MLS 324

Laboratory Management
Page 1 of 29
Property
Propertyofofand
andforforthe
theexclusive
exclusiveuse
useofofSLU.
SLU.Reproduction,
Reproduction,storing
storinginina aretrieval
retrievalsystem,
system,distributing,
distributing,uploading
uploadingororposting
postingonline,
online,orortransmitting
transmittingininany
anyform
formororbybyany
anymeans,
means,
electronic,
electronic,
mechanical,
mechanical,
photocopying,
photocopying,
recording,
recording,
or otherwise
or otherwise
of any partof any
of this
partdocument,
of this document,
without the
without
priorthe
written
priorpermission
written permission
of SLU, of is strictly
SLU, isprohibited.
strictly prohibited.
 MLS 324
Second Sem A.Y. 2020-2021

COURSE LEARNING OUTCOMES

At the end of the term, the Medical Laboratory Scientist pupils are expected to:

1. Integrate knowledge of physical, social, natural, chemical, humanities, and health

sciences in the practice of Medical Laboratory Science.
2. Communicate effectively orally and in writing using English and Filipino with cultural
sensitivity when interacting with peers, students, patients and other health care
professionals.
3. Demonstrate technical competence (safe, appropriate, and accurate testing) in
the performance of laboratory tests to aid in the diagnosis, treatment, and
management of diseases. Engage in medical laboratory science related researches
and projects that would help the community.
4. Practice analytical and critical thinking skills in making sound judgment in dealing
with implausible laboratory results and take appropriate actions.
5. Manifest dedication and commitment as well as management skills in the laboratory
operation to deliver quality laboratory services.
6. Engage in lifelong learning for professional advancement to be globally and
technologically competent.
7. Work effectively and independently in multi-disciplinary and multi-cultural teams
while preserving and promoting Filipino historical cultural heritage.
8. Demonstrate professional, social and ethical responsibility for the protection and
preservation of the environment through the practice of proper biosafety and waste
management.
9. Practice the principles of social accountability (relevance, equity, quality, and cost
effectiveness) in the delivery of health care to patients, families, and communities.
10. Apply the latest developments in Medical Laboratory Science ethically to all
patients in general.

Laboratory Management
Page 2 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 COURSE INTRODUCTION:

Dear future Medical Technologists,

Laboratory Management plays an important role in healthcare system. Achieving,

maintaining, and improving its day-to-day operational language requires significant
understanding to its purpose and its services provided. It is very important that
laboratory staff working within the laboratory should learn its language of healthcare in
general.

To successfully achieve its goal, one should be expected to understand and perform
numerous mandates from various regulatory agencies, managing human resources,
patient care testing, addressing quality performance issues, and overall accountability
to the facility administration.

We must not forget the purpose of the laboratory, these include improving accuracy,
timeliness, and reliability of all all its operations that sometimes these determinants
serves as a major challenge in its operations.

This module is intended to provide an avenue for students to be introduced to the basic
functions of management, and its essential quality-based services. Each topic is
discussed in a separate units.

By the end of the course, the student should be able to describe the basic concepts of
management as applied in administrative aspects of laboratory operations.
Specifically, it deals with planning, organizing, leading/directing, controlling/evaluating
the human, physical and financial resources of the clinical laboratory. Emphasis is also
given on quality systems and safety.

***

Page 3 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 MODULE 4 - SAFETY AND FINANCIAL MANAGEMENT, MARKETING,
. & CURRENT TRENDS IN LABORATORY MANAGEMENT
This module shall focus on the recognition of the nature of hazardous working
conditions present in the modern work environment and the types of danger inherent
to the medical laboratory. Also, this is to encourage a commitment on the part of both
the organization and the employees for ensuring the safety of the workplace and
compliance with safety rules and guidelines.

MODULE SELF MONITORING FORM

To help you keep track of your tasks for this module, you are provided in the below with
a self-monitoring form. Take the time to tick on the “Yes” box for each activity that you
finish and be reminded about pending activities that you are yet to do. Remember that
your success in achieving the module objectives depends entirely on how
conscientious you are of your own progress.

