Original Article

Activity-based costing methodology as tool for costing in

hematopathology laboratory
Sumeet Gujral1, Kanchan Dongre, Sonal Bhindare2, Subramanian P. G.1, HKV Narayan2, Asim Mahajan2,
Rekha Batura2, Chitra Hingnekar2, Meenu Chabbria1, C. N. Nair1
Departments of Pathology, 1Hematopathology Laboratory, 2Administrative Office, Tata Memorial Hospital (TMH), Mumbai, India
Address for correspondence:
Dr. Sumeet Gujral, Department of Pathology, Tata Memorial Hospital, Mumbai, India. E-mail: s_gujral@hotmail.com

ABSTRACT
Background: Cost analysis in laboratories represents a necessary phase in
their scientific progression. Aim: To calculate indirect cost and thus total cost
per sample of various tests at Hematopathology laboratory (HPL) Settings
and Design: Activity-based costing (ABC) method is used to calculate per cost
test of the hematopathology laboratory. Material and Methods: Information
is collected from registers, purchase orders, annual maintenance contracts
(AMCs), payrolls, account books, hospital bills and registers along with informal
interviews with hospital staff. Results: Cost per test decreases as total number
of samples increases. Maximum annual expense at the HPL is on reagents and
consumables followed by manpower. Cost per test is higher for specialized
tests which interpret morphological or flow data and are done by a pathologist.
Conclusions: Despite several limitations and assumptions, this was an attempt
to understand how the resources are consumed in a large size government-run
laboratory. The rate structure needs to be revised for most of the tests, mainly
for complete blood counts (CBC), bone marrow examination, coagulation tests
and Immunophenotyping. This costing exercise is laboratory specific and each
laboratory needs to do its own costing. Such an exercise may help a laboratory
redesign its costing structure or at least understand the economics involved in
the laboratory management.
KEY WORDS: Activity based costing, hematology, hematopathology, laboratory
DOI: 10.4103/0377-4929.59187

PMID: ****

INTRODUCTION
Healthcare organizations use cost accounting to estimate the unit cost of services they
provide. Such information helps establish a realistic budget; prices, identify inefficiencies
and project the effect that changes in demand would have on resource requirement. The
processes involved in the production of a laboratory test result include procurement of the
sample, logistical services, administrative procedures, performance of testing procedure,
professional consultation and oversight, rendering and administering an account and
information technology and communication cost.[1]
Ours is a national comprehensive cancer centre for prevention, treatment, education and
research in cancer. Every year nearly 43,000 new patients visit the clinics 1000 of whom
visit the out patient department (OPD) daily for medical advice, comprehensive care or
follow-up treatment. Every year nearly 6300 major operations are performed and 6000
patients treated with radiotherapy and chemotherapy. Laboratory investigations form
an integral part of management of these patients.
The Hematopathology Laboratory (HPL) is accredited by the National Accreditation Board
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for testing and calibration laboratories

(NABL). The policy of the laboratory is
to provide reliable, accurate and timely
diagnostic services to all our patients
and referring clinicians. HPL performs
both routine as well as specialized
hematological tests. Most of these samples
are from patients registered in the hospital.
Referral samples are received only for
immunophenotyping. The hospital
allocates a substantial part of its annual
capital and operating budget to the HPL.
However, there is no method to determine
the per annum cost of running the HPL.
Terminologies[1,2]
All calculations have been done in Indian
National Rupees (INR).
Indirect cost (fixed) is the common lab cost
shared by all tests on the basis of number
of samples processed for the tests. It is also
known as handling charge per request.
Direct costs (variable) are expenses which
are directly identifiable with a test. e.g.,
equipment, reagents, maintenance, spares
etc
Consumables are supplies procured and
consumed in one financial year.
Depreciation is defined as per annum cost
of equipment. It is derived by dividing the
cost of equipment by the average life span
of the equipment. Average lifespan of a
medical equipment as well as furniture
is taken as seven years. This is the bench
mark for capital equipment as our hospital
policy.
Types of Costing Methods
There are two methods of evaluating cost

