Laboratory Outreach Financial Considerations

Consider this analogy.  The average laboratory outreach program is like the old neighborhood “mom-and-pop” hardware store, compared to one of the big box, national chains like Lowe’s or Home Depot:



Looking at the big picture, a laboratory outreach program does not have the scale or sophistication of the national laboratories.  It cannot compete on price.  It provides quality testing for the community (some would say better than the nationals).  It keeps jobs local.  It provides faster turnaround time and personalized service.  It leverages the sunk investment in facilities, equipment, and staff in the hospital laboratory and lowers the cost of testing overall.  It’s the only laboratory that does testing across the patient continuum (hospital, extended care facilities, doctor’s office, and medical home), not because it’s profitable but because it’s the right thing to do.  This care continuum is absolutely essential for meeting future challenges such as utilization and population health management.  The hospital laboratory outreach program must be preserved.  It is good patient care and good business.

How do you overcome the preconceived ideas, the obstacles, and the risks?  Financial issues related to outreach are all manageable with the right information and some grit and determination, and include the following components:

  • Unit cost
  • Contracting
  • Pricing
  • Reimbursement
  • Billing
  • Financial transparency
  • Performance
  • Risk

Subsequent blogs in this series will address each of these components.  You can also learn more about mitigating laboratory outreach program financial concerns in my forthcoming book, The Profit Machine in the Hospital Basement: Turning Your Lab into an Economic Engine.

Kathleen A. Murphy, PhD

Chief Executive Officer

Chi Solutions Inc.

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