Completed
Schedule Activities Remarks
Yes No
Unit 1 : Safety Management

- Engage

Week 1 - Explore 📑⇤

- Explain

- Evaluate 📄⇥

Unit 2 : Financial Management

Week 2 - Explore

- Explain

Unit 3 : Principles of Marketing

- Explore
Week 3
- Explain

- Evaluate 📄⇥

Page 4 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 Unit 4 : Current Trends in Laboratory Management

Week 4 - Explore

- Elaborate 📑⇤

📑 ⇤ : For Submission
📄 ⇥ : Quiz

Page 5 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 MODULE CONTENTS
Contents

Course Introduction 03
Module Self Monitoring Form 04
Module Contents 05
Module and Unit Objectives 07

UNIT 1 : Safety Management

Engage: Laboratory Safety Programs 08
Explore: Hazards in the laboratory 10
Explain: Protective Measures and Procedures 11
Evaluate: Module 4—Unit 1 Quiz 15

UNIT 2 : Financial Management

Explore: Financial Management 16
Explain: Laboratory Budgeting 18

UNIT 3 : Principles of Marketing

Explore: Laboratory-Customer Relationship 22
Explain: Marketing Environment for Clinical Laboratory Service 23
Evaluate: Module 4—Unit 2 and 3 Quiz 27

UNIT 4 : Current Trends in Laboratory Management

Explore: Overview on Management of Change 21
Elaborate: Introduction to New Operational Strategies 25

References 29

Page 6 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 MODULE OBJECTIVES
After you are done reading and doing the tasks in this module, you are expected to be
able to:

1. Define the essential components of a laboratory safety program

2. Administer the program to meet safety requirements
3. Identify hazardous materials and procedures in the laboratory

This module is divided into four (4) lecture units including:

Lecture Unit 1 — Safety Management
Unit Objectives:
1. Discuss hazards in the clinical laboratory and methods of prevention
2. Acquire basic knowledge on safety management as applied in the
laboratory workplace
3. Analyze laboratory’s compliance to safety standards
4. Apply the principles of management to be able to perform safety
practice

Lecture Unit 2 — Financial Management

Unit Objectives:
1. Identify components and requirements for budget preparation
2. Prepare a basic budget for the clinical laboratory

Lecture Unit 3 — Principles of Marketing

Unit Objectives:
1. Acquire basic skills in marketing
2. Prepare a marketing plan for the clinical laboratory
3. Explain the rationale of marketing principles relative to competition that
exists among laboratories

Lecture Unit 4 — Current Trends in Laboratory Management

Unit Objectives:
1. Differentiate types of laboratories based on operations and technological
advancements
2. Elaborate certain issues arising from adapting new trends in laboratory
management
3. Implementation of quality environment protection

Page 7 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 UNIT 1: SAFETY MANAGEMENT
ENGAGE Laboratory Safety Programs

LECTURE ACTIVITY 1.1 Chemicals, Biological Materials, and Fire

Prevention

The environment of clinical laboratory can be a hazardous place to work. Laboratory

workers are exposed to numerous potential hazards including chemical, biological,
physical, and radioactive hazards, as well as musculoskeletal stresses (ergonomic).
Laboratories, by the nature of the work performed, contain inherent risk to workers that
is often difficult to measure and manage because safety is not an intrinsic, absolute,
and measurable property

The very first place in which safety factors should be considered is the design and
layout of the building and laboratory. Errors made at this stage of the management
plan can be extremely costly to correct. National and local fire and safety building
codes dictate most basic facility design features.

