Clinical laboratory costing
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1 Clinical laboratory costing Ronald A Booth, PhD, FCACB Division of Biochemistry, The Ottawa Hospital, Department of Pathology & Laboratory Medicine, University of Ottawa
2 Objectives Explain the complexity of laboratory testing Understand the various components of laboratory testing and costing Understand the pitfalls encountered when costing laboratory testing
3 Background The Ottawa Hospital is a large (~1200 bed) multi-site academic hospital. TOH is the referral centre for 16 regional community hospitals The EORLA (Eastern Ontario Regional Laboratory Association) reference laboratory serves as the referral site for 16 regional community hospitals as well as other regional and national hospitals. Comté de Renfrew Hôpital Hôpital Régional Renfrew County Hospital N Regional Y Hospital St. Vincent Deep River Heart Institute Institut de Cardiologie CHEO Pembroke Royal Ottawa Civic (TOH/HO) Riverside (TOH/HO) Général (TOH/H Hawkesbury St. Francis (Barry's Bay) Renfrew Victoria Arnprior Almonte Queensway-Carleton Glengarry Km Carleton Place Kemptville Winchester McConnell (Cornwall) Second (Cornwall) Service sites of agencies funded by the Champlain LHIN. Points de service des agences financées par le RLISS Champlain. 12/2008
4 Laboratory: excellent value for the money Hospital laboratories operate on a 24h-7day basis. Perform high volume low-complexity testing Perform low-volume high complexity testing Perform STAT testing when the clinical need arises (ED, ICU, OR, trauma etc) Laboratory medicine is an often forgotten yet integral part of patient care 70% of medical decisions are by based on laboratory results Sadly, laboratories have little control over testing requested Driven by physician ordering patterns
5 Laboratory Funding Issue 19 April 2011 Findings Among other findings Hospital laboratories across Canada are globally funded by provincial and territorial governments, based on a budgeting process.
6 Department of Pathology and Laboratory Medicine Biochemistry Hematology & Transfusion Medicine Genetics Microbiology Anatomical Pathology Analysis of blood, urine, & fluid components, including chemicals, enzymes, toxins drugs and proteins Analysis of blood cells in blood and fluids and coagulation machinery TM Blood typing and blood product supply Genetic analysis using blood and tissues Analysis of Bacteria & Viruses in blood, fluids and tissues. Analysis of body fluids and tissues for the presence of atypical findings and cancer detection
7 Example of laboratory staffing Divisions & Other Areas Procedures per year Lab Staff Medical/Scientific Administration 8 1 Biochemistry 5,582, Hematopathology 1,014, Transfusion Med 540, Pathology 1,919, Microbiology 1,883, Tissue Typing 68, Total 11,801, Phlebotomy and Specimen Receiving 116
8 Laboratory testing: patient to result
9 Laboratory costing
10 Total cost breakdown
11 Determining labour component Code Laboratory Unit Value Specimen Procurement Specimen procurement basic Includes: order review, preparation of materials, greeting, identifying and instructing the service recipient, specimen labelling, post procurement service recipient care (includes instructions related to glucose tolerance testing). Includes: all types of biological material (e.g. blood, urine, stool, 1.2 MIS Standards Canadian Institute for Health Information
12 Non-compensation costs
13 Cost confusion Direct Labour Costs Laboratory Staff Phlebotomists clerks technicians registered technologists Medical/Scientific staff Indirect Labour Costs Administrative staff Management staff Laboratory Staff Supervisory technical staff Medical/Scientific Staff Direct Material Costs Collection needles Collection tube/bottles Aliquot tubes Pipettes Reagents (juice) testing cuvettes Quality control material Calibrator material Resulting costs Paper Ink Envelopes Mailing costs Indirect Material Costs Service contracts Analyzer cost Facilities cost External Quality Assessment Instrument amortization Gloves Other consumables
