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In Focus
The Lean healthcare institute promotes effective operations in the healthcare industry through the use of quality management methods. The overriding goal of the institute is to impart this innovative knowledge to the healthcare professional through a simplified and proven approach. |
| Product & Services Guide 2010-11
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Greetings!
Total Cost of Operation is a metric that is being used more frequently in lab management. This month Nexus travelled to the UK, Germany, Austria, Canada and the US. In each geographic location, the TCO approach is either being used or considered for use in a variety of ways. The enclosed articles add insight into how and when they may be important for your lab. |
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Events
LHI classes are open for November.
Nexus will be at the AMP in San Jose, CA on November 17-20. Look us up! |
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Total Cost of Operation Methodology: Utilization in Today's Laboratory, Brian Jackson, Managing Partner, Nexus
October 28, 2010
Total Cost of Operation (TCO) is a methodology for determining, as the name implies, how much a certain method costs to operate. TCO uses activity-based costing (ABC) techniques, which consider all the manual activities and consumables. This ABC approach, popular in manufacturing and other industries for many years, has been applied effectively in healthcare diagnostics and offers a way to better monitor and understand the actual costs of operation.
COMMON CATEGORIES OF COSTS
· Direct and Indirect labor
· Reagents or Reagent kits
· Consumables
· Maintenance parts
· Capital equipment
· Service agreements
· Waste disposal
· Utilities and Laboratory space
The direct labor is captured by understanding the time required to operate an instrument and multiplying by the wage rate. There may a variety of activities that must be included when looking at the direct labor to include the time to calibrate, control, prepare reagent, and other related activities. Direct labor should normally be less than 10% of the total cost, and in today's age of high automation, it can be as low as 5% of the total cost of operation.
Other common costs are usually easier to obtain and include reagent, consumable and capital costs.
OFTEN OVERLOOKED COSTS
Important costs that often go overlooked are the last ones listed: waste, utilities and lab space. Of these, lab space can be a significant cost and in the TCO model, it must be counted. Lab space can be valued at up to $500 per square foot depending on the region, and freeing up lab space allows flexibility to generate more tests by bringing in new methods or expanded capacity.
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Tools of the Trade: Simulations
Simulations are programs designed to replicate an operation to better understand the financial and operational impact of decisions. Some think of 'simulations' as computer visuals where a tube can be seen moving across the screen and an instrument processes these images. Perhaps the image of a person is walking around the screen and "working" in the lab. Although these are fun visuals, the power of a simulation is in the background.
In a lab simulation like the one listed above, the user might be interested to see if extending the shift time will enable them to process more tubes, or if a better centrifuge will allow them to make tunraorund time goals. It can also be used to visually see the change in total cost of ownership (without actually having to make the decision in "real life").
The benefit of a simulation is ease of use and the ability to see how a decision will effect the lab system BEFORE making a costly decision. Contact Nexus for more information. |
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Service in Focus: Market Research
Nexus has extensive experience in market research for lab diagnostics. Our appraoch to market research involves a detailed understanding of the strengths, weaknesses, opportunities and threats (SWOT) of a product against the competition to effectively identify segmentation and real impact. We spend more time on observation to see how and if the perception of a product differs from the reality. Virtually in every case, we find that the customer is using the product differently than it was designed or they have created best practices that should be understood by you. Contact us for any needs. |
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