In addition to the general safety provision of building codes, the laboratory should be
designed to minimize any exposure to hazardous material through its work-flow
processes. Issues to be addressed through the floor plan layout and workspace design
include:

1. The separation of contesting functions such as clerical and administrative offices,

form areas containing hazardous materials by means of structural barriers and
control of traffic patterns.
2. The delivery and storage of potentially hazardous chemicals, such as flammables
and corrosive materials. This includes how they are brought into the laboratory,
where they are placed until they can be unpacked, and their final storage
arrangements.
3. The processing of specimens, from their collection and arrival in the laboratory to
their final delivery to the testing site.
4. The ventilation back-up plan. This factor is especially critical in sections such as
Histology and Microbiology, where there may be unusually heavy concentrations of
chemical and biological material. These two sections should have direct access to
outside venting (windows and fans) in case of an emergency.
5. The location, ease of use, and rapid availability of any special safety equipment
such as fume hoods, decontamination facilities and first-aid stations.

Chemical Hazards

Exposure to hazardous chemicals may result in acute and/or chronic disease that may
be exacerbated in employees with preexisting medical conditions. Although there is a
continuing effort to reduce the number and quantity of laboratory chemicals that are
toxic, carcinogenic, caustic, flammable, or radioactive, these compounds cannot be
eliminated completely from laboratories.

Page 8 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 Biological Hazards

Biological hazards (e.g., exposure to blood, body fluids, and other potentially infectious
materials [OPIM]) are a major concern for laboratory workers today and have
heightened the need for implementation of sound safety practices. Exposure to these
pathogens through specimens, aerosols, or droplets may cause an occupationally
acquired infection that can be transmitted to other employees, employees’ families, or
the public. Today, the potential use of biological, chemical, and radioactive materials
as terrorism agents imposes additional safety and security concerns in the laboratory.

Fire Prevention

A fire has three ingredients: an ignition source, oxygen, and fuel. All building codes and
fire prevention plans focus on preventing these three items from combining. The main
fire prevention strategies include keeping flammable substances in separate rooms and
storage cabinets; using fire-resistant building products, explosion-proof refrigerators, and
hoods, and performing procedures that result in highly combustible reactions under
water or in a vacuum chamber.

1. Fuel — when fuel is heated past its flash point, it enters the gas-phase and releases
vapor pressure that can ignite in air and support combustion.
2. Heat energy — combustion releases more than enough heat to make the fire self-
perpetuating
3. Oxygen — supports burning due to oxidation
4. Uninhibited chain reactions — this is what makes the fire self-sustaining. Heat is being
constantly produced as a result of ongoing reaction.

Page 9 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 EXPLORE Hazards in the Laboratory
LECTURE ACTIVITY 1.2 Different types of hazards (10 points)

As described in various regulatory and statutory guidelines and as prescribed by

Administrative Order No. 2007-0027 [Sec. VI B.1 (h) v.(p6)] or also known as the “Revised
Rules and Regulations Governing the Licensure and Regulation of Clinical Laboratories
in the Philippines; establishment of biosafety and biosecurity manual in a clinical
laboratory provides safety not only to the employees but also creating a safe work
environment. Subsequently, provision of hazard signs inside the workplace renders a
safety warning to the staff providing awareness on the risks and consequences as well
as possible mitigating measures to avoid accidents. Below are examples of hazards
signs you can observe inside a clinical laboratory, as a review identify and label each
hazard.

Page 10 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 EXPLAIN Protective Methods and Procedures
LECTURE ACTIVITY 1.3

Universal Precautions

Universal precautions are the policy of treating all blood, tissue, body fluids, and OPIM—
no just those specimens collected from patients known to have infectious diseases— as
equally threatening. This is a very commonsense approach. Despite the distinct
difference between the real and immediate danger from a known carrier and the
possible threat from the general specimen population, the existence and nature of the
threat may not be known until after a specimen has been collected and processed. For
these reasons, all protective procedures and methods should be applied universally in
all situations with a potential for exposure to bloodborne pathogens and OPIM.

Engineering and Work Practice Control

Engineering and work practice controls involve taking physical steps to isolate or
remove any possible pathogen hazards from the workplace. Next is a list of the primary
areas in which OSHA requires specific engineering action by employees.

