Financial Management: Setting the Stage

Abstract

This chapter concentrates on hospital and independent laboratories and deals with the operational management of the laboratory. It discusses strategic planning, human resource management in the operational units, cost analysis, and financial decision making. Major differences in the cost and operational structures of independent and hospital laboratories lie in the patient populations and the nature of the services provided. The chapter explores the environment of the hospital laboratory and how these factors may affect financial performance. Reimbursement of hospitals for inpatient stays is based on one of the following schemes, depending on the payor: percent of charges, per diem reimbursement and reimbursement for diagnosis-related groups (DRGs). The second and third of these schemes are the most common in the United States, where reimbursement based on charges has almost disappeared for inpatients. The breadth of testing provided by independent laboratories generally mirrors that of hospital-associated laboratories. The major differences lie in the population served, hours and scope of operation, turnaround time requirements, and need for ancillary functions, such as business operations. Most of the testing done by the independent laboratories is for outpatients of physicians and clinics. There are fundamental and striking differences in clinical need and demand, financial constraints and considerations, and laboratory mission and cost structures, which depend on the laboratory’s situation. Whether inpatient or outpatient hospital or independent laboratory, each has its own set of functional drivers of which laboratory management must be acutely conscious.