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Gujral, et al.: Costing of tests

of the laboratory tests; activity-based costing (ABC) and traditional

cost accounting. In the ABC system, costs are traced by activities
across departments or cost centers.[3,4] Traditional cost accounting
methods do not accurately reflect the contribution of indirect
costs to individual services. They pool all indirect costs and
allocate them to the various services in proportion to service
volume or direct costs. This approach tends to overestimate the
unit cost of high volume services and underestimate the cost
of low volume services. When indirect costs are large, often
the case in healthcare, the cost of services may be seriously
misrepresented. ABC solves this problem by estimating the cost
of the work activities that consume resources and by linking these
costs to the services that are provided.[3,4]
Principles of Activity-based Costing
Step 1: Cost that can be directly allocated to each test separately
is identified. These are considered direct costs for each test. The
annual direct cost for each test is determined.
Step 2: Cost that cannot be identified with a particular test but
are related to all the tests in the laboratory are pooled together
as common lab costs (Indirect Costs).
Step 3: Indirect costs are allocated to each test in proportion to
the number of samples processed for each test. Annual indirect
costs are determined.
Step 4: Direct cost and proportionate share of indirect costs are
added and divided by number of samples for that particular test.
Per sample cost of each test is thus determined.
Direct, indirect and annual cost of each test is calculated. Cost
unit is considered per sample cost of all the tests. Per sample
cost of a test is defined as a ratio of annual cost of the test to the
number of samples processed in that particular year. We studied
the cost per test to know the adequacy of the rate structure.
Aims and Objectives
To calculate indirect cost and thus the total cost per sample of
various tests done in the HPL. Existing price list was compared
with the calculated cost per sample.
MATERIAL AND METHODS
The staff includes two consultants (MD pathology), two senior
residents (post MD pathology), six scientific officers (including
two PhDs), two technical officers (M.Sc.), 13 scientific assistants/
technicians (B.Sc.), and six labor staff. Work wise distribution of
staff of the laboratory is - 21 technical staff and five phlebotomists.
Fourteen technical staff were involved in performance of routine
hematology including complete blood counts (CBCs), manual
differential counts (MDC) and coagulation studies. Two technical
staff were dedicated to flow cytometry (FCM), three worked in the
molecular diagnostic laboratory and one technical staff took the
responsibility of deputy quality manager (in addition to routine
hematology duties). Information was collected from registers,
purchase orders, AMCs, payrolls, account books, hospital bills,
registers and other documents. These observations along with
informal interviews with hospital staff formed the mode of
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research methodology followed.

The total number of samples received at HPL in the year 2005 was
227000 (a rounded off figure taken for further calculations) [Table
1]. Per sample indirect cost was calculated. This was added to
the direct cost of the respective test to calculate the total cost of
each test being done in the HPL. Calculations have been done in
Indian (Rs). One United States Dollar is approximately equivalent
to 48 Indian Rupees, 10 lakh is equivalent to one million and one
crore is 10 million.
RESULTS
A. Indirect Cost (INR)
1. Land and building: The HPLs are located at four different places
with a total area of 1186 sq ft. Monthly municipal rental value is
approximately Rs. six per square feet; annual rent for land and
building coming to Rs. 86,000.
2. Furniture and fixture: Total cost of furniture and fixture
Rs. 4,29,400; annual depreciation value at Rs. 61,342.
3. Water: Cost of average annual water consumption for the
whole annexe building is Rs. 12,80,000. Cost of water consumed
for seventh floor is Rs. 72,000. Total floor area of seventh floor
is 11,200 sq ft and the area occupied by HPL is approximately
600 square feet. Annual water consumption by the HPL is Rs.
3,900. Pls check: water consumption in rupees? Or is it cost of
water consumption ?
4. Electricity (of common equipment): Annual cost of total
expense on electricity is Rs. 5,44,000 [Table 2].
5. Depreciable value of common equipment: Total cost of common
equipment is Rs. 30,22,104; annual depreciation value being Rs.
Table 1: Annual Work Load with Total Cost and Per Sample Cost of
Each Test
Tests

