Clinical Laboratory Financial Value: 5% of Costs – 50% of Margin

The Financial Value of Clinical Laboratories is Disproportionately High:  5% of Cost Can Drive 50% or More of Margin

Here is one of healthcare’s best kept secrets–laboratory drives a disproportionate share of hospital profits. Five percent of hospital costs can drive over fifty percent of hospital profits. How? The answer is a robust laboratory outreach program. Outreach can be the proverbial “goose that laid the golden egg” providing a growing, recurring revenue stream at a time when hospitals are starved for new revenue and margin.

Outreach can be the proverbial “goose that laid the golden egg” providing a growing, recurring revenue stream at a time when hospitals are starved for new revenue and margin.

Yet, despite this incredible story, outreach is often misunderstood. Why? A myriad of reasons:

Reasons Outreach is MisunderstoodOutreach is often misunderstood. Why? A myriad of reasons. 1. It’s different from hospital business. 2. It’s a small portion of the hospital’s business. 3. It’s complicated. 4. It’s perceived as “non-core.” 5. It’s not a priority. 6. It requires new structure and systems. 7. It lacks transparency for profitability. 8. It's (incorrectly) viewed as a high volume, low margin business. 9. Etc.

I could go on and on with the reasons why outreach is so misunderstood. If you hold any of these beliefs, I recommend you read one or more of the following articles:

Kathleen A. Murphy, PhD.
Chief Executive Officer
Chi Solutions, Inc.

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