They’re back!

Diagnostic Medlab has effectively forced the Auckland DHBs into an embarrassing u-turn, and have been granted 10% of the medical testing market under a four year contract.

The big loser isn’t so much Labtests, but the DHBs themselves. The decision to move to Labtests was not necessarily wrong, but the transition plan in hindsight was woeful. The transition should have been done over six months or so, allowing a couple of suburbs to transition every fortnight, and make sure everything is working, before the next suburb moves over.

Diagnostic Medlab got much criticism for their campaign against Labtest, as the work of bad losers. But the campaign worked, and they just gained a $10.2 m/year contract.

Labtests loses $6.2 million a year for its reduced workload, and the DHBs (ie taxpayers) make up the extra $4.4m a year. This means the change overall does still save money, but a lot less than before.

NZMA say:

Today’s announcement has been welcomed by the New Zealand Medical Association.

“The decision by the Auckland District Health Boards goes some way towards reducing the inherent risk in the current arrangement of having a single provider and is therefore a step in the right direction,” said NZMA GP Council Chair Dr Mark Peterson.

And this raises the very valid issue of should they have gone with a single provider at all. Having both providers in the market will allow some comparisons of service, price and quality, and over time the one that performs better should end up with a greater market share.