The clinical laboratory in a not-for-profit hospital setting is measured not only by the quality and efficiency of laboratory testing but also by its overall financial performance and how effectively it manages the resources allocated for its operation. The budget is a plan for coordinating the use of these resources. Without a budget, it would be difficult, if not impossible, to maintain an effective and fiscally responsible operation. In addition, the budget allows for regular monitoring of expenses compared to the estimate of expenses created in the budget process. The laboratory manager is responsible for carefully preparing and closely monitoring the budget and providing this data to senior leadership overseeing this ancillary service.
There are essentially three important functions of the laboratory budget:
Function one: This reflects the business aspect of the laboratory as it relates to the institution and contains information for the justification of the allocation of resources. This includes resources for operating, capital dollars, human resources, infrastructure, and physical space.
Function two: In outpatient services, it contains information needed to establish charges and project net revenue.
Function three: The budget allows the laboratory manager to perform an analysis of important variances to the budget to make any necessary adjustments or make recommendations for changes to the operation so that performance will meet the expectation of senior management and hospital administrators' perception of laboratory costs and potential changes in outpatient and outreach revenue.
Simply put, the budget is a financial report containing estimates of income and expenses. The budget allows the manager to look for causes when deviations occur and adjust accordingly.
