Evaluating STAT testing alternatives by calculating annual laboratory costs.

Until 1984, when the Deficit Reduction Act (DRA) was passed, hospitals and their clinical laboratories were fully reimbursed for nearly all test analyses that were performed. The DRA established a Medicare system that indirectly pays for laboratory tests as part of a total-care reimbursement fee based on the diagnosis-related group (DRG) that classifies the patient’s clinical condition. Under this system, a hospital makes money if its actual patient care costs are less than the DRG reimbursement, or it loses money if its costs exceed the predefined DRG level. Two-thirds of health care reimbursements are now paid by Medicare or similar prospective payment programs. In addition to the prospective payment environment, several emerging trends impact the financial management of a hospital laboratory service: (1) Competition for Resources-Laboratories now must compete with other hospital departments for available resources. More than 70 percent of operating laboratories have experienced budget reductions.’ (2) Increased Costs-The cost of operating laboratories has increased faster than the general inflation rate, primarily due to an increased volume of testing caused by advances in technology, worry over malpractice liability risk, easier access to testing, and an increase in the acuity of illness in our aging population.23 (3) Higher Standard of Care Demands-Clinicians expect laboratories to quickly deliver reliable results to help them make immediate patient management decisions. The American Heart Association and the Emergency Care Research Institute recommend, for example, that blood gas and electrolyte results in open heart surgery be available within five minutes.4’5 The expected required turnaround time for these same tests in other critical care settings varies, but it is generally in the range of five to 15 minutes. These standards are