Cost-per-Test: Activities are the key
December 12, 2023eValuate: What can it do for you?
January 16, 2024Introduction
In our previous 6 posts, we delved into the intricacies of laboratory cost- and finance management, challenging some common beliefs and emphasizing the need for rigorous interrogation of financial data. We explored the integration of Business Intelligence (BI) tools to achieve this and had discussions on the crucial metric of Cost per Test, which involved a comprehensive examination of the impact on laboratory cost management, an overview of standard methods for calculating cost per test, and an exploration of the benefits and drawbacks associated with each method.
The overarching objective was to underscore the necessity for a consistently repeatable Cost-per-test calculation, encompassing all costs and ensuring a fair allocation of indirect costs.
In the end, we highlighted the efficacy of activity-based costing (ABC) in providing detailed cost breakdowns and underscored the need for a customized implementation tailored to the complex operations of laboratories.
Introducing eValuate
eValuate is an innovative activity-based laboratory cost management solution designed for accurate, repeatable cost-per-test calculations. This tool empowers organizations to monitor high-cost drivers, conduct comparative analyses across sites and departments, and ultimately enhance efficiency and profitability at the test level. Unlike mere dashboards, eValuate, tailored for laboratories, offers detailed breakdowns of cost and profit per test, enabling comprehensive insights for effective cost management. Leveraging curated data-driven reports, laboratories can identify strengths, weaknesses, and areas for improvement, supporting continuous operational enhancements while upholding quality patient care.
How should eValuate be used?
Targeting laboratory finance teams, operational professionals, and strategic planners, eValuate is intended for periodic use, particularly before budgeting periods, during pricing determinations, and when evaluating test cost-effectiveness. Data is sourced from Laboratory Information Systems (LIS), Human Resources (HR), and finance systems, utilizing process data for accurate cost allocations. The tool provides a clear presentation of profit, revenue, and cost per test, unveiling hidden costs, inefficiencies, and opportunities for savings. Users should focus on identifying cost trends, areas of high expenditure, and opportunities for reduction.
What can you expect from using eValuate?
Test cost analysis using eValuate significantly influences the overall profitability of the laboratory, informs service pricing, and guides strategic decisions on resource allocation, capacity planning, and service offerings. Actionable steps may involve negotiating better supplier contracts, investing in cost-effective equipment, or discontinuing high-cost tests. Operational considerations include benchmarking test performance time, lab personnel costs, and maintaining and operating lab equipment.
Report Presentation
Presenting the calculation results in a BI report, eValuate allows analyses from high-level overviews to detailed interrogations. With cost data visualization, over time, trends can be tracked offering actionable insights for informed decision-making.
Conclusion
In conclusion, eValuate stands as a tailored solution for laboratories seeking enhanced cost management. Its detailed insights, sourced from curated data, empower finance and operations professionals to optimize resource allocation, identify cost reduction opportunities, and align cost structures with organizational goals. Using BI reports further enhances the capacity to analyze, visualize, and act upon cost data, ensuring laboratories remain adaptive, efficient, and strategically aligned in a dynamic healthcare landscape.
