Chapter 12: Financial Management Flashcards
is the supply, labor, and overhead money spent on a
product or service
Cost or Expense
are expenses that can easily be traced directly to an end
product. In the laboratory setting, the end product is a billable test.
Examples are reagents, consumables, and hands-on technologist time. In contrast
Direct cost
are not directly related to a billable test but are necessary
for its production. it was often referred to as overhead.
Examples are proficiency testing and utility expenses.
Indirect costs
do not change with the volume of tests performed.
Fixed costs
Fixed costs that change with increments of volume
Step costs
also associated with the recruitment, interview, and selection process
Salary costs
are the expenses incurred to produce a product or
service.
Operating costs
the item must meet three criteria: time, price, and purpose.
Capital item
The annual loss of a capital item’s value
Depreciation
determines the total direct labor and supply costs of producing a test, and it is the starting point for determining the fully loaded cost and ultimately the price for a test.
Microcosting
distributes the total direct costs of a run over the patient “reportable” results for that run. Testing efficiency is defined as the total reportable patient results/total test results.
Cost per reputable result
the cost of producing one additional test that, typically, does not require an additional salary or capital
Incremental cost
for a test is the sum of direct and indirect costs
Fully loaded cost
should be based on the fully loaded cost to produce the test compared with the price offered by a commercial or reference laboratory.
Make-versus-buy decisions
is the balance remaining after the fully loaded costs are deducted from the price charged for a test.
Contribution margin
a laboratory is the life cycle cost of its capital assets. It focuses attention on the sum of all costs of owning
and maintaining all assets for a specific service or product, as opposed to the initial capital or operating costs.
total cost of ownership (TCO)
the total price of services rendered or products sold
It is the money a business is entitled to receive for the services and products it produces.
Revenue
consists of the total charges at a facility’s full-established rates (list price) for provision of inpatient and outpatient care before deductions from revenue are applied.
Gross patient revenue
is the gross inpatient and outpatient revenue minus all related deductions.
Net patient revenue
from revenue includes contractual adjustments, provision for bad debts, charity care, and other adjustments and allowances that reduce gross patient revenue.
Deductions
