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Chapter 28 : Financial Management: Setting the Stage

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Abstract:

This chapter concentrates on hospital and independent laboratories and deals with the operational management of the laboratory. It discusses strategic planning, human resource management in the operational units, cost analysis, and financial decision making. Major differences in the cost and operational structures of independent and hospital laboratories lie in the patient populations and the nature of the services provided. The chapter explores the environment of the hospital laboratory and how these factors may affect financial performance. Reimbursement of hospitals for inpatient stays is based on one of the following schemes, depending on the payor: percent of charges, per diem reimbursement and reimbursement for diagnosis-related groups (DRGs). The second and third of these schemes are the most common in the United States, where reimbursement based on charges has almost disappeared for inpatients. The breadth of testing provided by independent laboratories generally mirrors that of hospital-associated laboratories. The major differences lie in the population served, hours and scope of operation, turnaround time requirements, and need for ancillary functions, such as business operations. Most of the testing done by the independent laboratories is for outpatients of physicians and clinics. There are fundamental and striking differences in clinical need and demand, financial constraints and considerations, and laboratory mission and cost structures, which depend on the laboratory’s situation. Whether inpatient or outpatient hospital or independent laboratory, each has its own set of functional drivers of which laboratory management must be acutely conscious.

Citation: Lepoff R. 2004. Financial Management: Setting the Stage, p 493-498. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch28

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Figures

Image of Figure 28.1
Figure 28.1

The organizational chart of a hospital that is organized in a traditional manner. Note that the chief operating officer, who is parallel in reporting responsibility to the VP nursing, is responsible for all ancillary services through a director who is responsible for operations.

Citation: Lepoff R. 2004. Financial Management: Setting the Stage, p 493-498. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch28
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References

/content/book/10.1128/9781555817695.chap28
1.Centers For Disease Control And Prevention. 2001. National Hospital Discharge Survey. Centers for Disease Control and Prevention, Atlanta, Ga.
2.Centers for Medicare and Medicaid Services. Acute Inpatient Web Page (http://cmshhs.gov/providers/hipps).
3.Centers for Medicare and Medicaid Services. Hospital Outpatient Perspective Payment System Web Page (http://cms.hhs.gov/providers/hopps/).
4. Travers, E.M. 1997. Clinical Laboratory Management, p. 154155. Williams & Wilkins, Baltimore, Md.
5. Travers, E.M. 1997. Clinical Laboratory Management, p. 435480. Williams & Wilkins, Baltimore, Md.
6. Valenstein, P.,, A. Praestgaard,, and R. Lepoff. 2001. Six year trends in productivity and utilization of 73 clinical laboratories: a College of American Pathologists Laboratory Management Index Program Study. Arch. Pathol. Lab. Med. 125:11531161.
7.WashingtonG-2Reports. 2003. Laboratory Industry Report, vol. 12, no. 4, April 2003. 46:2629.

Tables

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Table 28.1

The demographics of the laboratory industry

All numbers approximate.

Citation: Lepoff R. 2004. Financial Management: Setting the Stage, p 493-498. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch28
Generic image for table
Table 28.2

Components of diagnostic laboratory testing

Citation: Lepoff R. 2004. Financial Management: Setting the Stage, p 493-498. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch28
Generic image for table
Table 28.3

Factors that produce inefficiency in hospital-based laboratories that serve inpatients

Citation: Lepoff R. 2004. Financial Management: Setting the Stage, p 493-498. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch28
Generic image for table
Table 28.4

Laboratory productivity and volume

Data from Laboratory Index Management Program of the College of American Pathologists (1994).

Quartile values are the means of independent distributions. The sum of mean consumable and labor expense is not necessarily the same as direct expense.

Citation: Lepoff R. 2004. Financial Management: Setting the Stage, p 493-498. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch28
Generic image for table
Table 28.5

Reimbursement mechanisms in the inpatient, outpatient, and independent laboratory settings

Citation: Lepoff R. 2004. Financial Management: Setting the Stage, p 493-498. In Garcia L, Baselski V, Burke M, Schwab D, Sewell D, Steele J, Weissfeld A, Wilkinson D, Winn W (ed), Clinical Laboratory Management. ASM Press, Washington, DC. doi: 10.1128/9781555817695.ch28

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