Number
of tests

Total Annual
Cost (INR)

Per Sample
Cost (INR)

Complete Blood Count

Manual Dierential Count
Prothrombin Tests
Activated Partial Thromboplastin
Time
Fibrinogen
Thrombin Tests
Fibrinogen Degradation Products
Immunophenotyping
CD34 counts
MPO
LAP/NAP
TRAP
NSE
Iron Staining
ESR
Reticulocyte Count
Bone Marrow
Body Fluids
Total Annual Cost

172200
6900
24104
10752

13544599
229687
2277329
985101

85
33
94
92

12
50
90
1300
170
1700
700
12
220
5
1450
480
4770
2000
226915

5402
24920
147210
5272744
282713
54618
46597
2692
8161
289
74350
12577
155673
76187
23200849

450
498
2676
4056
1663
32
67
224
37
58
51
26
33
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Table 2: Annual Cost of Total Electricity Spent

Item
Tubes
Bulbs
Fans
Common
Equipment
Total

Units
25
8
6
-

Units/hr
in KW
0.05
0.06
0.06
-

Hours
3168
3168
1728
-

Rate per
unit
4.6
4.6
4.6
-

Total cost
in INR
18,216
6995
2862
5,16,097
5,44,169

4,32,000.
6. Repair and Maintenance: AMC for instruments is Rs. 58,400
(including four microscopes, four printers and general repairs).
Annual cost of the remaining entities (in Rupees) include
manpower (40,00,100), stationary (86,000), consumables
(1,73,000), fire safety (1,000), glass ware (80,000), miscellaneous
(21,500) and overheads (1,11,853).
Thus, total sum of the indirect cost (common laboratory cost)
is Rs. 56,59,153. Since total number of samples received in the
HPL is approximately 2,27,000 per year, common laboratory
cost becomes Rs. 24.99. Thus per sample indirect cost (hidden
cost) is Rs. 25.
B. Direct Cost and Per Sample Cost
It was calculated individually for all tests as follows:
1. Complete blood count (CBC):
Annual workload is 1,72,200 samples and includes use of 200
microtainers and 300 vacutainers per day. Different parameters
were calculated including cost of equipment, cost of reagents,
maintenance and spares, quality control material, consumables
and electricity [Table 3].
Table 3: Costing of CBC
Total cost of the equipment in the HPL (INR)
Cell Dyn (n=2)
36,00,000
Coulter ACT 8 (n=1)
5,00,000
Coulter ACT Di (n=3)
22,50,000
Swing Roll Mixer (n=6)
60,000
Total
64,10,000 (Annual cost - 915714)
Annual cost of Maintenance and Spares
Cell Dyn + Coulter
344000 + 252000 = 596000
Annual cost of reagents
Cell Dyn + Coulter
2276280 + 2919024 = 5195304
Annual Cost of Quality Control
Liquicheck for coulter
54000
Liquicheck for Cell Dyn
57000
Calibrator for Coulter and Cell Dyn
50000 + 50000
Total
211000
Annual cost of the consumables
Microtainer + Vacutainer + Lancet
1411680 + 10,22,000 + 792330
Sodium Hypochlorite
116314
Storage rack for microtube
19065
Total
3342515
Annual Cost of the Electricity
Cell Dyn
26133
Coulter ACT 8 + Coulter ACT Di
3956 + 13662
Swing roll mixer
7314
Total
51065
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Total direct cost of CBC is Rs..1,03,11,599 [Table 4]. Average

