There is a fundamental, inherent flaw in the current methodology for benchmarking clinical laboratories—we only measure half of the value equation. Why do we only measure costs and not revenue? It is because most hospitals still view lab as a cost center rather than profit center.
The reality is that hospital laboratory businesses are growing in size. In our 13th Comprehensive National Laboratory Outreach Survey, the average and median outreach programs were $19 million and $11 million, respectively, with an average contribution margin of 28 percent. Businesses of this size and profitability deserve some respect! At minimum, the revenue should appear in the value equation. It is nonsensical to measure only costs. It goes against the rules; it’s like:
- Peanut butter without jelly.
- Biscuits minus gravy.
- Adam without Eve.
- Milk without cookies.