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A cost-out program for chemistry instrument selection.

A cost-out program for chemistry instrument selection

With Federal reimbursement expected to tighten for hospital capital equipment, many laboratory managers are feeling the pressure to anticipate future needs so that their instrument purchases can be made within the current payment structure.

Sound instrument selection is based upon in-depth technical review and includes such factors as analytical methodology, speed, random access capabilities, and interferences. From a financial perspective, a different yet equally important review must be conducted.

For optimal allocation of scarce capital and maximal payback on investment, the following must be accurately calculated: total instrument lifetime operational cost, monthly or annual operating cost, actual monthly or annual cost per reportable test result, and fixed and variable costs.

Unfortunately for most laboratories, instrument vendors prepare financial reports that are biased to favorably present their specific product. They frequently omit critical data that would increase the operating cost.

At our institution, it became necessary to replace a veteran dry-slide analyzer with an instrument that can provide a 20-test panel in a rapid and more cost-effective manner. To simplify and standardize the financial costing-out process, a program was developed in Basic for an IBM-compatible microcomputer.

This program, which we call "Instcost,' is menu-driven and screen-interactive. Occupying 6K of random access memory, it can be used with a single floppy disk or hard disk drive and an inexpensive dot-matrix printer.

The program requires keyboard entry of 1) monthly reagent and/or kit costs, 2) monthly consumable /expendable item costs, 3) monthly number of patient tests, 4) monthly number of quality control samples, 5) monthly number of calibrations, 6) monthly full-time equivalents required for instrument operation, 7) CAP workload units per test, and 8) hourly technologist wages.

In addition, specific calibration data, such as frequency, number, and cost of different calibrators, is entered if required. Seven-year straight-line depreciation can also be calculated--by inputting initial instrument cost, the instrument's useful life in years, and the salvage value at the end of the instrument's useful life--as can the yearly maintenance contract cost.

Figure I is a program excerpt showing the Basic code for the calculations. All data can be checked and corrected (see Figure II) prior to final costing-out calculations.

The completed financial analysis presented in Figure III includes the instrument's major monthly operating costs--both variable (reagents and consumables) and fixed expenses (labor, calibration, depreciation, and service).

At the bottom of the screen are displayed the monthly grand total for operation, the monthly cost per reportable patient result, and the total lifetime operating cost of the instrument. A printout of these data can be obtained through use of the <ALT><PrtSc*> key combination.

The current version of Instcost determines annual service costs for all but the initial year of operation (when the instrument would be under warranty). The instrument's repeat-test rate can be factored into total monthly patient, quality control, and calibration test volumes.

This program has been used in conjunction with a DBase III instrument database to narrow down instrument selection on the basis of cost, throughput, interferences, and other factors, and subsequently to perform a detailed costing-out. In this manner, we identified the most cost-effective, random access profiling analyzer for our for-profit reference laboratory operation. The program is now helping us evaluate whether we want to acquire a state-of-the-art dry slide analyzer, and if so, whether a purchase or a rental would be more advantageous.

Readers who wish more information about this program may write to the author at the Mt. Sinai Medical Center, Department of Laboratories, 1 Mt. Sinai Drive, Cleveland, Ohio 44106.

Table: Figure I The program's cost calculation commands

Table: Figure II Data presented for review before final costing-out

Table: Figure III Computed operating costs for a centrifugal random access analyzer
COPYRIGHT 1987 Nelson Publishing
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Copyright 1987 Gale, Cengage Learning. All rights reserved.

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Author:Sealfon, Michael S.
Publication:Medical Laboratory Observer
Date:Dec 1, 1987
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