MLS 3302 BIOSTATISTICS RESEARCH METHODS LABORATORY PRACTICES Unit
MLS 3302 BIOSTATISTICS, RESEARCH METHODS, & LABORATORY PRACTICES Unit 4 – Financial Management Section 1 – The Laboratory Management Index Program (LMIP) Matthew Nicholaou, Dr. PH, MT(ASCP)
Unit 4 – Overview Section 1 � The Section 2 � US Laboratory Management Index Program (LMIP) Healthcare System & Reimbursement Section 3 � Cost / Benefit Analysis Section 4 � Laboratory Budgeting Section 5 � Inventory forecasting
Unit 4. 1 – Laboratory management Index Program (LMIP) Initially the College of American Pathologists’ (CAP) Workload Recording Method (WLRM) was used to measure productivity and assess laboratory staffing. � Due to numerous inefficiencies, fraud, and unreliable values… a new system was put into place by CAP. In 1993, CAP implemented the LABORATORY MANAGEMENT INDEX PROGRAM (LMIP) � LMIP – is a structured approach to laboratory management using a series of ratios derived from daily operational data.
Unit 4. 1 – Modules The LMIP is a peer comparison program of productivity, use, and financial operation. LMIP uses management ratios as performance indicators and focuses on the most important factors affecting laboratory performance: � � � PRODUCTIVITY: How effectively are you using your laboratory personnel? COST-EFFECTIVENESS: How efficiently are you using your supplies, equipment, and labor? UTILIZATION: How do your test ordering patterns compare to those of your peers? “About LMIP”, www. cap. org, accessed 10/29/2012
Unit 4. 1 – Standard Sections LMIP modules are available for a series of STANDARD SECTIONS: � Chemistry � Microbiology � Hematology � Blood Bank � Immunology � Anatomic Pathology � Urine � Specimen Procurement
Unit 4. 1 – Peer Group Analysis The LMIP provides inter-laboratory comparison that assists managers in decision making. LMIP achieves this through peer grouping system based on: � BILLABLE GROUPS [1 – 4]: volume of billable tests performed by the laboratory. � COMPLEXITY GROUPS [I – V]: laboratory services, specialty functions, employee skill mix, intricacy of testing, and laboratory organization structure are used to produce a complexity index.
Unit 4. 1 – LMIP Overview Participants provide raw data specific to their section. The data are converted to COMPARISON RATIOS. Peer analysis is structured in two groups, BILLABLE and COMPLEXITY GROUPS. Together comparison ratios provide a study of: � productivity of personnel, instrumentation, laboratory policies and procedures, salary dollar use, physician use, and organizational benefits LMIP provides indicators of management decisions and as such is a CONTINUOUS QUALITY IMPROVEMENT (CQI) tool.
Unit 4. 1 – LMIP Model Productivity Microbiology Costeffectiveness Chemistry Utilization LMIP Hematology Etc…
Unit 4. 1 – Continuous Quality Improvement (CQI) Input Data Items Percentile Ranking Conversion to Ratios Peer Comparison A central core of input data and ratios exists for each Section of a Specific Modules • Billable Groups 1 - 4 • Complexity Groups I - V
Unit 4. 1 – Input Data Items INPUT DATA ITEMS: 20 -25 items are collected analyzed quarterly, these data are used to create relevant management ratios. For example under the PRODUCTIVITY module the general INPUT ITEMS are: � � � Labor Full Time Equivalent (FTE) Financial Costs: Salary, Consumable, and Equipment The STANDARDIZE BILLABLE TEST (SBT) is the primary unit of measure for LMIP.
Unit 4. 1 – Input Standardized Billable Test Counts LMIP uses the CAP STANDARDIZED BILLABLE TEST to establish a common basis for counting tests among laboratories. EXAMPLE: SBT prevents profile tests (CBC/DIFF) from being ‘exploded’ and counted as many individual tests, when another hospital may only count it once, thus appearing less productive. Since CPT code usage varies, SBT insures all laboratories count tests in a uniform manner. SBT is defined as a test or procedure that is: � Ordered by a physician or caregiver � Associated with a CPT code � Generates a result, product, or billable phlebotomy procedure � Performed by laboratory personnel
Unit 4. 1 – Full-time Equivalent (FTE) FULL-TIME EQUIVALENT (FTE): is a unit that represents the ratio of the total number of paid hours during a period, by the number of working hours in that period. One FTE is equivalent to one employee working a 40 hour week. E. g. Assume you have four employees and they work 50, 40, 15, 10 hours respectively each week. If a full time employee works 40 hours per week, how many FTEs does your lab have? 50 + 40 + 15 + 10 = 115 total hours paid 40 hours per working period 115/40 = 2. 875 FTEs E. g. If a normal schedule of hours for one quarter equals 480 hours [40 hrs per week * (52 weeks – 4 weeks vacation) / 4 quarter] then an employee who works 140 hours accounts for how many FTEs? 140/480 = 0. 292 FTEs
Unit 4. 1 – LMIP comparison Ratios provide a study of productivity of personnel, instrumentation, laboratory policies and procedures, salary dollar use, physician use, and organizational benefits. Billable Test FTE
Unit 4. 1 – LMIP Comparison Ratios: Productivity LMIP model uses PRODUCTION OUTPUT UNIT rather than minutes of activity to determine the productivity of personnel. LMIP looks at the global environment and measures how many FTEs are required to produce a billable test. FTEs are broken into two categories: � � TECHNICAL: performs test procedure NON-TECHNICAL: administrative, clerical, or support activities
Unit 4. 1: LMIP Comparison Ratios: Productivity ON-SITE BILLABLE TEST PER TOTAL FTES – is a gross measure of laboratory staff productivity. ON-SITE BILLABLE TEST PER TECHNICAL FTES – represents the output produced by the bench labor force. � The ratio decreases as lab size increases ON-SITE BILLABLE TESTS PER WORKED HOUR – represents the productivity of employee in terms of actual working hours. � SBT/t. FTEs examined along with SBT/Whr can provide an idea of the productivity per hour for the technical staff.
Unit 4. 1 – LMIP Comparison Ratios: Productivity WORKED TO PAID HOUR RATIO – provides laboratories with an estimate of the benefit package offered PERCENT OF ON-SITE BILLABLE TESTS PER TOTAL BILLABLE TESTS – reflects the proportion of testing that is performed at the hospital, ‘in-house’. Others: � � PERCENT TECHNICAL FTES PER TOTAL FTES ON-SITE BILLABLE TESTS PER PAID HOUR
Unit 4. 1 – LMIP Comparison Ratios: Cost-effectiveness Evaluation of a laboratory's costs in relation to its peer group can assist in identifying areas where potential cost savings may be achieved. Two areas that account for the largest direct expense in a laboratory Labor (1 st) � Consumables (2 nd) � DIRECT EXPENSE: is a cost associated directly with a test procedure [Technical Labor Expense, Consumable Expense, Equipment Maintenance, Equipment Rental Expense & Equipment Depreciation]
Unit 4. 1 – LMIP Comparison Ratios: Cost-effectiveness TOTAL LABORATORY EXPENSE PER DISCHARGE and TOTAL LABORATORY EXPENSE PER PATIENT DAY – increase as billable group size and complexity group increase. Which is consistent with more acutely ill patients requiring more services, resulting in more costs. DIRECT EXPENSE PER ON-SITE BILLABLE TEST and TOTAL LABOR EXPENSE PER ON-SITE BILLABLE TESTS – decreases as the number of billable tests increases which reflect: � Increasing automation, batching of tests & general improved efficiency
Unit 4. 1 – LMIP Comparison Ratios: Cost-effectiveness Others: � � TECHNICAL LABOR EXPENSE PER ON-SITE BILLABLE TEST REFERRED BILLABLE TEST EXPENSE PER REFERRED BILLABLE TEST TOTAL LABORATORY EXPENSE PER TOTAL BILLABLE TEST CONSUMABLE EXPENSE PER ON-SITE BILLABLE TEST
Unit 4. 1 – LMIP Comparison Ratios: Utilization The greatest cost and productivity benefit in a laboratory lies in control of use. EXAMPLE: Hospital A orders 5 fewer tests per discharge than the mean for its peer group. � Discharges per quarter = 5, 810 patients � Average cost of one billable test $8. 49 Hospital A saves $246, 634. 50 per quarter in relation to the peer mean. (5 x 8. 49 x 5, 810) With an average salary per FTE of $8, 563 per quarter; To achieve a similar savings, more than 28. 5 FTEs would need to be eliminated.
Unit 4. 1 – LMIP Comparison Ratios: Utilization Because of this, physicians’ ordering patterns will be increasingly important to evaluating and improving, use and efficiency of the clinical laboratory. These patterns should also be evaluated in relation to patient outcomes, adherence to practice guidelines, ordering standards, and cost. The clinical laboratory administration can indirectly influence the use of hospital services by documenting the impact of these practices on operating budgets by using the following comparison ratios.
Unit 4. 1 – LMIP Comparison Ratios: Utilization INPATIENT BILLABLE TESTS PER PATIENT DAY and INPATIENT BILLABLE TESTS PER DISCHARGE – reflect the medical staff’s use patterns and intensity of service. PERCENT BILLABLE STAT TESTS PER ON-SITE BILLABLE TESTS – defines one aspect of intensity of use and complexity. Higher levels of stat tests increase unit cost. As well as impacting instrument buying decisions.
Unit 4. 1 – LMIP
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