number of CBC samples is approximately 1,72,200. As per sample
indirect cost is Rs. 25, the annual indirect cost is Rs. 4305000.
Total annual expenditure of doing CBC tests in the HPL is sum
of direct and indirect cost (10311599 plus 4305000) is equal to
Rs. 1,46,16,599. Per sample cost of doing CBC in HPL is Rs. 85.
2. Direct Cost of manual differential count (MDC):
Total Direct cost of MDC is Rs. 57,187. Total number of samples
received in one year for MDC is 6, 900. Total indirect cost for
MDC is Rs. 1,72,500 (6900 x 25). Thus total cost of the MDC is
Direct cost (Rs. 57,187) plus Indirect Cost (Rs. 1,72,500) is equal
to Rs. 2,29,687. Per sample cost of MDC will be 2,29,687/6900 is
equal to Rs. 33. Per sample cost for the cases which require both
CBC plus MDC, is 85 plus 33 is equal to Rs. 118.
3. Cost of Coagulation Tests [Table 5]:
Different types of tests done include prothrombin time (PT) (n is
equal to 24104), activated partial thromboplastin time (APTT) (n
is equal to 10752), Fibrinogen (n is equal to 12), fibrin degradation
products (FPD) (n=90) and Thrombin time (TT) (n is equal to
50). FDP and TT were done manually. Per sample cost of PT and
APTT is Rs. 94 and 91 respectively. Per sample cost of Fibrinogen,
FDP and TT is Rs. 45,02,676 and 500 respectively.
4. Costing of Immunophenotyping (IPT) and CD34 Count
a). Direct cost of IPT and CD34 counts:
i. Monoclonal Antibodies: Cost of antibodies is Rs. 41,25,000
[Table 6].
ii. Equipment cost: Total cost of equipment [Table 7] is Rs..
539731. Share of IPT and CD34 for the equipment cost is Rs.
4,77,313 and Rs. 62,418 respectively.
iii. Other costs [Table 8] involved in IPT and CD34 counts
include cost of reagents, quality control, maintenance and
spares, consumables and electricity. Total cost is calculated
by multiplying total units consumed per hour of utilization
in KW, total number of hours of utilization in a year, and
rate applicable per hour in rupees. Share of IPT and CD34
for the total electricity cost is Rs. 1,26,256 and Rs. 16,510
Table 4: Summary of Direct Cost for CBC
Direct costs centers
Equipment
Maintenance and repairs
Cost of reagents
Quality control
Consumables
Electricity
Total

Cost (INR)
915714
596000
5195304
211000
3342515
51065
1,03,11,599

Table 5: Total Annual Cost of PT and APTT

Cost Centre
Equipment and Consumables
Reagents
Indirect Cost
Total annual cost

Annual Cost of PT
(INR)
1180092
494637
602600
2277329

Annual Cost of APTT

(INR)
526437
189864
268800
985101

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Gujral, et al.: Costing of tests

respectively. Similarly, share of IPT and CD34 in the total

cost of reagents is Rs. 1,38,964 and Rs. 18,172 respectively
[Table 9]. Share of IPT and CD34 in the quality control is
Rs. 88,435 and Rs. 11564 respectively. Cost of LASER is Rs.
2,50,000 with installed capacity of 5000 hours, estimated to
run for 3.5 years, considering 1300 hours of usage in a year.
Thus annual cost of laser is Rs. 65,000. Annual share of IPT
and CD34 counts for spare and maintenance is Rs. 1,34,687
and 17,612 respectively [Table 10]. Share of IPT and CD34
counts in the annual expenditure of consumables is Rs.
87,197 and Rs. 11,402 respectively.
b). Indirect cost of IPT and CD34 counts:
Average number of samples received in a year for IPT is 1300
and per sample indirect cost is Rs. 124. The indirect cost of IPT
is high as there are two cytometrists exclusively doing cytometry.
Thus annual indirect cost for IPT is Rs. 1,61,000. Refer Table 11
for summary of direct cost of IPT.
Table 6: Costing of Flow Cytometry Tests
Acute leukemia
Number of antibodies used
Average cost of each antibody (Rs.)
Total requirement of each antibody
Total cost of antibodies (Rs.)
Mature B cell lymphomas
Number of antibodies used
Average cost of each antibody (Rs.)
Total requirement of each antibody
Total cost of antibodies (Rs.)
CD34 stem cell counts
Number of antibodies used
Average cost of each antibody (Rs.)
Total requirement of each antibody
Total cost of antibodies (Rs.)
Additional antibodies used
Average cost of each antibody (Rs.)
Total requirement of each antibody

