Lab budgeting and cost accounting under DRGs
Medical Laboratory Observer, Feb, 1985 by W. Glenn Cannon
Cost accounting is not a solution to management problems. It is a management tool designed to provide information that facilitates sound decisions. The two primary objectives of cost accounting are 1) to match cost with revenue and 2) to match resource consumption with the units of service provided.
Under the DRG system, matching revenue with cost and evaluating appropriate utilization levels must be done on a patient-by-patient or case-by-case basis. These are hospital management functions. Overutilization of services for a patient will drive costs above the level of the fixed payment rate for a particular diagnosis.
Since the cost of a particular test can no longer be matched against a specific dollar amount of revenue, laboratory managers now will have the most significant impact by producing lab services as efficiently as possible in terms of costs. Controlling resource......
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