1. Hand-washing facilities must be immediately available in the workplace, and the

employer is required to take all necessary steps to enforce hand-washing policies.
This includes appropriate hand care before and after contact with a patient, after
handling any infectious material, and upon removal of protective apparel such as
gloves, aprons, or other garments.
2. Needles and other sharps must be handled with great care and caution,
Recapping needles is not allowed unless absolutely necessary and they only
mechanical devices (eg, forceps). All sharps must immediately be placed in
puncture-resistant leakproof containers, labeled with a hazardous warning, and
securely sealed prior to storage or disposal. If there is a possibility of the outside of
the primary sharps container becoming contaminated , it must be placed into a
secondary receptacle with instructions for decontamination if leakage occurs
during shipment.
3. Eating, drinking, smoking, and applying cosmetics must be banned in areas in
which exposure to pathogenic material is possible.Food and drink must also be
stored in separate areas and refrigerators from biological specimens
4. Procedure that minimize splashing, spraying, or generating aerosols must be
adopted. This includes keeping all specimens inclose containers as much as possible
during centrifugation and testing, as well as prohibiting mouth pipettes.
5. Equipment and instruments that may become soiled with biological material must
have warning labels attached stating the potential hazard and instructions for
decontamination

Page 11 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 Personal Protective Equipment (PPE)

If a potential for exposure to blood or other potential infectious material (OPIM) remains
after all possible engineering and work practice controls have been implemented and
enforced, the employer is required to provide the worker with the PPE necessary to
provide complete protection from any remaining danger. Identifying the types and
usage of PPE is an integral part of the exposure control plan and depends on the
nature and extent of the possible danger. This decision about the kinds of PPE to be
provided is crucial because it is the direct barrier between the hazardous agent and
the last line of protection for the worker. Following the several comments on important
aspects of these PPE items:

1. Gloves are to be worn whenever there is even a remote possibility of the hands
coming into contact with blood or OPIM. The gloves must be replaced between
patients and when their protective integrity is compromised, that is, after gross
contamination, extended wear, or any break or tear.
2. Eye and face protection items include goggles, glasses, masks, hoods, and counter
shields that provide barriers to splashes, splatters, sprays, or aerosols caused during
the handling or processing of infectious materials
3. Protective body clothing (gowns, aprons, lab coats, surgical caps and scrubs, shoe
covers, and disposable arm sleeves) must be worn when there is the threat of
contamination to parts of the body or garments not covered by gloves or eye and
face guards

Housekeeping Techniques

Housekeeping procedures are required to be detailed and specific, including the

specific disinfectant or sterilization (chemical or physical) method to be used to render
the surface or item no longer capable transmitting infectious particles and thus safe for
handling and disposal.

The collection, storage, and transportation of wast must follow the guidelines described
previously for needles and other sharps. These rules state generally that waste must be
placed immediately in a receptacle that can contain the item (leak-, puncture-, and
spill proof, and so on), with a secondary cover if decontamination of the primary
container (“double-bagging” or two-container system) is possible, and properly labeled
with a warning and instructions for dealing with a leak or spill.

Waste Disposal System

Concerns over the dangers of chemical and biological waste, especially in the
protection of the public and the environment, have proliferated the laws and
regulations governing disposal of this material. The overriding principle for disposal of
any such material should follow this precept:

“Do not purchase or allow into your laboratory any substance for which a practical
waste treatment and disposal option is not available”

Page 12 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 LECTURE ACTIVITY 1.4 Safety Equipment in the Laboratory
The safe operation of machinery and equipment is crucial. This is certainly true when
there is potential harm from moving parts such as belts, centrifuges, or gears; extreme
temperature burn from heating or cooling elements; or cuts and puncture wounds from
sharp objects like sampling probes, mechanical scissors, broken glasswares, or
venipuncture needles.

