Monitor: An important tool for laboratory management is to monitor each department's expense budgets monthly to look for trends and adjust as necessary. The image below shows the first 5 months of expenses for the various departments in a clinical laboratory in 2020.
Explain variances: The first two months demonstrated a better-than-expected expense budget, but starting in March, the expenses begin exceeding the budget goals, and this trend continued through May. It demonstrates what can happen when an event like the COVID-19 pandemic totally disrupts the institutional budget and specific departments such as laboratory services. In this example, the hospital started to see a large influx of COVID patients in March, requiring many more laboratory services than was expected. After trending for 3 months, the increase in expenses by virtually all laboratory sections except Path/Cytology should alert the laboratory manager.
Make Adjustments: A revised budget plan needs to be negotiated with upper management for the laboratory to continue meeting the institution's demands.
If only one or two departments in the laboratory were trending upward with expenses, management should look for possible reasons. Example causes in a non-pandemic environment might be increased test volume due to adding outreach clients, the hiring of expensive locums to cover for sick leave or maternal leave, a sharp increase in reagent and supply costs, etc. Next would be to determine if this was a temporary increase and if the causes can be corrected or if the trend was more permanent and would require a new expense budget plan for the department.
