ADAC's quest for quality pays off with Malcolm Baldrige recognition

October 23, 1996

Award caps vendor's four-year rise to prominence in nuclear medicineNuclear medicine vendor ADAC Laboratories last week finally fulfilledits three-year quest for the Malcolm Baldrige National QualityAward. The Milpitas, CA, firm received

Award caps vendor's four-year rise to prominence in nuclear medicine

Nuclear medicine vendor ADAC Laboratories last week finally fulfilledits three-year quest for the Malcolm Baldrige National QualityAward. The Milpitas, CA, firm received national recognition whenit was named the recipient of the Baldrige medal for excellencein manufacturing.

The Malcolm Baldrige National Quality Award is given by theU.S. Department of Commerce every year to recognize excellenceby U.S. companies. ADAC is the first healthcare company to receivethe award since the Baldrige program presented the first awardsin 1988. Since then, 28 companies have received Baldrige awards.

ADAC's award is the crowning achievement for a company thatused the Baldrige criteria as a road map to execute a remarkablerise to prominence in the nuclear medicine industry.

ADAC's ascent began in 1992, when the vendor was emerging froma series of financial ups and downs that had plagued the companythrough the late 1980s and early 1990s (SCAN 12/26/90). ADAC'smarket share in the U.S. was 12% in 1990, making it the thirdor fourth largest nuclear medicine vendor, according to chairmanand CEO David Lowe.

Lowe was promoted to president and COO of ADAC in Februaryof 1992, and helped set ADAC on a course to achieve excellenceby emulating the Baldrige criteria.

"We established a massive benchmarking program where westole shamelessly the best practices of other Baldrige winners,"Lowe said. "We set a bold, audacious goal of winning theaward, and frankly, when we announced that pursuit, people laughedat us."

ADAC gained momentum with the release of the Genesys Vertex,a variable-angle dual-head gamma camera, in 1992 (SCAN 12/16/92).ADAC and its market share prospered as the dual-head segment gainedin popularity, and the firm maintained its technological edgewith a series of innovations, the latest of which is its MolecularCoincidence Detection high-energy imaging technique (SCAN 6/19/96).The company now claims over a 50% market share in the U.S.

While ADAC's technology spearheaded its resurgence, the company'stotal quality management program and adherence to Baldrige criteriaalso showed results. The company has won the top rating for servicesatisfaction for the past four years in surveys by IMS America,and has a 93% customer retention rating in an industry with a55% average.

The vendor came close to its goal of a Baldrige medal in 1994and 1995, when it received site visits, but Baldrige recognitioneluded it, until last week.

This year, ADAC joins three other firms as Baldrige recipients:Dana Commercial Credit of Toledo, OH, in the service category;Custom Research of Minneapolis in the small business category;and Trident Precision Manufacturing of Webster, NY, also in thesmall business category.

To win the award, ADAC was required to complete a 71-page questionnairewith 142 questions detailing its practices for improving qualityand increasing customer satisfaction. The vendor also receiveda week-long site visit by Baldrige examiners in September.

The Baldrige committee cited several accomplishments achievedby ADAC. Among them are the following:

** Emphasis on customer satisfaction, which includes rulesthat require executives to take customer calls personally andspend 25% of their time with customers;

** Reductions in service cycle time, which measures the timerequired to get malfunctioning products back into operation, from56 hours in 1990 to 17 hours;

** Tripling of revenues since 1990;

** Speed in bringing new products to market; and

** Revenue per employee, which has risen from $200,000 in 1990to almost $330,000 last year.

ADAC sees its participation in the Baldrige competition asmore than a public-relations coup: It provided the means to improvethe company's business processes by comparing them with thoseof previous Baldrige winners.

"In the first two years, the big benefit from the awardprocess was not an attempt to win a small piece of gold medal,"Lowe said. "It was getting us feedback reports that highlightedthe strengths of the company and its areas for improvement asit related to the Malcolm Baldrige criteria. Those areas for improvementallowed the organization to focus on key areas that made the companybetter."