LECTURE ACTIVITY 1.5 Safety Codes (Responsibility for Safety)

The chief executive officer must assume total, overall responsibility for the safety of the
people working in the organization. Primary responsibility for enforcement of safety rules
and procedures lies with the worker’s immediate supervisor. However, individuals have
the personal obligation for ensuring their own well being by performing their duties in a
safe and conscientious manner and promptly reporting any problems to their
supervisor.

Because safety affects every aspect of the organization and a wide range of
interdisciplinary skills are needed to develop and manage a safety program, the use of
safety committees and the appointment for safety officer to oversee this function have
gained wide popularity. This approach has the advantage of using a variety of
expertise and resources and assigns the administrative authority to implement, monitor,
and enforce the safety plan. In a hospital, for example, an organizational safety
committee may be responsible for the coordination of safety policies; the laboratory
may have its own specialized team.

LECTURE ACTIVITY 1.5 Safety Management Program

Safety Committee

A safety committee should consist of representatives from all areas of the organization
or department, including administration, pathologists, clinical scientists, managers,
supervisors, and line workers. Members must be allowed (ie, encouraged and solicited)
to share their opinions and perspectives with the group and to actively participate in
the proceedings of the committee.

The safety committee develops and monitors the safety management program and
provides a resource for resolving any special safety problems. The committee members
also serve as ambassadors to their coworkers in communicating and disseminating the
spirit of the safety program and as mentors to encourage the attitude and leadership
so crucial for nurturing a safety-oriented culture.

Page 13 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 Safety Management

A safety management program, established under the auspices of the safety

committee and safety officer, involves specific action plans at least five areas:

1. Policy and procedures

2. Communications
3. Disaster plan
4. Safety audits and inspections
5. Accident investigation and accident prevention

Page 14 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 EVALUATE
MODULE 4 UNIT 1 — QUIZ
For OBL Students: Wait for the instructions of the class instructor.
For CBL Students: Answer the set of questions given below.

Page 15 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 UNIT 2: FINANCIAL MANAGEMENT
EXPLORE Financial Management

LECTURE ACTIVITY 2.1 Introduction

The objectives of laboratory management must reflect the demands of the laboratory’s
clients and the clinical and financial environment in which it operates. There are
fundamental and striking differences in clinical need and demand, financial constraints
and considerations, and laboratory mission and cost structures, which depend on the
laboratory’s situation. Whether inpatient or outpatient hospital or independent
laboratory, each has its own set of functional drivers of which laboratory management
must be acutely conscious.

What is financial management?

Financial management refers to the strategic planning, organizing, directing, and

controlling of financial undertakings in an organization or an institute. It also includes
applying management principles to the financial assets of an organization, while also
playing an important part in fiscal management. Take a look at the objectives involved:

1. Maintaining enough supply of funds for the organization;

2. Ensuring shareholders of the organization to get good returns on their investment;
3. Optimum and efficient utilization of funds;
4. Creating real and safe investment opportunities to invest in.

Financial management is also made up of certain elements. These include:

1. Financial planning: This is the process of calculating the amount of capital that is
required by an organization and then determining its allocation. A financial plan
includes certain key objectives, which are:
i. Determining the amount of capital required;
ii. Determining the capital organization and structure;
iii. Framing of the organization’s financial policies and regulations.
iv. Financial control: This is one of the key activities in financial management. Its
main role is to assess whether an organization is meeting its objectives or not.
Financial control answers the following questions:
a. Are the organization’s assets being used competently?
b. Are the organization’s assets secure?
c. Is the management acting in the best financial interests of the
organization and the key stakeholders?
d. Financial decision-making: This involves investment and financing with
regards to the organization. This department takes decisions about
how the organization should raise finance, whether they should sell
new shares, or how the profit should be distributed.

The financial management department of any firm is handled by a financial manager.

This department has numerous functions such as:

Page 16 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 • Calculating the capital required: The financial manager has to calculate the
amount of funds an organization requires. This depends upon the policies of
the firm with regards to expected expenses and profits. The amount required
has to be estimated in such a way that the earning capability of the
organization increases.

