investment may be used to propel or expand business in other divisions of the institution.

Special Considerations Not Easily Quantified

Other considerations may need to be incorporated that are not easily quantified or explicitly stated. For example, a small laboratory that is a part of a much larger laboratory network may not need the high throughput urinalysis analyzer being considered by other labs. Instead, they need an instrument with similar technology that produces a low time to first result. Therefore, an ideal vendor match would have a diverse offering of instruments with varying levels of capacity.

Consider the following factors during the RFP process to improve both end-user and overall laboratory satisfaction. The new technology or platform may:

  • Provide more and better analytic data for specific patient or population
  • Improve quality of overall test process by use of error-trapping quality control or patient moving average mechanism
  • Tap into expertise and knowledge with existing vendor platforms already in use with member labs
  • Increase standardization of test systems to both operators and clinicians across a large geographic area
  • Improve purchasing power of hardware/consumables through overall standardization under corporate guidance

Continuing the example above, say there is an additional lab in the same network that requires a urinalysis analyzer with very high throughput, yet the testing volume (at times to capacity) is spread unevenly across a production shift. In this case, the lab would need to accommodate a small window’s throughput needs to meet goals such as X TAT with minimal staffing. Therefore, it would be effective to utilize a contractual obligation in order to meet the requirements of these objectives. A vendor may agree to assistance if expectations are not met, which may include additional on-site training to improve efficiency of testing personnel, workflow analysis to optimize processes, and resources to evaluate data used for monitoring. When thoroughly explored prior to implementation, understanding these variables will help ensure strong compliance and cooperation with technology vendors.

Think Locally, Act Globally

Most successful RFP projects employ the common marketing concept—think locally, act globally. While the general purpose of an RFP is to reduce costs through the standardization of testing, any laboratories or lab sections that would be impacted by the new instrument should seek full representation and participation in RFP committees. This promotes consideration of all perspectives and needs at a regional level.

Beginning with the research process, this may employ any of the following methods to collect data to establish a baseline and obtain feedback on potential instruments and platforms:

  • Previous RFP committee member experience with platform
  • On-site instrument trials in parallel with current test platform to compare workflow and other real-time factors
  • Baseline workflow studies, spaghetti map diagrams for counting steps, and/or lean processes to examine value-added and non-value-added steps
  • Discussions with current vendor customers on their own experiences
  • Correlations of interesting patient specimens previously difficult to characterize

Keep in mind, a vital variable in the RFP process that cannot be discounted is staff buy in. Even though front-line staff members may not participate directly with other RFP committee members, they should be kept up to speed with new information including potential challenges and opportunities presented by the new instrument or system. Inclusion of all relevant staff is crucial for a successful implementation to be maintained. Staff members should be encouraged to provide valuable feedback and alert management if issues or inconsistencies arise during implementation, validation, or anywhere downstream. Fostering this involvement with front-line staff members allows management to remain focused on the overarching goals of the project, but also avoid potential issues that, if found early, can prevent larger issues in the future.

Negotiation Creativity is Key

The most effective corporate purchasing teams employ a variety of options to meet the needs of individual labs. Successful corporate partnerships require significant investment in discussions to explore all potential financial transactions. Some of these tools to achieve financial gain for the customer include:

  • Reagent rebates
  • Reagent rental agreements
  • CPR/CPT
  • Extended warranty periods
  • Equipment rebates
  • Revenue rebates

Conclusion

Much work goes into the RFP process for new instrumentation, systems, and platforms throughout the laboratory. And while pre-plan meetings, presentations, demonstrations, and comparisons require time and collaboration, realizing the full benefits of the RFP process will make it worthwhile in the long run. Even after implementation and testing begins, vendor resources should remain focused and directed toward making the platform operate up to specification. Take this opportunity to maintain communication and necessary support from your vendor resources. Maintain documented pitfalls and shortcomings along with action items remaining to be addressed. Moreover, continual feedback to the corporate level ensures the overall RFP process is beneficial for all relevant parties through met expectations. Whether through reduction in direct material or labor, or overall improvement in safety, all participating laboratory stakeholders should find this benefit.

References

  1. Winsten D. How to Build an ROI for Capital Acquisitions. Med Lab Man. 2021:10(4), p. 2-5. Accessed 8/31/21: medlabmag.com/article/1758
  2. Varnadoe LA. Medical Laboratory Management and Supervision. Philadelphia, Priority Ed, 2008.

Aaron Samson, MBA, MB(ASCP)CM, is the hematology operations manager at CPL in Austin, Texas, where he oversees staff in various areas of specimen testing. Prior to joining CPL in 2012, Aaron performed high complexity flow cytometry and molecular testing at the University of Kentucky Medical Center. He has experience with lab automation implementations, project management, and process improvement.

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