Number of cases = 1200

21
15000
10 vials
3150000
Number of cases = 100
31
15000
2 vial
930000
Number of cases = 170
1
15000
9 vial
1,35,000
3
15000
1 vial

Total cost of antibodies (Rs.)

45000

Table 7: Total Cost of Equipment for IPT and CD34 Counts

Equipment

Unit

FCM
Table top centrifuge
Cytospin
UPS
Total

1
1
1
1

Total cost
(INR)
3500000
125000
83121
70000

Total cost per

annum (INR)
500000
17857
11874
10000
539731

Table 8: Other Costs in IPT and CD34 Counts

Electricity

FCM
Table top
Cytospin
UPS
Total

Units
No. of
consumed hours
per hour run in a
in KV
day
0.25
5
0.4
1
0.8
0.15
3.5
24

No. of
hour
run in a
week
25
5
0.75
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5. Costing of Cytochemistry Tests:

Cytochemical tests are performed in the HPL include
myeloperoxidase (MPO, n is equal to 1700), non specific esterase
(NSE, n is equal to 220), leucocyte alkaline phosphatase (LAP, n
is equal to 700), tartarate resistance acid phosphatase (TRAP, n
is equal to 12) and iron staining (n is equal to five). Total indirect
and direct cost is 42500 and 12118 with a sum total of Rs. 54618.
Thus per sample cost of MPO is Rs. 32 only. Similarly per sample
cost of other cytochemical stains are LAP (Rs. 66), NSE (Rs. 38),
Table 9: List of reagents used for IPT and CD34 Counts
Reagents

Monthly
Annual
consumption consumption

Ficoll hypaque
(600 ml)
FACS flow
sheath, 20
liters
Ammonium
chloride, 500g
Potassium
bicarbonate,
100gm
Tetra sodium
bicarbonate,
100 gm
Albumin, 100
gm
Sodium azide,
100gm
Sodium
hypochlorite,
5 liters
Sodium
chloride, 500
gm
Total cost

200

2400

Cost per
specified unit
against each
item (INR)
4231.75

Annual
cost
(INR)

40

480

5500

132000

8.26

99.12

115.5

22.89

12

668.25

80.19

0.037

0.444

891

3.956

104

7672.5

7979.4

0.2

10.4

330

34.32

0.25

385

19.25

416

84.27

70.11

16927

INR
157137

Table 10: Spare and Maintenance for IPT and CD34 Counts
Maintenance
AMC
Spares
Flow cell
LASER
UPS Replacement
Total cost

Cost per annum (INR)

50000
33000
65000
4300
152300

Table 11: Summary of Direct Cost of IPT

No. of
hour
run in a
year
1300
260
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Per sample cost of IPT: Thus total annual expenditure on IPT is Rs.
5,35,7,025. Per sample cost of IPT for a case of hematolymphoid
neoplasm is Rs. 4120. Similarly per sample cost of CD34 counts
is Rs. 1700.

Rate per
unit

Total
cost
(INR)

4.6
4.6
4.6
4.6

1495
478.5
143.52
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Cost centers
Monoclonal antibodies
Equipment
Electricity
Reagents
Qquality control
Spares maintenance
Consumables
Per annum direct cost (INR)

Total cost for CD34 counts Total cost for IPT

135000
4125000
62418
477313
16510
126256
18172
157137
11564
88435
17612
134687
11402
87197
272678
5196025

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Gujral, et al.: Costing of tests

TRAP (Rs. 225), and Iron staining (Rs. 58).

