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At last, a guide to cost accounting in the lab.

A new NCCLS guideline is intended to give lab supervisors, managers, and directors a better grasp of day-to-day costs.

Some of the earliest known writing consisted of records carved on clay tablets. Keeping the books has progressed substantially beyond that ancient medium, of course. Nevertheless, clinical laboratory supervisors and managers need all the help they can get in working toward cost containment. They will be served by consulting a new proposed guideline published by the National Committee for Clinical Laboratory Standards: Document GP11-P, "Cost Accounting in the Clinical Laboratory."

GP11-P provides advice and worksheets to help laboratorians answer the important question, How much will it cost my lab to perform this test? To obtain each figure, the reader follows the procedures and formulas given. The process involves finding the costs of labor, reagents and supplies, and equipment-related direct costs. The 108-page paper-bound document, published in December 1990, supplies basic definitions and concepts along with extensive formulas and examples.

Altered reimbursement practices have made it increasingly important to embrace cost-effective money management techniques. More than ever, lab managers find themselves in a strongly competitive environment that requires greater selectivity regarding the choice of performing routine and special tests. Decision makers in the clinical laboratory must know how to examine their own equipment and methods, determine actual costs, and estimate standard costs.

Before settling on a make-or-buy decision--whether to perform a test in-house or send it out--a manager must know what it would cost the lab to do the test on the premises. Yet many laboratories do not have formal cost accounting procedures in place, and few laboratorians are accoutants.

* Cost data. Unlike financial accounting, which provides reports for such external uses as tax prepration, audits, and stockholder reports, cost accounting yields information used to make informed decisions concerning procedures, personnel policies, and capital equipment expenditures. An example: Cost accounting might help a laboratory manager decide to accept a marginally profitable series of tests when doing so would benefit the institution in other ways (supporting the researcher who requested the tests, for example). To accomplish this, the manager might have to schedule the work during otherwise idle time to avoid incurring differential salary expenses.

* Need for cost control. What prompted the NCCLS to prepare the new guideline? MLO spoke with Eleanor M. Travers, M.D., who chairs the subcommittee that produced the document. "The lab's role has turned 180 degrees in the past five years, from a revenue center toward total cost control in the future," she said.

"Many laboratories have realized the importance of calculating actual costs, which has been caused by a combination of forces, including but not limited to CLIA, increasing workload, malpractice suits, and the failure of third-party insurers to reimburse hospitals adequately," explained Dr. Travers, director of pathology and laboratory medicine at the Department of Veterans Affairs in Washington, D.C.

GP11-P includes sections that describe uses of cost accounting in the laboratory and explain how to focus resources to optimize the benefits of cost accounting and how to calculate costs of tests. Figure I, excerpted from an extended example in the document, shows and illustrates the formula for determining consumable costs of a test or profile. Figure II shows part of a labor worksheet.

* Accounting in labs. In 1985 the NCCLS Area Committee on General Laboratory Practices formed a Subcommittee on Cost Accounting with Dr. Travers as chair-holder. Finding that laboratory cost accounting methods varied greatly and that no standard cost accounting terms or protocols for labs existed, the subcommittee adapted basic cost accounting principles to the special needs of clinical laboratories.

GP11-P "has a long history. It's more detailed than a lot of NCCLS documents, which tend to be very procedure oriented," according to Donald W. Thompson, MT(ASCP), assistant executive director of NCCLS and staff liaison to the cost accounting subcommittee. Typically, NCCLS documents describe such subjects as antibiotic susceptibility testing and enzyme and fluorescence immunoassays.

The subcommittee met, formed a consensus, gave assignments, and held meetings about twice yearly for five years before arriving at the proposed guideline stage for GP11-P. The document will be open to comments and suggestions until approximately the end of this year. "We encourage users to write back and comment on the utility of the guideline and make recommendations," Thompson said. "Once the subcommittee has this input in hand, it will meet again, address the comments, and revise the document as necessary."

Steps that follow will bring republication of the document as a tentative guidline, a second year-long evaluation by users, and finally issuance as an approved guideline.

The authors of GP11-P caution against relying too heavily on figures alone. "The laboratory business is a complex activity whose elements include personnel, money, space, equipment, goals, ethics, incentives, materials, and policies," they write. "No manager has all the information on each of the elements, and many decisions must be made under uncertainty using good judgment . . . A cost accounting system overused could be detrimental if overemphasis on the importance of figures replaces, rather than complements, good managerial judgment."

Each NCCLS member organization has been sent a copy of GP11-P. Additional copies are available at $20 for members and $30 for nonmembers from the NCCLS at 771 E. Lancaster Ave., Villanova, PA 19085.
COPYRIGHT 1991 Nelson Publishing
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:clinical laboratories
Author:Jahn, Mike
Publication:Medical Laboratory Observer
Date:May 1, 1991
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