Starting a Lab

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Nine steps to point you in the right direction

If you have decided to start a laboratory, I hope this article will serve as a level overview to guide you through the process. Experts have probably written whole books on each of these individual steps, so there are a multitude of details that I won’t be able to address, but I hope that it will point you in the right direction. Based on myconsulting experience helping to start clinical laboratories, below are nine basic steps to take in consideration when launching your laboratory.

1 Selecting a Test Menu
Selecting the list of tests that your laboratory will offer will affect all of the remaining steps in the process. If you do not know what tests your laboratory should offer, you should engage the services of a qualified laboratory consultant to assist you with this process. A common mistake that is often made when setting up a new laboratory is to try and perform every test that your facility (for in-house labs) or your customers may need. In order for your laboratory to be successful, you need enough test volume for it to be financially feasible to perform the test within your laboratory. For many rare or small volume tests, it makes more sense to send them out to other labs for testing than to invest in the necessary staff and equipment to perform the tests yourself.

2 Medical Laboratory Director
Every clinical laboratory needs a laboratory director. Based on the test menu, you will be able to determine if you will be classified by CLIA as a waived, moderate-complexity or high complexity laboratory. If you are a moderate-complexity laboratory, your laboratory director may only need a Bachelor’s degree; however, if you fall into the high-complexity category, you will need either an MD Pathologist or a PhD with a CMS-recognized board certification.

For many small and moderately sized high complexity laboratories, it doesn’t make sense to spend over $120,000 per year on a full-time lab director’s salary, so more and more labs are utilizing part-time laboratory directors. My company supplies part-time Laboratory Directors to labs throughout the county, and there are several other companies offering this service as well. This option often results in large savings for the laboratory.

3 Location
Once you have a feel for the type of testing you will be performing, you can select the physical space for the laboratory. If you need assistance, your laboratory director should be able to provide some insight into the amount of square footage that your lab will require.

One thing to consider when selecting a space is a constant temperature, so a reliable HVAC system is a must. You will also need adequate plumbing for a sink and eyewash station. Hard flooring, such as cement, tile or vinyl, is most common and carpet should be avoided. Finally, you will need ventilation in the room, but this can often be added retroactively if it is not already present.

4 Accreditation
Now, you will need to select your accrediting or inspecting body. CLIA is the federal agency that provides oversight and regulation enforcement to clinical labs; however, many labs opt to have their laboratory accredited by a non-profit like COLA because many feel that it is an easier inspection to pass due to the advanced notice and guidance provided.

5 Laboratory Application
Once you have selected the physical location, the laboratory director, the test menu and whether you are going to be regulated by CLIA or another accrediting body, you can file your CMS 116 application. This will officially start the ball rolling. There are fees involved with filing and the process can take anywhere from 4 weeks to 6+ months, depending on what part of the country your lab is located in and how backed up the CLIA office is that approves applications for your region.

6 Instrumentation
You will need to select the necessary equipment to perform the tests you decided to offer on your test menu. Do your homework and don’t be afraid to haggle! Get quotes from at least three vendors prior to making a decision. The best deals are often had at the end of a quarter or year when sales reps are seeking to make quotas. Remember, the purchase price isn’t the only thing that can be negotiated. It is often easier to get the vendor to agree to throw in an extra year of service contract or a reduced rate on the financing or lease terms.

7 Laboratory Information Management System (LIMS)
Around this time, you will want to start thinking about which laboratory information management system (LIMS) that your laboratory will use. Your staff will use this system to enter new specimens for tracking and to enter results to be reported back to the ordering physician. This is what your laboratory will use to enter new specimens into for tracking and into which your lab staff will enter results to be reported back to the ordering physician. The current movement in LIMS systems is to cloud-based monthly subscription models.

8 Revenue Cycle Management, Billing and Coding
Now, you have a decision to make: do you want to handle all of your billing and coding in-house or outsource it to a company that specializes in providing this service? Some labs try and save money by performing this in-house; however, it can quickly cost you more than you save if it is not done correctly. It is also important to begin the process of getting “in network” or “in contract” with private insurance. You can probably get your billing company to handle this for you if you have decided to outsource billing.

9 Staffing
The most important investment you will make is in choosing qualified staff to run the laboratory. The clinical laboratory is a highly regulated setting, so credentials and certifications are very important. Each high complexity laboratory is required to have a clinical consultant, laboratory director, technical supervisor, general supervisor and testing personnel. One person can fill multiple roles, so it is especially important for small labs to be strategic in their hiring to get all roles covered in the most efficient way possible.

Once you have completed these nine steps, you should be ready to start processing live specimens. The first few months will be bumpy and will present many opportunities for you to improve your laboratory operations, but you will be well on your way.

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About Author

Jon Harol
Jon Harol

Jon Harol is the co-owner of Laboratory Start-Up Consultants and Lighthouse Recruiting, which is a clinical laboratory recruiting firm.

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