6. Costing of bone marrow (BM) aspirate examination
[Table 12]:
Per sample cost of BM examination is Rs. 33 only. We routinely
stain three BM slides for each case (two aspirates and one touch
imprint slide). Thus cost of three slides per case is Rs. 49 [25
plus (8x3)].
7. Costing of other tests:
Similarly per sample cost of other tests is ESR (Rs. 51), reticulocyte
count (Rs. 26) and body fluids examination (Rs. 38).
Costing based on working hours reveals that the cost of CBC
and BM morphology per sample is Rs. 77 and 496 respectively,
in comparison to Rs. 85 and 49 as seen above. Per sample cost of
BM examination increases corresponding to the manpower cost
(pathologists). Cost of the CBC tests is slightly less as it is being
done by the technicians.
Of the total indirect cost of Rs. 56,5,9153, cost incurred by the
hospital (which is not the part of the budgets allocated to the HPL)
is approximately Rs. 48,66,653 (86%), while remaining 7,92,500
(14%) is from the HPLs budget. Total annual cost of the HPL
was 23200849 [Table 1]. Annual operational cost incurred is Rs.
1,85,85,968 [Table 13]. Approximate annual expenditure is Rs.
1,85,85,968 plus 48,66,653 which is equal to Rs. 2.32 crore per
year. However, annual budget for year 2005-06 for the HPL was
Rs. 1.15 crore, which included operational budget (Rs. 1 crore)
and capital budget (Rs. 15 lakh). The revenue earned by HPL in
the year 2005 was approximately Rs. 1.32 crore. Though there
appears to be gain of Rs. 17 lakh, actually there is an annual net
loss of approximately Rs. 1 crore to the HPL.
DISCUSSION
Laboratories in government hospitals generally fend off financial
scrutiny and accountability on the grounds of their complex
Table 12: Costing of BM Aspirate Examination
Cost center
Direct cost
Methanol
Wrights stain
Immersion oil
Phosphate buer
Indirect cost
Total annual cost (INR)

Total
5085
16600
14670
68
119250
155673

Table 13: Annual Operational Cost Incurred by the HPL

Indirect expenses
Stationary
Consumables
Glassware
Depreciation of common equipments
Miscellaneous
Direct expenses of all tests
Total expenses (INR)
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nature and lack of compelling need. However, costing has now

come under intense scrutiny because of budget reduction and
possibilities for private/corporate sector competition. Costing
provides robust data that accurately reflects how resources are
consumed. There are occasional studies on ABC cost analysis
of laboratory tests.[5,6] However, as literature suggests, there is a
paucity of similar studies in India.
We made an attempt to do ABC of various tests done in a
laboratory of a government hospital. Most of the expenditure
in our cost analysis was on reagent purchase as also seen in the
Thailand study.[5] HPL spends a mere 13% of its total expenses
on the manpower, as reported in a Thailand study.[5] However,
manpower constitutes approximately 40-60% of total laboratory
expenses in the western world.[7-9] It may possibly be due to lower
staff salary or lower number of staff which may in turn increase
the turn around time. Various other factors include completeness
of data, study method, place and duration, time of study, number
of tests, technology used and changing rate of currencies. It is
recommended that every laboratory should calculate their unit
cost periodically.
Indirect cost (hidden cost) was Rs. 25 only as HPL is a large size
laboratory. The direct costs are mainly borne by the HPL, while
most of the indirect costs are by the hospital (86%). Common
annual expenses of the HPL included reagents (60%) followed by
manpower (13%). Expenditure incurred towards quality control
procedures stood at three per cent (owing to large sample size).
Cost of CBC test by our method was Rs. 85, however, per hour
costing for CBC test was Rs. 77. Similarly per hour costing for
bone marrow morphology was as high as Rs. 496, as pathologists
spend most of their time in these specialized tests.
As a hospital mandate, 10% of our patients get free treatment and
diagnostic services, another 50% are offered subsidized rates or
a lower affordable price while remaining 40% are charged in the
private category. The annual revenue loss to HPL is approximately
Rs. 1 crore.
Extra testing is a common phenomenon and is assigned primarily
to residents during training. Routine tests like MDC, PT, APTT
are asked for at every routine surgery (minor as well as major).
It leads to extra burden and expenditure on both the patient as
well as on hospital infrastructure. Substantial amount of money
may be saved in a laboratory by selective ordering of tests.[10]
There is a wide variation in the cost of laboratory tests and
their turnaround times.[11] Concept of faster turn around time is
catching up in the Indian laboratories. Turnaround time is three
days for bone marrow morphology and IPT and 24 hours for all
remaining tests in the HPL. It highlights the use of automation,
extra reagents, staggering duties and employing adequate staff.
Accreditation agencies make internal as well as external quality
assurance programs (EQAP) mandatory thereby further increasing
the cost of the laboratory testing. It outlines need of having
national EQAP programs for various tests. Automation is in