14 J Clin Pathol 1990;43:92-97 Laboratory costing system based on number and type of test: its association with the Welcan workload measurement system I F Tarbit Repeat testing Trouble shooting Quality control Phoning critical results Tarbi't 96 Abstract generated from a comprehensive laboratory A laboratory costing system which costing system. all cost costs against tests, rather direct and indirect cost elements profiles highlighting Tablerecovers 2 Example than using both test and request charges, was developed. Methods of recovering Methods Labour costs (L,) costs of routine and emergency services, THE COSTING SYSTEM of capital investment in equipment, of (XJ)Direct materials costs Direct Materials COStS Total direct Total labour Total Total materials instrument maintenance costs and of As described previously' reagent costs per cost (19 ( ) cost Other Indirect labour cost Indirect Analytical Direct (L) (19) Test Procedure general hospital overheads were con- sample were determined for each analysis type sidered. The Welcan unit system of work- by assessing expenditure on each reagent over an extended profile (AU5000)was applied0 495 Electrolyte measurement to a range this time period 0 101and dividing Boneload (AU5000) profile of test procedures. Both the Welcan by the number0142 of patient0721 samples figure unit Liverprofile(AU5000) value profile and unit value CX3) adjusted for in the same period Thus reagent costs analysed 0 541calibra(Synchron Electrolyte repeat of calibration, based CK tion and quality control (Welcan quality 0 control, and cost per analyses Glucose weighting) correlated only moderately are built into a00 true patient Cholesterol time per sample Bloodwith gaseslocally derived analytical Other consumables 0such 216 as pipette tips, direct 0084 TSHtest and correlated poorly with cups, calibration0and 144 were control 0sera of 084 sample0 796 T4 analytical cost per test. The correlation assigned invoice a unit cost from 827 total Urinedirect catecholamines analytical cost per test0 with records cost per test was much stronger than that Multiplying unit cost by the unit volume used of analytical time per test with direct per test gave the specific consumable cost for analytical cost per test. that test. The data suggest thatassays neither Welcan Inhouse maintenance costs of in- PREPARATION number of major "on-demand", an increasing SAMPLE nor strumentation were assessed over an extended unit values, Welcan based weightings,have be costed in both batch and Welcan assays timemay locally derived analytical per test totime period and allocated uniformly over all unit values assigned to particular in"stat" modes. can truly reflect total resource consump- samples analysed on that instrument struments do not always reflect individual in the tion for the provision of athis of testproposes a number of ways of assay conditions. For the Cobas Bio, the first rangepaper same period. should be borne procedures. This factorrecovering investment in laboratory equip- assay on a specimen carries a value of 3-0 in mind when applying operational or that expen- whereas subsequent assays on the same suggest might Approach Welcan (2) based on performance indicatorsment. Direct labour costs
15 Forgotten costs - analyzer replacement Table 3 Example test amortisation changes based on optional methods of capital investment recovery Method (2) Charge targeted at tests using particular analyser Method (1) (b) Weighted to Universal test (a) Universal reflect workload Test (analyser) charge (A;) charge (A) on instrument (/,) Plasma sodium (AU5000) Plasma calcium (AU5000) Plasma cholesterol (Cobas Mira) Plasma urate (Cobas Mira) Serum CK (Cobas Bio) Plasma glucose (Cobas Bio)
16 Total cost pitfalls $600, Direct Costs Indirect Costs $500, True Total Costs False Total Costs $400, $300, $200, $100, $- 50, Test Volume
17 Laboratory type The type of laboratory can influence the cost of testing High-volume low complexity testing greater testing efficiency lower cost per test STAT analysis usually not required limited medical/scientific staff e.g. private laboratories Low-volume mixed complexity testing lower testing efficiency mid cost per test STAT testing required limited medical/scientific staff e.g. community hospitals High-volume high-complexity testing mid testing efficiency mid cost per test, but can be high for some tests STAT testing required esoteric testing performed greater numbers of medical/scientific staff e.g. academic health science centres
18 Laboratory cost model What is the best model? Cost buckets Individual test costs Separate direct and indirect costs Separate labour from testing costs
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