Increasing cost pressures in the U.S. healthcare industry are well documented, with healthcare as a percentage of GDP rising from approximately 16 percent in 2007 on towards a projected 18 percent by 2015.[1]  Feeling the effects in the clinical laboratory market, a recent broad survey of U.S. laboratory managers and administrators indicated that the respondents were concerned about the rising costs of healthcare, a reduced labor force and general unease over healthcare reform legislation[2]. 

Mirroring these trends, the World Bank in the EU is predicting an increase in healthcare spending from 8 percent of GDP in 2000 to 14 percent in 2030.[3]  So regardless of the healthcare system philosophical debates, the costing trends are similar and heading toward something unsustainable.

These macroeconomic challenges are certain and the impact is being felt in laboratories that we visit.  At Nexus we believe that the tools used to combat these challenges are the same throughput the world:  continuous operational improvement, measuring and monitoring techniques, and using accounting tools to control, gauge progress, and help make the right decisions.

One of these tools, called Total Cost of Operation, is being used more frequently.  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 of the method, as well as capital and consumable costs.  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.