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Gujral, et al.: Costing of tests

demand and most laboratories (private as well as government) opt

for automated instruments. Though there are major advantages
of the technology, it has lead to an increase in cost price of tests.
Complete blood counts which used to cost a few rupees only now
cost more than 100 Rupees per test.[12] In the recent past, charges
of most of the tests have rocketed high owing to automation and
the accreditation. Thus, costing of laboratory test is an important
issue to be dealt by the government-run laboratories. In the private
sector, costing is defined by a few large size laboratories and rest
majority of the laboratories follow these charges.
The total allocation for health sector in India in the present
financial year budget 2008-2009 is Rs. 165,534 crore. This is
an increase of 15 per cent over last year.[13] In the time of fast
economic growth in India, the budgetary allocation to health
sector is far from desirable proportion of two to three per cent of
GDP and is constant at low rate of 0.9% of total GDP.[14] Although
cost containment directed at misutilization and overutilization
of existing services has conserved resources, to date, an effective
cost control mechanism has yet to be identified and implemented
in government-run laboratories in India.
Government-run clinical laboratories should enhance efficiency
and reduce costs by forming alliances and networks; consolidating,
integrating, or outsourcing to specialized laboratories (private,
public or government funded). The laboratory business model
in Indian laboratories suffers from fragmentation, redundancy,
and excess capacity and is inadequate in the new reality of cost
containment and competition. The advances in information
technology and internet applications allow for efficient
communication between collaborating laboratories.[15] Mumbai
has four government medical colleges and we propose a single
reference laboratory for specialized tests. All laboratories may
outsource tests to such a reference laboratory with a higher level
of expertise.[15] Larger test volume lowers both the unit cost as
well as turnaround time. Cost and quality should improve, as
efficiency is boosted.[16]
Limitations of the study:
The estimation of testing costs in the hospital environment is
problematic. Even the identification of relevant costs is not easy.
TMH has a tripartite mandate of service, training and research.
Research and training costs are difficult to separate out and
quantify. Laboratories attached to institute or hospitals like
HPL have an academic excellence that sets them apart from the
private sector.
This costing exercise was a short duration study (six months
only). It was difficult to cost all the centers which indirectly
help the HPL. Few of the support departments could not be
included in the overheads calculation as required data was not
available. There were no meters to measure the exact electricity
and water consumption at the cost centers (different working
stations of the HPL). Though depreciation is followed on all
the equipment purchased, many of them (non analytical) have
served beyond their useful life. Few instruments in the HPL
have been procured from the research grants. Rates of reagents
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have been calculated without value added tax charges. A few

