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CAPHLD
Whitepaper
Cost is one of the most important considerations one must face in justifying any organization. During times of public budgetary affluence this is a very important concern. When public budgets are retracted, costs can become the sole criteria for keeping or eliminating a function. Since public health laboratories provide support for communicable disease control activities, fiscal, operatives often feel that less support for them is the best way to meet budgetary constraints and yet keep what they feel is the core operation functioning at or near normal levels. Therefore the first thing they suggest for cutting in disease control cost is the reduction or elimination of the public health laboratory.
Cost savings are the basis for existence for the public health laboratory at all times but more so now.
COST RELATED FACTORS
The following information is provided to deal with cost related factors in providing diagnostic laboratory test services.
Characteristics of larger commercial medical laboratories often are: Loss leader underbidding of initially provided test service i.e., taking a loss at one time to profit in another. They may not be willing to offer a firm multi-year contract for all test services at the initial bid price. They have the ability to utilize investments, losses and marketing in ways governmental organizations cannot. They are profit making organizations. A 50% profit is not uncommon in some test categories. Operate high volume automated test systems. Operate 3 shifts everyday. Pay lower wages and benefits by using less qualified employees. May abbreviate their test procedure while using the same CPT code that public health laboratories use. Use an average cost for microbiological testing rather than separating out the cost of this testing from their chemistry and hematology. Usually do not deal with individual test costs. Instead, they deal with an account and the overall volume and type of work the client needs. Therefore, like selling plane tickets, some tests can be discounted and others are not.
Generally, public health laboratories perform diagnostic microbiology and immunology tests at costs lower than those of other medical laboratories (i.e. hospital or commercial) because:
