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wikiHow to Cut Costs in a Laboratory

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Most laboratories must work with a limited budget, either to maximize earnings or to conserve valuable resources. If you are ever put in charge of a laboratory or managing its budget, here are some steps to help cut costs in a laboratory setting.


  1. 1
    Monitor the laboratory's costs. Maintain an accurate journal and ledger, logging every expense, such as salaries and benefits paid, supplies, equipment, overhead, services, personal costs, fees, fines. Proper accounting of the laboratory's costs will guide efforts to implement cost-cutting strategies. Cost cutting efforts directed at the bigger cost categories will most likely result in bigger savings.
  2. 2
    Determine which costs are volume dependent and which are volume independent. Volume dependent costs are those that are a function of the laboratory's volume. For example, supplies are generally volume dependent, because the higher the work load of the laboratory, the more supplies it will need, hence supply costs will tend to increase with revenue. Volume independent costs, on the other hand, are fixed costs regardless of the laboratory's volume. For example, overhead costs such as rent and utilities tend to be fixed costs.
  3. 3
    Determine the cost per procedure. This can be calculated by adding up all the costs associated with certain procedure and dividing by the number of procedures, over a specified period of time. Effective cost-cutting strategies should aim to lower the cost per procedure.
  4. 4
    Determine the revenue or reimbursement per procedure. This can be calculated by adding up all the revenue or reimbursement derived from certain procedure and dividing by the number of procedures, over a specified period of time.
  5. 5
    Limit the number of nonproductive tests. By comparing the cost per procedure versus revenue or reimbursement per procedure for various procedures, it will become apparent which procedures are profitable and which are a drain on the laboratory's resources. The number of unproductive tests and procedures should be limited.
  6. 6
    Discuss proper laboratory utilization with all staff and laboratory technicians. Ensure that everyone understands when certain tests and procedures are indicated, and that all criteria for specimen submission, handling, processing, and reporting of results are observed. Eliminating unnecessary tests and procedures will save money.
  7. 7
    Update all laboratory workers on any changes in standard operating procedures. Discuss these changes during morning reports, staff meetings, and annual training, and post these changes in bulletin boards. Ensuring adherence to all protocols will help reduce unnecessary costs.
  8. 8
    Try to run tests together and coordinate procedures whenever possible. If multiple specimens are sent at the same time for the same test, pool them together will yield the same result as running the test on them separately, but cost will be significantly cut down. Savings in time and resources will cut down costs.
  9. 9
    Order supplies in bulk to save money, if the supplies are unlikely to be outdated. For supplies that may expire or become obsolete, calculate the inventory turnover (cost of goods sold divided by inventory) and make sure the time to expiration/obsolescence is well below the period of time implied by the turnover.
  10. 10
    Look for ways to run tests or procedures more efficiently. For example, if a new machine can run twice the number of specimens in shorter time, it may decrease the cost per procedure and save money. Before deciding on a new equipment that can do things better, however, one must consider the initial cost of the instrument, ongoing reagent costs, cost of training technicians to use the new machine, depreciation costs, etc. and weigh these cost carefully against the cost savings it brings.
  11. 11
    Determine which tests to perform in-house and which to send out to a reference laboratory. Consider all costs associated with a specific test or procedure, including cost of quality control testing, cost of supplies, cost of proficiency testing and training, clerical time for record keeping, and mailing or transport costs to outside facilities. If a test requiring special technical skills or equipment is rarely requested, it may be cost-saving to have the test sent out rather than performed in-house. On the other hand, frequently performed tests, or those that require quick turn-around time, may be better performed in-house.
  12. 12
    Monitor the effects of any cost-cutting strategies over time. Be patient, as the effects of any such strategies may take months or years to manifest. An effective cost cutting strategy should lower the cost per procedure or the expense ratio of the laboratory.

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  • Sometimes what appears to be a costly procedure may in fact be cost-effective; reduction in future costs may more than offset the initial cost of an apparently expensive test or procedure. Always keep cost/benefit ratio in mind.

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Categories: Funding | Budgeting

In other languages:

Русский: снизить затраты в лаборатории, Português: Cortar os Custos em um Laboratório

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