Lab Economics: Comparing Cost

To test at the point of care or not to test at the point of care? That is the question. Although, some debate over the cost-effectiveness of near-patient testing has dimished with its increasing use, it has by no means disappeared.
    Traditionally, the lab has fought to maintain control of all testing to ensure quality control, while clinicians have enjoyed the quick results afforded by bedside testing.
    If a cost analysis on this subject is in your future, you may be interested in the findings of Dr. Kiechle who compared glucose testing in the lab with point-of-care glucose testing. He believes the financial consequences of internal and external defects should not be overlooked.

Frederick L Kiechle, MD, PhD

The cost attributed to point-of-care testing (POCT) programs in hospitals may be determined by two different methods: cost center-based analysis or defect-rate inclusion analysis. Any evaluation of costs will require new calculations if there is any change in volume, reagent costs, methodology, salary, etc. In general, the cost of performing a point-of-care glucose test is indirectly related to the volume of procedures per nursing unit. Units that perform a low volume of glucose analysis should arrange to have their tests performed in the central laboratory.

Cost center-based analysis records all direct and indirect costs associated with performing a glucose test in the clinical chemistry laboratory or on the nursing unit for POCT. This method has been used in numerous published cost comparisons that evaluate POCT vs. central laboratory. The conclusion that a POCT program on a nursing unit will be more expensive ($7.85) for total costs and $3.92 greater for incremental costs than the central laboratory (see table) is inevitable when the cost analysis method is used.

Total costs include direct and indirect costs. Direct costs include personnel time to prepare and perform the test, reagents, quality controls and equipment depreciation. Indirect costs include reporting costs (computer) and hospital overhead. Incremental costs include only the direct costs and not the indirect costs. Therefore, incremental costs demonstrate what it would cost to perform one more glucose test, assuming the equipment and facility are already in place (see table). (Table corrected for on-line display.)

This analysis of direct costs for the central laboratory does not include the cost of the collection tube or labor required to obtain the specimen. It only includes the direct cost assigned to the cost center (clinical chemistry laboratory) that performs the assay. This traditional approach to cost analysis is not ideal for evaluating POCT programs because it fails to quantify the effect of defects.

The defect-rate inclusion analysis moves beyond the narrow cost-center approach and includes the total cost related to the failure to provide a (central laboratory or POCT) result in a reasonable length of time. The defect rate or failure to achieve a reasonable turnaround time may be defined as internal or external failure rates. External failure costs, which result as a consequence of a delay in the usual turnaround time, are incurred by clinicians who need the test result. Internal failure costs, a consequence of a defect in the testing system, are incurred by the testing center.

A comparative analysis of glucose tests performed in the central laboratory or POCT site using defect-rate inclusion analysis was published by Cembrowski and Kiechle in 1994 in Advances in Pathology and Laboratory Medicine, volume 7, pages 3-26. In this study, the internal failure rate was attributed to the repeat rate: 3 percent in the central laboratory and 5 percent in the POCT unit plus requests for the central laboratory to confirm high and low extreme values. The POCT unit contributed approximately six times as much of the internal failure costs as the central laboratory.

However, the central laboratory contributed >22 times the cost of the POCT unit for external failure costs. This disproportional distribution is directly related to the central laboratory’s failure, 27 percent of the time, to provide a glucose value within 15 minutes of the time the food tray was delivered to the POCT unit. Each delay in turnaround time for a glucose value resulted in a registered nurse delaying insulin treatment and searching by computer or telephone for the glucose result for 16 minutes. Although defect-rate inclusion analysis does not include all costs related to glucose analysis, it does include the effect of defects on the laboratory and POCT unit when delays in obtaining results are secondary to causes of repeat analysis or other problems.

In conclusion, the evaluation of costs for a POCT program vs. central laboratory requires more detail than a cost center-based analysis can provide. Some effort should be made to look at the financial consequence of defects, especially internal failure and external failure costs, during such a cost evaluation.

Frederick L, Kiechle, M.D., Ph.D., is chairman of the department of clinical pathology and medical director of the Beaumont Reference Laboratory at William Beaumont Hospital in Royal Oak, Mich.