6 Deadly Mistakes That Destroy Start-Up Medical Diagnostic Laboratories

We have helped many entrepreneurs start their own labs. Most found success and have been growing; some reached a certain size and stabilized. Others never really got off the ground.

The successful labs each found their own version of success. However, the labs that failed did so in several predictable ways. If your lab can avoid the following 6 mistakes, your chances of success will drastically increase.

1. Poor choice of site or premises

The laboratory premises must, among other characteristics, have the appropriate temperature, humidity and air quality. If the premises do not already have the necessary environmental conditions, make sure that you can at least mitigate them. When evaluating a laboratory site, you should consider the location of all instruments and equipment, personnel workstations, emergency exits, eyewash station and other essentials.

2. Wrong staffing

When beginning to hire staff for your laboratory, start with the manager. Make sure that the manager is able and willing to do the work of setting up or developing a new lab. You will pay a bit more in salary, but a good manager will be able to independently perform the initial workflow and equipment set up, whereas line employees usually work best in a pre-arranged structure. Once up and running, add staff as necessary to meet the workload.

3. Lack of documentation

Standardization and documentation are an absolute must from the get go. Build (or arrange to be built) a technical manual and document the technical considerations for every type of test and procedure you perform. Without this, your staff will perform inconsistently and you will not produce consistent, high-quality outcomes.

Also create a quality manual, containing the overview of all standard operating procedures, organizational chart, a roster of personnel responsible for specific areas, criteria for evaluating referral labs, hiring policies, emergency procedures etc.

4. Absent or low-quality supporting equipment

Most “labpreneurs” (we may be coining a word) spend a great deal of time thinking about which laboratory analyzers they would deploy and the test menu they would offer. However, it’s worth to also remember the supporting equipment – such as centrifuges, refrigerators, microscopes and water filtration systems. Your results are only as strong as your weakest link, so avoid “going cheap” in any important area.

This is equivalent to buying the fastest race car but also remembering to get a tool kit, impact wrench and a jack.

5. Unsuitable instrumentation

So many mistakes are made in this area that this section deserves a list. Here are the most common errors:

• Purchasing analyzers abroad, with no local support. Down time is one of the costliest things that can happen to a lab. Having local support can make a difference between being down for weeks or even months and being back up in hours.
• Buying cheap analyzers due to low price, without regard to reliability or accuracy. There is no magic – cheap analyzers are either unreliable or produce poor quality results. While there are some reasonably-priced instruments that produce good quality results, there will be trade-offs. For example, a good but inexpensive clinical chemistry analyzer may not have an automatic cuvette washer, which may be acceptable for an early stage start-up laboratory. However, a cheap instrument that the supplier claims is as good as its more premium counterparts, should raise suspicion.
• Buying too much instrument. You may be tempted to buy a top of the line, over-engineered analyzer. This may be particularly tempting if you know someone else who successfully operates such an instrument. However, if your lab is just getting started, you may not have the volume such an instrument requires. This may lead to budget shortages for other instruments, supporting equipment or staffing. There is also a risk of premature reagent expiration, since larger analyzers often have larger test kits, which you may not finish before their shelf life runs out.
• Trying to start out as a comprehensive lab. Rather than trying to do everything from the beginning, you could start with highest volume/profitability testing, build up to the 2nd highest etc. Chemistry is the most common ordered modality, amounting to about 80% of revenues for a typical lab. Even if you initially outsource hematology and immunoassay tests, you will still turn a profit. Making a profit will allow you to expand soon.

6. Trying to go it alone

Some people are experts in some things. No person is an expert in all things. You may be an excellent medical technologist, but you are almost certainly better at some specialties than others. Also, you may not be the best compliance officer, or human resources specialist, or accountant, or procurement manager…

The good news is that you do not have to be an expert at everything to be successful. You do have to be good at identifying experts and adding them to your team. Sure, experts cost money. However, surprisingly (or not), with expert help you will reach profitability sooner than without.

Some experts offer free initial consultations. For example, we do. Shoot us an email and see how quickly you can reach your goals!