Clinical Labs of Hawaii has been providing laboratory services at Kona Community Hospital for decades, but that relationship is coming to an end in June.
The West Hawaii region of the Hawaii Health Systems Corporation which includes Kona Community Hospital and Kohala Hospital, announced their upcoming partnership with Diagnostic Laboratory Services in December to provide onsite laboratory services to the healthcare facilities.
HHSC was established in 1996 through a legislative initiative to free the community hospital system under the Department of Health from bureaucratic oversight and red tape. The new semi-autonomous corporation became exempt from many laws pertinent to other government agencies. HHSC continues to depend on appropriations from the Legislature for services and capital improvement projects.
Although Clinical Labs had served the hospital since the 1970s, they first entered into a contract with HHSC-KCH to provide services to the region in 1997 after the corporation was formed. The most recent four-year contract between the hospital and Clinical Labs was awarded through a request for proposal in 2020.
However, when the contract was coming to an end, Clinical Labs was not able to submit a proposal to continue services because HHSC/KCH did not solicit a RFP.
“In 2009 the Legislature passed Act 182, Session Laws of Hawaii, which, among other operational and organizational changes, granted an exemption to the HHSC regions from the state’s procurement code,” explained HHSC Senior Corporate Contracts Manager Alison Stransky. “Since 2009 the regions have continued to use request for proposals and other competitive procurement methods, but they are not required by statute to do so.”
She said the lab services contract with Clinical Labs currently serves the facilities in the HHSC East Hawaii region which includes Hilo Medical Center, Hale Ho‘ola Hamakua and Ka‘u Hospital; the West Hawaii region including Kona Community Hospital and Kohala Hospital, and Oahu regions. Ali‘i Health Center is also an affiliate of HHSC.
“The term of this contract was four years, and expires June 28, 2024. The regions independently determined whether to step off the CLH contract in June, or remain under contract by exercising a contract option period,” she said.
She said the lab services entail complex technical requirements and the only qualified labs that meet their criteria are DLS and Clinical Labs.
Judy Donovan, marketing and strategic planning director for Kona Community Hospital and Kohala Hospital, said Diagnostic Lab Services was chosen because they utilize preferred testing methods with competitive pricing.
“HHSC West Hawaii followed their procurement policy, the purpose of which is to support public accountability and sound business practices,” said Donovan.
As far as who will perform the autopsies Clinical Labs currently conducts, she said the West Hawaii Region is in talks with stakeholders to ensure a smooth transition that will not impact services.
Stransky said the no bid contract enables the regions to be more efficient and responsive to the needs of providing direct patient care.
“As such, there is no statutory requirement to issue a competitive solicitation. However, there does remain an obligation for HHSC to strive for “best value” combining price and service with the ultimate goal of delivering quality patient care. West Hawaii pursued this process,” she said. “It considered many factors including Clinical Lab’s historical vendor performance, technical capability, and pricing. Also considered was the West Hawaii physicians’ preference for DLS due to DLS’s state-of-the-art test results which enable physicians to more accurately diagnose and treat patients.”
“Pricing was also a significant factor. West Hawaii compared its current Clinical Labs pricing against DLS pricing and found a significant savings opportunity. Based on these factors West Hawaii awarded the contract to DLS,” she said.
DLS, based out of Oahu with branches on neighbor islands including the Big Island, is a subsidiary of the Queen’s Health System. Last year Queen’s acquired a 31.15-acre parcel of land at Honokohau Nui (West Hawaii Business Park) in Kailua-Kona with plans to build a clinic. Ali‘i Health Center and Kona Community Hospital also now have access to Queen’s electronic medical record system, Clinically Integrated Physician Network, providing increased access to primary and specialty care.
“This initial 4-year partnership signals our commitment to providing quality care to our growing population in West Hawaii,” said Clayton McGhan, West Hawaii region CEO in a media release.“DLS’s dedication to our island communities along with the caliber of service they provide, as well as their current integration with the Epic electronic health record system, blends perfectly with our vision for a bright, community-focused future.”
“Our values align seamlessly with the mission of Kona Community Hospital and Kohala Hospital,” stated Mark Wasielewski, DLS president in the release. “Their deep local roots and unwavering dedication to quality care make them ideal partners for us. We are confident that this collaboration will further strengthen our collective ability to care for the communities we serve.”
Clinical Labs had no indication they were about to lose the contract, as they have been awarded it through RFP’s for so many years with DLS being the other lab submitting proposals.
“It was truly a shock,” said Mits Takahashi, Clinical Labs vice president of legal and compliance. “We are surprised and saddened by the loss of our contract at Kona Community Hospital. Clinical Labs of Hawaii began providing pathology services for Kona Community Hospital in 1971 and has provided full hospital-laboratory services since 1980, when we were asked to revive the hospital’s failing laboratory.”
“Over the years, we have participated in and won all of the available Kona laboratory contracts based on service and pricing, including the most recent contract in 2020. We are a part of the world’s third largest laboratory and remain the gold-standard for testing, providing access to the most cutting-edge technology in the country,” she said.
Physicians in West Hawaii still have the choice to utilize Clinical Labs or DLS depending on their preference.
“Although we may no longer be serving as Kona Community Hospital’s laboratory, our commitment to serving our patients and physicians in West Hawaii remains steadfast,” said Takahashi.