spares for hematology cell counters are one time purchases like
as vacuum accumulators, syringes, peristaltic tubing. Cost of
hospital information system (laboratory information system),
telephonic communication, and correspondence (national as
well as international) was not included. Though the HPL has a
molecular diagnostic laboratory, its costing was not included in
this study. Budget for the molecular diagnostic tests comes from
various research projects. Certain disciplines such as morphology
and flow cytometry evaluation are signed by a pathologist, while
remaining tests are handled by technologists. Many among the
laboratory staff end up working beyond the defined 42 working
hours a week to finish the days work. Trainees, students and
observers help regular staff in routine working. Local transport
to attend meetings and the subsidized rates of meals and coffee
to the staff are other indirect costs.
A new policy of the hospital is to acquire reagent rental
instruments. Here the liabilities (insurance and maintenance
etc.) are transferred to the instrument supplier. Consignment
stock that includes reagents, consumables, control and calibrating
material, are purchased by the HPL. Thus in present date, HPL
incurs no direct cost prior to the performance of the test as most
of the instruments are acquired on reagent rental. The laboratory
continues to evolve and adds new feathers to its cap. It has
acquired newer sophisticated instruments,, developed laboratory
information system with unidirectional interfacing, bar coding
of the vacutainers and pneumatic shoot for transport of samples.
Assumptions
There were a few assumptions made while doing the study.
Rounded off values were considered for calculations. Values
considered represent the value of stock as in the year 2005.
Though refrigerators work for 24 hours, because of thermostat,
actual consumption of electricity is for 15 hours. For CBC and
MDC, lifespan of storage rack for micro tube is taken as two
years. The cost of methanol, phosphate buffer, immersion oil
and Wrights stain is shared by MDC, cytochemistry and BM
tests. For coagulation tests, lifespan of magnetic stirrer is taken
as five years and lifespan of rack tube floating foam is taken as
two years. For IPT, life of a flow cell is considered as five years.
CONCLUSION
Though there were several limitations and assumptions, this was
an attempt to understand consumption of resources in a large size
government-run laboratory. Price is only a part of the per sample
cost which also includes costs of quality and transaction. Cost per
test decreases as the total number of samples increases. Number
of samples analyzed is the most important cost setting factor. Our
costing study concludes that the rate structure needs to be revised
for most of the tests, mainly for CBC, BM examination, coagulation
tests and IPT [Table 14]. Maximum annual expenses in the HPL
are on reagents and consumables followed by manpower. Cost per
test is higher for those specialized tests where the morphological
or flow data interpretation is done by a pathologist.

MICROBIOLOGY - 53(1), JANUARY-MARCH 2010

73

Gujral, et al.: Costing of tests

Table 14: Charges for General Category and Private Patients in

comparison to Per Sample Cost of Various Tests Done at HPL
Test

Per sample cost

(INR)

CBC
CBC + MDC
PT
APTT
Fibrinogen
FDP
TT
Immunophenotyping
CD34 counts
ESR
Reticulocyte count
BM examination
Body fluids

85
118
94
91
416
1635
500
4120
1663
51
26
49
38

Current Charges (INR)

General Category
Private
30
105
50
125
30
80
30
80
15
200
15
200
30
320
500
4000
50
500
10
75
15
50
100
200
15
50

This costing exercise is laboratory-specific and each laboratory

needs its own costing, especially in the government setting. Such
an exercise may help a laboratory re design its costing structure
or at least understand the economics involved in the laboratory
management. Charges for various laboratory tests have marginally
increased in the last decade, as per the hospital policy. Charges
for the poor and general category patients in the government
hospitals are cheaper than ever before. Private category patients
are charged as per the cost of the test.

4.

5.

6.
7.

8.
9.

10.
11.

12.

13.

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Source of Support: Nil, Conflict of Interest: None declared.

MICROBIOLOGY - 53(1), JANUARY-MARCH 2010

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