Macro Cost Analysis for the Hematology Section

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The page below is a sample from the LabCE course Basic Concepts for Making Informed Financial Decisions for the Clinical Laboratory - Part 1. Access the complete course and earn ASCLS P.A.C.E.-approved continuing education credits by subscribing online.

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Macro Cost Analysis for the Hematology Section

When doing a macro cost analysis, the first step in the process is to determine the number of patient reportable tests done over the specific time period. This is a routine data collection process for most laboratories because this number is required for accreditation and is helpful to administration in accessing productivity. The next step is to perform the cost study breaking the costs down into fixed and variable. Once the cost data has been determined for the cost/revenue centers the total costs, fixed costs and variable costs are then divided by the patient reportable tests to determine the cost per reportable (billable) tests for these categories. These are valuable indices to watch over time to help determine if productivity is increasing, decreasing, or stable. If unfavorable variations are occurring in a specific category this is an area to investigate. Table 3 depicts a sample macro cost analysis for a hematology section of a clinical laboratory. The variable costs in this example are the costs that can potentially be altered. The fixed costs are much harder to alter. In this example, reducing variable costs for supplies and reagents, purchased services, the variable salaries and wages (possibly overtime), unscheduled maintenance, and eliminating paper reports by implementing electronic reports all could result in a better total and variable cost per reportable test index.
Table 3 Hematology Laboratory Macro Cost Analysis
Cost DescriptionAnnual CostsFixedVariable
Direct Costs
Salaries & wages $150,000 $130,000 $20,000
Purchased services $50,000 $50,000
Supplies & reagents $110,000 $110,000
Instrument depreciation cost $15,000 $15,000
SUBTOTAL $325,000 $145,000 $180,000
note: variable Salaries and wages cost is from overtime
Indirect Costs
Minor equipment $1,000 $1,000
Report from printing $1,500 $1,500
Unscheduled maintenance $5,000 $5,000
Scheduled maintenance $13,500 $13,500
SUBTOTAL $21,000 $14,500 $6,500
100,000 reportable tests
TOTAL DIRECT & INDIRECT COSTS $346,000 $159,500 $186,500
Performing the macro cost analysis on a regular basis (monthly) will assist the laboratory manager in recognizing seasonal variations in cost per test and provide a stimulus to look at adjustment strategies if the variations seem quite significant. For example, in a university laboratory the number of laboratory tests done in the summer might drop by 50% or more with far less students enrolled. A strategy would be to recruit laboratory personnel that would like summers off or a reduced number of days during the summer. Another possibility might be to outsource low volume tests during the summer allowing for seasonal adjustments in labor. Hospital laboratories may have seasonal adjustments in cost per tests depending on the demographics of the population they serve. A good strategy for maintaining productivity would be looking at ways to reduce costs during significant down swing periods.