DLM (ASCP) Exam Study Guide | Laboratory
Management, Budgeting, Finance, Break-Even
Analysis, Cost Control & Revenue Notes.
Project Volumes (forecasting stage)
based on expert opinion, stats, historical data, shifts in patient mix, changes in medical staff
composition, changes in inflation/reimbursement ratws, expansion/cutbacks, population
fluctuations based on economy
Steps to creating a budget
1. project volumes
2. convert volumes to revenue
3. convert volumes into expense requirements
4. Adjust revenue/ expenses as necessary to meet budget margin
gross revenue
Rates x Production Unit (Billable test volume)
Expenses
salaries/wages, reference service, instrument lease, maintenance contracts, education/travel
Financial Statements
convey the financial status of an organization
4 main types - income statement, balance sheet statement of changes in equity and statement
of cash flows.
income statement
summarizes the operations of an organization with a focus on its revenues, expenses, and
profitability. contains operational results over a period of time.
depreciation
noncash charge against earnings on income statement that reflect the "wear and tear" on a
business' fixed assets (property and equipment). loss of value
salvage value
amount received when final disposition occurs at end of the asset's useful life.
,annual depreciation
(initial cost - salvage value)/ useful life
Profit
net income -expense
cashflow
net income + depreciation
Total Profit Margin
Net income divided by total revenues. It measures the amount of total profit per dollar of total
revenues.
fixed costs
cost not related to the volume of services delivered (ex. facilities cost, lab admin, instrument
leases, maintenance contracts)
variable cost
directly related to the volume of services delivered (ex. supplies, labor costs)
Profit Analysis
technique use to analyze the effects of volume changes on profit. can also be used to analyze
effects of volume changes on costs.
Total Costs
fixed costs + variable costs
Variable costs = variable cost rate x volume
contribution margin
difference between per unit revenue and per unit variable cost. gives the amount left to cover
the fixed costs. after fixed costs are covered what's left contributes to the profit.
accounting breakeven
Volume needed to produce zero profit. Revenues cover all accounting costs.
Total Revenue (cost x volume) - Total Variable (variable cost rate x volume) - fixed costs = $0
economic breakeven
, occurs when all accounting costs plus a profit target are covered
total revenue - total variable cost- fixed cost = profit
Surcharge/Cost Plus
used for reference/send out testing. Determine cost of doing a procedure then add markup
factor to get appropriate price.
weight value basis
each test performed is assigned a weight based on cost of performing the test in relation to the
procedure.
patient day factor
the number of patients in a hospital on a given day.
(average patient day/ daily census for the year) x 365
tests per patient days
test volume/ patient days
revenue per test
gross revenue/test volume
direct costs
test-specific costs (Variable)
examples - supplies, instrumentation, reagents, tech time
indirect cost
remain constant
examples - lab admin, medical records, house keeping, utilities, etc. (fixed/semi-variable)
unit costs
total direct + indirect expenses
Employment cycle
covers all stages in the process of employing staff:
1. recruitment and acquisition costs (pre-employment screen)
2. training/developmental costs (ongoing)
3. productive/operational periods
4. termination/separation of employee from institution costs
Management, Budgeting, Finance, Break-Even
Analysis, Cost Control & Revenue Notes.
Project Volumes (forecasting stage)
based on expert opinion, stats, historical data, shifts in patient mix, changes in medical staff
composition, changes in inflation/reimbursement ratws, expansion/cutbacks, population
fluctuations based on economy
Steps to creating a budget
1. project volumes
2. convert volumes to revenue
3. convert volumes into expense requirements
4. Adjust revenue/ expenses as necessary to meet budget margin
gross revenue
Rates x Production Unit (Billable test volume)
Expenses
salaries/wages, reference service, instrument lease, maintenance contracts, education/travel
Financial Statements
convey the financial status of an organization
4 main types - income statement, balance sheet statement of changes in equity and statement
of cash flows.
income statement
summarizes the operations of an organization with a focus on its revenues, expenses, and
profitability. contains operational results over a period of time.
depreciation
noncash charge against earnings on income statement that reflect the "wear and tear" on a
business' fixed assets (property and equipment). loss of value
salvage value
amount received when final disposition occurs at end of the asset's useful life.
,annual depreciation
(initial cost - salvage value)/ useful life
Profit
net income -expense
cashflow
net income + depreciation
Total Profit Margin
Net income divided by total revenues. It measures the amount of total profit per dollar of total
revenues.
fixed costs
cost not related to the volume of services delivered (ex. facilities cost, lab admin, instrument
leases, maintenance contracts)
variable cost
directly related to the volume of services delivered (ex. supplies, labor costs)
Profit Analysis
technique use to analyze the effects of volume changes on profit. can also be used to analyze
effects of volume changes on costs.
Total Costs
fixed costs + variable costs
Variable costs = variable cost rate x volume
contribution margin
difference between per unit revenue and per unit variable cost. gives the amount left to cover
the fixed costs. after fixed costs are covered what's left contributes to the profit.
accounting breakeven
Volume needed to produce zero profit. Revenues cover all accounting costs.
Total Revenue (cost x volume) - Total Variable (variable cost rate x volume) - fixed costs = $0
economic breakeven
, occurs when all accounting costs plus a profit target are covered
total revenue - total variable cost- fixed cost = profit
Surcharge/Cost Plus
used for reference/send out testing. Determine cost of doing a procedure then add markup
factor to get appropriate price.
weight value basis
each test performed is assigned a weight based on cost of performing the test in relation to the
procedure.
patient day factor
the number of patients in a hospital on a given day.
(average patient day/ daily census for the year) x 365
tests per patient days
test volume/ patient days
revenue per test
gross revenue/test volume
direct costs
test-specific costs (Variable)
examples - supplies, instrumentation, reagents, tech time
indirect cost
remain constant
examples - lab admin, medical records, house keeping, utilities, etc. (fixed/semi-variable)
unit costs
total direct + indirect expenses
Employment cycle
covers all stages in the process of employing staff:
1. recruitment and acquisition costs (pre-employment screen)
2. training/developmental costs (ongoing)
3. productive/operational periods
4. termination/separation of employee from institution costs
