Estimating cost per test

Medical Laboratory Observer, March, 2007 by Daniel M. Baer

Q I am a new laboratory manager looking for information on how to determine my cost per test within our laboratory. Any information that you could provide would be appreciated.

A It is all about the numbers. The more accurate your numbers, the more accurate your cost analysis. Getting to "good" numbers is not always easy. From where do you pull numbers? The laboratory information system, if you are fortunate enough to have one, or the billing system, or both. I say use both, and reconcile them to make sure you are billing for all you can. There are two costs you should obtain: cost per reportable test and cost per billable test. Both are important for managers to know. This means you must accurately count the number of tests performed in a specific time period, such as a year or six months. For an accurate reportable test volume, counts should include patient samples, proficiency tests, controls (including control verifications), calibrators, and a percentage of repeats. For billable tests only, count those tests that were actually reimbursed. Once you have accurate test volumes, add up the costs to run that volume of tests, include direct costs such as reagents and consumables, and indirect costs such as regulatory fees, proficiency testing fees, and overhead. Do not forget to appropriately assign costs for equipment, equipment maintenance, and personnel. A tricky cost factor is overhead; talk to your office manager or administrator to determine what is appropriate for your testing scenario. (Professional associations are also good resources for information on cost analysis.) Add up all your costs and divide by the appropriate volumes for cost per reportable test and cost per billable test. Sound simple? Finding all the costs by going through contracts and invoices is a time-consuming process, although it is a great time to reconcile invoices with contracts to ensure you are not paying more than your contracts state.

--C. Anne Pontius, MBA, CLS(AMT), MT(ASCP)

Laboratory Compliance Consultants.

Raleigh, NC

References

1. Travers E. Clinical Laboratory Management. Philadelphia, PA: Williams & Wilkins; 1997.

2. Garrison RH, Noreen EW. Managerial Accounting. 8th ed. New York, NY: McGraw-Hill; 1997.