Labtests has started functioning today after winning the exclusive $560 million, eight-year contract from Diagnostic Medlab.

Labtests has undercut DML by $15 million a year to get the contract. However it will have 56 testing centres as compared to DML's 80.

Doctors say that they are closely observing services provided by Labtests in Auckland over the next month.

Under the contract, Labtests will be responsible for collecting and testing for all three of Auckland's district health boards by September.

DHB project manager Tim Wood says all general practitioners have received starter packs advising them of the changes. The information includes how the service runs, where the collection centres are located and opening hours.

Labtests ensures that it will be providing efficient services to the people. The company claims that it has hired hundreds of former DML staff with Aukland experince.

Auckland GP Carmel Built says the new company is skimping on pathologists.