HOW DO FINANCES WORK? A CASE STUDY

2016 Medicare rates have been finalized. As we understand:

No additional reimbursement over 22 drug classes

A typical POL / pain management practice will test for ~40 drugs and metabolites.

Reimbursement of $215 per sample at 40 drugs and metabolites

Running 500 samples per month

This results in a monthly reimbursement of $107,500*

Cost of consumables are ~$10 per sample

Gross Profit = $100,000 per month

Other overhead costs include labor, equipment costs, rental (lab space) and utilities.

* This refers to G0483 and does not include the other screening codes.

As stated previously, it is practical and strongly recommended to ensure adequate personnel and equipment when increasing the number of sample tests per month. The answer for any given lab is a business decision. There are essentially two options: As the number of samples increases, one option is to push the existing mass spec to its maximum capacity. The second option is to put a backup into place as well as to increase the number of personnel. This is not a decision that needs to be made immediately, but rather one that should be considered as your lab gets more fully utilized.

Another Case Possibility

Same reimbursement per sample

Increase to 2,800 samples per month (based on 7 minutes per run for 16 hours for 21 days per month)

Monthly reimbursement of $588,000

Less consumables at $10 per sample for gross profit of $560,000 per month

Note that reimbursement for a single month exceeds the cost of a laboratory (laboratory upgrade).

Hence, while a single device is capable of high volumes, business decisions may point to additional equipment as redundancy and/or backup.