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The following questions
and answers are from the Cardinal Health Lab Briefings webinar
entitled:
Laboratory Finance: 101 and Beyond held live on May 19, 2021. The views, opinions, and guidance expressed below are
those of the webinar presenter and do not express the views,
opinions or guidance of Cardinal Health or Whitehat
Communications.
For
information on Cardinal Health laboratory products, please
visit our website here.
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Question
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Response
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How can I cost-justify bringing in certain new tests or
implementing new services for patients?
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Cost-justification can go beyond a profit and
loss/return on investment calculation. Many procedures
we perform in the laboratory do not generate a profit
based upon reimbursement, rather they are used to
stratify the patient’s risk, thereby avoiding other
downstream healthcare costs. Two examples are MRSA and
C. diff testing. Many literature examples are available.
Example:
Practice forum Infection preventionists and
laboratorians: Case studies on successful collaboration
Article in American Journal of Infection Control, April
2016, DOI: 10.1016/j.ajic.2016.02.011
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Why is labor listed under both fixed and variable cost?
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In the laboratory, technical effort varies based on the
procedures performed. Variable labor is also known as
hands-on effort: the more procedures you do, the more
time it takes you. Many manual laboratory procedures and
pre-analytic processes (phlebotomy, data entry) are
variable in their labor requirements.
Conversely, fixed labor does not vary greatly with
volume fluctuations. An example of fixed labor is
management personnel. An example of fixed labor that has
a variable aspect is a technologist that is responsible
for running a highly-automated analyzer. Their
productivity is largely dependent upon the throughput of
analyzer. Certainly, that employee is required to run
the testing, but the labor cost is the same whether the
instrument is running at capacity or not. Use caution
when assigning a labor cost to a highly-automated
procedure.
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How can I calculate contractual allowance?
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A contractual allowance (or contractual adjustment) is
the difference between what a healthcare provider bills
for the service versus what it will paid based on the
terms of its contracts with health plans (insurance)
and/or government payors. Simply stated, it is the
percentage of reduction from your charged amount. If
your contractual allowance is 75%, you receive 25% of
what you billed.
Example: $100 charged rate - minus $75 contractual
allowance equals $25 collected revenue.
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How can I learn more about laboratory finance?
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Professional associations
provide many resources for their members. The Clinical
Laboratory Management Association (CLMA) provides a Body
of Knowledge that defines critical laboratory leadership
competencies across 10 domains. The Financial Management
Domain provides a support for developing sound financial
management practices at all levels of experience. Topics
include budgeting, financial and managerial accounting,
using accounting information for decision making, and
financial management, including assets management with
an emphasis on cash flow analysis. Learn more at
https://www.clma.org/bodyofknowledge.
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How can the laboratory learn to speak “CFO”?
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In addition to the CLMA resource noted in the above
question, the Healthcare
Finance Management Association provides a broad
range of resources for professionals across the spectrum
of financial roles within healthcare. It is likely that
your CFO and/or finance VPs are members of HFMA.
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Lab Briefings webinars are sponsored by
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Communications, a division of Martek Inc. |
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