Disclaimer: This article was updated on Dec. 23, 2021, to provide new and more timely information.
What are those critical mistakes that new lab owners make when staffing their lab?
The clinical laboratory industry is a tough business. If you’ve ever started a lab for the first time, you’ve made mistakes, lots of them.
If you had to go back and do it over again, you would do a million things differently. It’s incredibly complex on every level. Technical, legal, compliance, billing, you name it, very little comes intuitively. Everywhere you look there’s a fifty-cent word that you don’t know how to pronounce. Once you think you understand something and make a decision, it turns out there were ten more questions you should have asked and now there’s a whole new minefield of decisions to navigate.
The same is true when it comes to staffing. While I can’t provide a solution for every staffing dilemma you will encounter; I want to highlight five critical mistakes that I see new lab owners make on a regular basis.
#1 – Looking for Everything in One Person
Typically, the first full-time hire a lab makes is the Lab Manager. This is an important hire and you absolutely need this person. However, you need to first understand what that person does and does not do. It’s not uncommon for new owners to expect that this person will essentially run their company. Legal questions, operations questions, billing questions, this person should know the answers to everything. Why not, they’ve been working in a lab most their life, they should know this stuff.
Ironically, I made a similar mistake myself recently. As the owner of three different businesses, collectively there were enough transactions and contracts flying back and forth that I felt justified in bringing on In-House Counsel. Even though I had a smorgasbord of issues to be addressed, I figured I could just find one Attorney to address them all. They’re an Attorney for pete sake! They are well educated, extremely intelligent, I’m paying them well, and they’ve got years of legal experience, why shouldn’t they be able to address all of these issues. The truth is, no matter how smart or good you are, no one is an expert at everything. One person can only do so much.
Your Lab Manager is there to run the technical operations of your laboratory. And just because they have years of technical experience in one department of the lab, that doesn’t mean they’re capable of running every test under the sun. If your lab is going to have multiple specialties, you will likely need multiple specialists. Further, their primary role is to make sure the day to day testing in your laboratory is done compliantly, all logs are being properly maintained and overseeing the all other technical personnel. Ideally, you want someone with strong technical experience in your specialty and previous supervisory experience in an established lab. You also need to be ready to hire additional personnel quickly as this person’s plate will fill up quickly, even with a small amount of test volume.
In the same vein, don’t hire a Sales Rep and expect them to run your sales division. Don’t hire an Admin Assistant and expect them to run your operations. And for the love of God, don’t hire a medical biller and expect them to run your billing. More on this later.
#2 – Hiring at the Bottom of the Pay Scale
Many startups are started on a tight budget and that’s to be expected. However, when it comes to starting a lab, the first few hires you make are likely for your most critical roles. It’s important to get seasoned professionals that know what they’re doing. The ideal hire in most owners’ minds is to find that motivated person that is underemployed and ready to take the next step in their career…and is willing to do it for significantly less money. On rare occasion, you can find that person, but more often than not, you end up taking a gamble on an unknown. Now’s not the time to be taking those gambles. Save those gambles for when your lab is running like a well-oiled machine and the wrong decision won’t cripple you. When you push all your chips in on the wrong person, if you’re new to the industry you may not realize it right away and when you do, it might be too late. You need to be willing to shell out a few extra bucks to hire a known quantity.
#3 – Benefits, Benefits, Benefits
A full benefits package is the expectation for most roles in the lab industry. The explanation I frequently get from most startups is just that, we’re a startup, we don’t have all the amenities an established employer has. I get that but there are certain concessions you are going to need to make to find top talent. Going back to numbers one and two, the common thinking is that a new startup is going to hire someone at the bottom of the pay scale, make them wear multiple hats and offer little to no benefits. Why would anyone accept that offer? You’ll probably find someone to take the job but the person you find most likely isn’t the person you want. Medical benefits and paid time off are a must. If you absolutely can’t give medical benefits, you need to offset that with a higher salary and than some. Everyone can give paid time off so there’s no excuse there. Anything less than two weeks vacation and eight paid holidays is an insult. Benefits like a retirement plan with company matching, long and short-term disability and life insurance are common as well. If you can’t offer these benefits upfront, have a concrete timeline as to when these will be implemented. ‘We’ll add them as we grow’ isn’t good enough.
#4 – This Ain’t No Side Gig
The idea that you are going to continue to work as a sales rep or operate/work for another company plus act as the CEO of your lab is laughable. There are a million decisions that are going to need to be made very shortly. You either need to be in your lab full-time, every day or you need to hire someone else that will be. If that person can’t be you, and that’s OK, keep numbers one through three in mind, find someone great and give them the authority to make high-level decisions. I’ve seen this mistake happen many times over and it leads to a frustrated, burnt out lab owner very quickly.
#5 – Outsource Your Billing
When you create a proforma, it almost always looks like a good idea to bring your billing in house. It’s a difficult argument to make but I can tell you from experience that it’s not a good idea. I can also provide you with a whole list of current or previous lab owners that would tell you the same thing. Effectively getting across all the complexity and nuances of billing is almost impossible but I promise you this, if you try to bring it in-house right out of the gate, you will make A LOT of mistakes and you will likely cost yourself significantly more than you saved. Skip hiring a billing manager and find yourself a quality billing company. When doing so, you’ll be tempted to default to the low-cost option, please don’t! Partner with an established company with a strong track record, you’ll be glad you did.
This post was written by the Co-Founder and Managing Partner of Lighthouse Lab Services, Chris Harol.
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