CLINICAL LAB SCIENEC

156
ESSENTIALS OF CLINICAL LABORATORY SCIENCE
Introduction
Historically, most hospital administrators were physicians. Although physicians
were singularly suited to treating the ills of the public and to dealing with other
physicians, they were most often poorly equipped to handle the complex finances
of the modern health care facility. As the financial complexities burgeoned, it was
obvious that a more businesslike approach to handling and controlling cash flow
was needed. Business office managers and resident accountant positions were
created for compiling the intricacies of costs and income. It should be noted that
medical centers and hospitals are theoretically nonprofit but must maintain a cash
reservoir for handling unexpected expenses of updating, facility repairs, loss of
cash flow for various reasons, and, in some cases, expansion. Many hospitals have
evolved from a general or community hospital to a “medical center” or a “health
care system,” increasing the size and complexity of the organization and the structure
of the management team. The sometimes far-flung specialty clinics and fullsize
hospitals of health care systems create a need for using an established business
model, similar to that of large industries, for maintaining fiscal soundness.
Complex systems such as those found in the health care industry are growing.
Budgets have expanded, as services rendered to patients are increasing in
number and the advanced technology used for these services are more expensive.
The medical industry is an ever-evolving industry, with funds for services generated
from a variety of sources, including government agencies, private insurance,
and, in increasingly rare cases, through direct payment from the consumer.
Assignment of health care benefits from insurance companies has helped to fund
increasing levels of medical care, particularly during the past few decades.
Another concept, that of cost centers, has arisen in health care facilities in
the past few decades. The term is somewhat of a misnomer, as these centers or
departments often generate revenue in some cases, although others lose money.
The clinical laboratory and the pharmacy typically generate a great deal of
revenue, while costs for patient rooms and operation of the emergency department
traditionally exceed revenue generated for these areas. To cover certain
operating costs, most often the laboratory is assigned a portion of the overhead
or perhaps other types of operational costs, paying with revenues generated, to
help in balancing the budget for the entire health care institution. The mechanism
for this type of system is complex, but in simple terms is essentially as
presented here.
In the last half of the 20th century, most hospitals were increasingly headed
by a business type of officer or “administrator.” This official worked directly
with the medical board through the chief of staff and with the various department
heads. Administrators are now called CEOs (chief executive officers), just
as they are identified in large businesses, a category in which medical centers
now belong. Most often these CEOs have no background in medicine as any
sort of medical practitioner, as was the case in the past. Departments in larger
facilities are now typically handled by assistant administrators, who report
directly to the CEO. Thus, most large hospitals and certainly the large health
systems or corporate hospital systems have a distinct division between the
business aspects of operation and the actual provision of care to the patients.
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