19.07.17 lab budgeting

Question 1

Issues facing current NHS budget

Answer 1

• Ageing population

- Cuts in budget

Question 2

Three main options for decreasing a lab budget

Answer 2

1) Genetics/molecular pathology service integration
2) Reduction of staff costs
3) Reduction of non-staff costs

Question 3

Considerations when decreasing a lab budget

Answer 3

Ensuring the quality of results and service provided are not compromised

Question 4

How would service integration reduce costs

Answer 4

• Cross-training staff, sharing equipment/ reagents

- LIMS systems that can cross talk

Question 5

Issues with service integration

Answer 5

• Physical space requirements
• LIMS requirements require substantial financial investment
• Sample storage and transport

Question 6

What percentage of a lab budge does staff cost comprise?

Answer 6

70-80% (also have to pay NI contributions, usually 20% more than staff member sees)

Question 7

Examples of reducing staff costs

Answer 7

• Service integration, staff cross training
• Evaluate skill levels required (redistribute accordingly, more lower bands to alleviate time of higher bands)
• Not replacing staff wastage (retirement, leave eg maternity)
• Restructure to increase efficiency and productivity
• Automation of wet lab processes
• bioinformatic solutions to automate dry lab process (e.g. report generation through Genomic England CIP-API system)

Question 8

Examples of reducing non-staff costs

Answer 8

• Finding cheaper suppliers, re-negotiating prices with existing suppliers (including maintenance contracts)
• long term , large scale orders get bigger discounts, but risk buying too much (if consumable is no longer used)
• Purchasing consortia, collaborate with other services. Increase volume of orders to increase discount.
• Stop offering a specific test (e.g. if costly, labour intensive) or replace with cheaper/efficient test. e.g. karyotyping vs QF-PCR, CNV calling via NGS rather than MLPA
• Reducing number of samples sent out for testing
• Eliminate waste by reducing failure/repeat rate (optimisation), reduce sample volumes, batch testing (can impact TAT)
• Inhouse assays vs commercial assays (cheaper but require extensive validation)
• Reduce paper/stationary
• Estate costs (rent/utilities/maintenance) not possible if located in a hospital.

Question 9

Main ways to generate income

Answer 9

• Increase prices (still need to be competitive to other labs, not relevant as test directory will set a tariff)
• Additional charge for private testing
• Develop new services (initial investment will be needed)
• Collaboration with research/charity may allow for grant applications
• Collaborate with supplies/pharma in return for reduced rate of goods
• Government grants

Question 10

How is a lab’s budget determined

Answer 10

Previous year’s spending

Question 11

Difference between cost and price

Answer 11

• Cost= what it actually costs the department to perform a test in terms of consumables
• Price= what the lab charges (includes staff time and maintenance)

Question 12

When do you have to write a business plan

Answer 12

• If changes to services are not cost neutral.

- Service users need to be informed so they have the opportunity to move elsewhere