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• John Muir Health Opens New Lab; Stanford Looks for Sale
• New John Muir Lab Open for Business

John Muir Health Opens New Lab; Stanford Looks for Sale

East Bay Business Times
- by Marie-Anne Hogarth
7/4/08

John Muir Health, with campuses in Walnut Creek and Concord, has opened a $35 million "core" laboratory in Concord's NorthPointe Business Park to process more tests more quickly for its own doctors, as well as to serve a growing number of sites outside of the health system.

The move comes as another Bay Area health system, Stanford Hospital & Clinics, is hoping to sell its "outreach laboratory" business after just five years.

The lab testing industry is a precarious one that requires significant up-front investment on the part of hospitals, as well as competitive pricing.

"It is not for the faint of heart," says Kathy Murphy, president of the Michigan consulting firm Chi Solutions Inc. She would not comment specifically since her firm represented John Muir and is working with Stanford on its sale. "Many organizations are expanding their programs and making further investments in them, because they realize that it is a good source of investment and income for hospitals. Organizations that are strapped for cash or for strategic reasons have occasionally chosen to get out of the business."

John Muir, which got into the hospital lab outreach business in 1994, currently processes tests for 1,000 doctors at out-patient facilities throughout Northern California and some 300 skilled nursing facilities.

Its business serving players outside its own hospital walls now amounts to just 6 percent of the Bay Area's $700 million outreach market, according to the trade publication Laboratory Economics. Stanford has about 5 percent and Quest Diagnostics Inc. of Madison, N.J., has 60 percent of the market.

There's very little overlap between the markets served by John Muir and Stanford, said Scott Liff, vice president of laboratory services for John Muir.

Liff, a former director of operations wit SmithKline Beecham, now GlaxoSmithKline, came to MuirLab in 1999 to assess and build up what was already a growing lab business for John Muir. He brought with him hospital experience as well, having climbed the ladder from a job as a phlebotomist, drawing blood samples, to hospital lab director, before moving into the laboratory industry.

Over the last 14 years, Muir's laboratory business has grown from 400,000 tests a year in 1994 to 2 million in 1999 to 11 million today. John Muir's new lab, located about three miles from the Concord hospital campus, at the intersection of Bates Avenue and Commercial Circle, will handle about 8 million of these.

The 56,000-square-foot lab, which has been fully operational for about a month, employs 400 workers over three shifts.

The core lab boasts a 163-foot automated sample distribution line, which John Muir says is the biomedical instrument manufacturer Beckman Coulter Inc.'s longest in North America. This line, which uses robotic clamps to pick up samples and move them automatically from centrifuger to analyzer to refrigerator, can process a single sample in approximately 20 minutes.

John Muir predicts the system will increase its testing capacity by 50 percent to 100 percent and decrease turnaround time for lab results by 25 percent to 50 percent.

In addition to processing "outreach tests," Liff said, the new lab will ease the burden of John Muir's two hospital-based labs by processing batches of the more-work-intensive bio medical tests, like throat cultures, as well as more esoteric tests like HIV tests.

That in turn will free up the hospital-based labs in Concord and Walnut Creek to process time-sensitive tests of samples for its blood bank, intensive care unit, emergency department and surgical departments.

About three-quarters of hospitals in the United States provide "outreach" testing to their communities. Sutter Health, a Sacramento health system with 26 hospitals in Northern California, opened its own facility in Livermore last year and employs approximately 60 people. The Sutter lab does work for most of the group's hospitals and some of its physician foundations, although not for doctors outside of the Sutter system. This "Shared Lab" performs about 170,000 tests a month and is designed to support a capacity of as many as 350,000 to 400,000 tests a month, according to Sutter.

Stanford has been talking to several interested buyers, according to spokesman Gary Migdol. He said that the hospital would likely hang on to its hospital-based laboratory in Palo Alto, as well as to some specialized services such as surgical pathology and hemapathology.

According to an article in Laboratory Economics, as Stanford grew its outreach lab business it was in the red for the first four years, despite optimistic revenue projections.

New John Muir Lab Open for Business

By Tanya Rose
Contra Costa Times
07/04/2008

CONCORD - A much-anticipated $22 million lab has opened in North Concord, equipped to perform 8 million lab tests each year, such as cholesterol screens and diabetes tests, more efficiently.

Muir Lab, a 56,000-square-foot building on Commercial Circle in Concord, is connected to John Muir Health Systems. Its formal opening was June 30 but it has been performing tests now for about a month.

That means blood work and other lab tests historically done at both John Muir hospitals in Concord and Walnut Creek - such as urinalysis, HIV tests and the cholesterol screens - have moved to this single lab for better efficiency.

Because of new automated systems that shuttle test tubes to the right machines more quickly and reduce errors by 30 percent, patients will often find out the results of their tests the same day as their lab visit, said Scott Liff, vice president of laboratory services and imaging development for John Muir Health Systems.

"We had an instance recently where a pediatrician sent a patient in for tests and then was at dinner that evening with his wife," Liff said. "He got the results of the tests sent right to his PDA and was able to call the patient and get him into the hospital within the hour. Because everything is automated, we really are in the information transfer business."

The next step: lab test results sent to a patient's own BlackBerry. "We're not there yet, but we're getting there," Liff said. "We still want the physician to be involved at that stage - it's a delicate balance."

Previously, lab techs were performing these tests in cramped quarters at both hospitals. "We were just growing so fast and we were running out of space to keep expanding," Liff said. "A lab like this brings everything to one spot."

About 450 employees, 350 of whom were working at the Walnut Creek hospital, have moved to the new lab.

Only time-sensitive testing will remain at the hospitals.

Liff said there's room to add 20,000 square feet of new building space to the lab, which would allow John Muir to add new tests. Right now, tests for more rare diseases must be sent out. Moving them on site makes the lab that much more convenient Liff said.

The automated track system works a lot like a bottle system in a factory. Test tubes move along a track to various machines for testing and eventually to refrigerators for storage. The system even takes the caps off the tubes, then replaces them before all is said and done. That limits workers' risk of exposure - and carpal tunnel syndrome, said hospital spokeswoman Laura Kaufman.

In addition to John Muir facilities, nursing homes and clinics from Salinas to Auburn also use the lab. "Muir Lab" cars zip around the area - there are 130 cars in the fleet - transporting samples across 15 counties to Muir Lab.

The two-story building is a boon in North Concord, a transitioning area that the city has hoped would become known for technology-based businesses and research and development.

Liff said hospital leaders picked the area based on its freeway access - at the Highway 242 and Highway 4 interchange - and its capability for expansion.