Basic Concepts for Making Informed Financial Decisions for the Clinical Laboratory Part 3: Development and Utilization of the Laboratory Budget and Inventory Management
Continuing Education Credits
Basic concepts for the development and utilization of the laboratory budget and Inventory management are presented. The budget steps required to create a budget, monitor, and when to adjust are described. An example of an inventory management process is described including the ordering process, supply management when to order, and how to maximize pricing from suppliers is presented.
Objectives
- Define what a budget is and describe the phases of the budget process.
- Develop goals for a laboratory budget and list the major categories of the laboratory budget.
- Describe several budget assumptions and discuss cost and revenue projections.
- Monitor the budget, explain variances, and make adjustments.
- Describe an inventory management process as it applies to the clinical laboratory.
- List the steps required to implement an inventory control program.
- Discuss the proper location and storage of incoming supplies as applicable to the inventory management plan.
- Discuss a monitoring system to assure adequate inventory without surplus.
- Discuss a monitoring system to assure adequate inventory without surplus.
- Discuss a monitoring system to assure adequate inventory without surplus.
Course Outline
- Introduction: Budget and Inventory Management
- Introduction
- Introduction to the Laboratory Budget
- Before managed-care hospitals, the laboratory was evaluated on the cost per test versus revenue per test.
- Introduction to Inventory Management
- The Budget Process: Definition and Phases
- Budget Defined
- An important function of the budget process is to inform the institution's financial decision-makers of the laboratory's predicted expenses to allow for the proper allocation of resources to the laboratory.
- Phases of the Budget Process
- Phase I: Development of Budget Goals
- Phase I: Budget Goals
- A major consideration in developing the laboratory budget is to provide justification for all expenses when the laboratory budget is not fully in sync with that of the overarching hospital/institution.
- Phase II: Budget Assumptions
- Phase II: Budget Assumptions
- Phase II: Budget Assumptions, continued
- One possible assumption in budget preparation is that the previous year's expenses will remain similar in the next fiscal year.
- Phase III: Forecast
- Phase III: Forecast - Budget Categories
- Phase III: Forecast - Cost and Revenue Projections
- Phase III: Forecast - Cost and Revenue Projections, continued
- Phase III: Forecast - Opportunities for Cost Containment
- Phase III: Forecast - Preparing the Final Budget
- Forecasting includes all of the following, except:
- Charting the Budget
- Charting the Laboratory Budget: The Big Picture
- Charting Expenses by Departments in the Laboratory: Monitor, Explain Variances, and Make Adjustments
- When charting the laboratory budget, it is important to:
- Budget Summary
- Budget Summary
- Inventory Management
- Introduction to Inventory Management
- What is Inventory Management? What Steps are Required?
- One of the most effective ways to reduce costs and improve productivity is to:
- The Process for Creating an Inventory Management Plan
- Step 1: Create a Starting Point
- Step 2: Assess Stocking Levels and Reductions
- Step 3: Locate, Monitor, and Track Inventory; Disposal
- Step 4: Procurement of Supplies - Leverage Pricing and Place Orders
- The process for creating or revamping an inventory management plan should include all of the following, except:
- Summary
- Summary
- References
- References
Additional Information
Level of Instruction: Basic
Intended Audience: Medical laboratory scientists, medical
laboratory technicians, laboratory supervisors, and laboratory managers. This
course is also appropriate for MLS and MLT students and pathology residents.
Author Information: Dr. A. Wayne Bruce has B.S. and M.S. degrees in Medical Technology and a Doctorate degree in Higher Education Administration and Statistics from the University of Minnesota. He has served as Director of a Clinical Laboratory Science program for 25 years and as Laboratory Director and Technical Consultant for over 35 years. He most recently was an Associate Dean at the Northern Ontario School of Medicine. Dr. Bruce was President of Bruce North Country Consulting Services, LLC, and consulted with clinical laboratories on laboratory finance, start-up, management, and accreditation. He has numerous publications, including a book on quality assurance for the clinical laboratory and a financial management manual for the Thompson Publishing Group.
The author has no
conflict of interest to disclose.
Reviewer Information:
Larry Brace, Ph.D., MLS(ASCP)SH, has over 40 years of experience as a medical laboratory scientist. He holds a B.S. degree in Medical Laboratory Sciences and an M.S. degree in Clinical Pathology from Michigan State University and a Ph.D. degree in Pharmacology from the University of Illinois at Chicago. He has been an Associate Director of the Medical Laboratory Science program at Michigan State University, Professor of Medical Laboratory Science, and Professor of Pathology at the University of Illinois at Chicago (UIC). He was also the Director of Core Laboratories at UIC until his retirement. Dr. Brace has published more than 40 articles in scientific journals and has nearly 100 presentations (abstracts and podium presentations) at national and international scientific meetings.
Dr. Julie Ann West is certified by the American Society for Clinical Pathology (ASCP) as a Medical Laboratory Scientist (MLS) and as a Specialist in Microbiology (SM). In addition, Dr. West has earned a PhD in Public Health - Epidemiology Specialization (emphasis: infectious disease) - and is Certified in Public Health (CPH) by the National Board of Public Health Examiners. Dr. West is experienced as a Technical Specialist, Safety Officer, Educator, and Lead in the Veterans Administration Healthcare System, and has prior experience as an Administrative Laboratory Director. Dr. West also has extensive experience as a certified Contracting Officer Representative (COR) Level II for the Veterans Administration.
Course Description: Basic concepts for development and utilization of the laboratory budget and inventory management are presented. The budget steps required to create a budget, monitor, and when to adjust are described. An example of an inventory management process is described including the ordering process, supply management, when to order, and how to maximize pricing from suppliers is presented.