Microbiology's economics: dissecting procedures and costs.
They are needed for the following reasons: 1) to set charges for the sizable amount of work that still falls outside the prospective payment system, 2) to monitor laboratory expense against budget allocation per DRG and against Medicare fee schedules for outpatient work, and 3) to provide a baseline against which the cost of proposed procedural changes and new tests and be assessed.
Not long ago, we reviewed all of our microbiology procedures, dividing them into as many individual components as possible and determining the direct production cost of each. That cost consists of labor and supplies.
All of the data were assembled and analyzed manually. The task would have been greatly simplified on a computer, but our current data processing capability is inadequate, and a new system is a number of months away. Even use of the College of American Pathologists' Computer-Assisted Workload Program would have made the project much easier.
First we listed every microbiology procedure so that each test stood alone rather than as part of a general designation. Follow-up tests were itemized for different kinds of positive cultures. For example, a mycobacteriology sputum culture was broken down into these components: acid-fast concentration, acid-fast smear, acid-fast screen, acid-fast identification, and acid-fast susceptibility. Figure I is an excerpt from the list.
Whenever possible, we matched each component to a corresponding 1984 CAP workload recording method procedure number and unit value. If permanent or temporary CAP value did not exist for a procedure or if our methodology varied from the CAP description, we conducted our own time studies and used that data for a procedure or component. Everything in our analysis represented direct time study measurements, either by the CAP or ourselves.
Figure II shows examples of our breakdown of test components and workload values. Values based in whole or in part on our own data are flagged with asterisks.
The final step was to establish direct labor and material costs for each procedural component. This was a herculean manual task: Our 700-bed hospital laboratory performs approximately 300 different microbiology procedures. The supervisors tackled the job with enthusiasm and a firm grasp of project objectives, and their calculations ae a remarkable achievement.
Component and cost breakdown first require intimate knowledge of all procedures. Supervisors sat down and reviewed each test, listing every supply item used. They then turned to pricing information to calculate unit costs, which were multiplied by the number of items used in the procedure--two pipettes, three slides, and so forth.
Labor cost calculations were even more demanding. We had been performing time studies for several years, and more were conducted in connection with our cost analysis--as many as 20 time studies per test. Supervisors then had to calculate the cost of the time spent on each procedure by employees at different salary levels.
Now we know that a positive Clostridium difficile culture costs the laboratory $4.71, which includes laboratory assistant time ($0.98), technologist time ($1.43), a CCFA plate ($1.25), an anaerobic gas pack ($0.86), and a gas pack indicator ($0.19). Other examples of direct cost breakdowns are shown in Figure III.
By expanding our long-standing workload recording system to include cost breakdowns and all test components, we reaped benefits beyond those related to test pricing and monitoring of costs. For one thing, we can see where our test methods match those listed by the CAP and where they differ. Some administrators rely heavily on CAP data, and the laboratory must be able to justify workload figures if other test methods are used.
Similarly, we can provide more accurate and comprehensive workload and productivity totals for our laboratory. Although the CAP system has been very good as far as it goes, we've found it helpful to rely on our expanded data. CAP, too, has seen how helpful breakdowns can be: Its 1985 manual contains more comprehensive procedure information.
With all test components identified, we can keep track of data such as how many urine screens must be worked up, what percentage of blood cultures are positive, and how many workload units are required to complete work on a culture. In addition, third-party payers are less likely to challenge a charge for a fully explained procedure than a charge labeled "culture."
Defining the methodology and its labor and supply requirements enables us to spot opportunities for savings. We can cut costs by eliminating or modifying procedural steps, which may also lead to faster turnaround time.
If a data base made up of test components and costs is plugged into a computer, then automatically test charges can be added to the patient's bill, workload units can be tallied (even separated for technical, clerical, and quality control functions), and periodic reports can be generated on expenses, workload, and productivity.
As we move toward a standardized national payment system and fee schedule, we must be able to analyze our operations under a stronger magnifying glass in order to gauge productivity and increase efficiency. The ideas we have put forth may help others plan for the future.
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|Author:||Garcia, Lynne S.; Bruckner, David A.|
|Publication:||Medical Laboratory Observer|
|Date:||Feb 1, 1985|
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