Chapter 38 : Determination of Profitability

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This chapter describes those items that are included in the true costs of a laboratory procedure, It discusses possible reasons why cost analyses rarely account for all expenditures and the term “outcome assessment.” The chapter lists three primary tools used in the laboratory to assess profitability. Several key indicators used to evaluate an institution’s performance (benchmarking) and the the term “outcome assessment” are described. The chapter also talks about the concept of human profitability and its relationship to quality patient care. Analyses to assess laboratory profitability are usually performed on a regular basis, not less than quarterly and typically monthly. To accomplish this there are three primary tools used in the laboratory setting: the balance sheet, the income statement, and the cash flow statement. Key income indicators are used to determine whether a laboratory is financially successful. It is clear that each individual laboratory must be able to operate efficiently within a defined budget and that each laboratory manager must continue to seek ways to operate more effectively to decrease overall costs in an era of evercontinuing decreases in available revenues. Through all discussions of profitability, one must not lose sight of the reason for the existence of laboratory medicine as an accepted discipline.

Citation: Baselski V, Weissfeld A, Sorrell F. 2004. Determination of Profitability, p 603-608. 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.ch38
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