• Formation of capital structure: Once the amount of capital the firm requires has
contribution of
been estimated, a capital structure needs to be formed. This involves debt
shareholders in the equity analysis in the short-term and the long-term. This depends upon the
capital employed in amount of the capital the firm owns, and the amount that needs to be raised
business.
via external sources.

• Investing the capital: Every organization or firm needs to invest money in order to
raise more capital and gain regular returns. Hence, the financial manager
needs to invest the organization’s funds in safe and profitable ventures.

• Allocation of profits: Once the organization has earned a good amount of net
profit, it is the financial manager’s duty to efficiently allocate it. This could
involve keeping a part of the net profit for contingency, innovation, or
expansion purposes, while another part of the profit can be used to provide
dividends to the shareholders.

• Effective management of money: This department is also responsible for

effectively managing the firm’s money. Money is required for various
purposes in the firm such as payment of salaries and bills, maintaining stock,
meeting liabilities, and the purchase of any materials or equipment.

• Financial control: Not only does the financial manager have to plan, organize,
and obtain funds, but he also has to control and analyze the firm’s finances
in the short-term and the long-term. This can be done using financial tools
such as financial forecasting, ratio analysis, risk management, and profit and
cost control.

The Hospital Environment

In the hospital institutional environment, the laboratory usually operates as a division

under a vice president or director of operations. Along with other operational divisions
such as pharmacy and dietary, the laboratory must compete for resources with direct
patient care divisions such as nursing. Because the laboratory may not be directly
represented at the table where administrative and fiscal decisions are made for the
institution, and because the work of the clinical laboratory is relatively invisible
compared to direct patient care, it can be at a relative disadvantage in these
negotiations. Consequently, it becomes even more important for laboratory
management to be perceived as a team player in the hospital—to be seen as clinically
responsive and fiscally responsible. These attributes become increasingly important
when large capital expenditures or program expansions are sought.

In these situations the role of the laboratory medical director becomes critically
important. To be most effective the director must speak for the medical needs of
patients, particularly as they relate to laboratory services, but must also present a
Page 17 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 credible front to the hospital administration when addressing the business aspects of
the laboratory, such as budgeting, billing, and planning.

In certain sections of the laboratory, such as anatomic pathology and the blood
bank, the director must be a physician. The directors of all sections—and especially the
overall laboratory director—will be able to function most effectively, whatever their
academic degree, if they have a medical or clinical background that gives them
credibility with the medical staff. Similarly, the relationship with the hospital
administration may be enhanced if the laboratory director has a business background
or at least demonstrable competence in business matters.

The ideal director, who fully satisfies both sets of competencies, may be difficult
to find. In fact, it is not essential that all that talent be manifest in one individual if the
director can utilize other resources within the laboratory. It is essential, however, that the
person at the top have a balanced view of the laboratory world. Operating in the
Inpatient Hospital Setting The major differences in the cost and operational structures of
independent and hospital laboratories lie in the patient populations and the nature of
the services provided.

The Non-Hospital Environment

The breadth of testing provided by independent laboratories generally mirrors

that of hospital-associated laboratories. The major differences lie in the population
served, hours and scope of operation, turnaround time requirements, and need for
ancillary functions, such as business operations. Some of these facilities do a substantial
amount of reference (esoteric) testing for hospitals and other laboratories.

Most of the testing done by the independent laboratories is for outpatients of

physicians and clinics. Some may provide phlebotomy services at or near the offices
and clinics they serve. Essentially all provide couriers for the transportation of specimens
back to the home laboratory. Except for work that requires rapid turnaround, which is
unusual in this setting, most specimens are transported during daylight hours and arrive
at the laboratory in the late evening or night. Thus, the major testing effort takes place
during the night in one large batch, and most results of routine tests are transmitted
before the physicians’ offices open the next morning.

EXPLAIN Laboratory Budgeting

LECTURE ACTIVITY 2.2 Laboratory Budgeting Process
Operational Budget

An operating budget is a forecast of the revenues and expense expected for one or
more future periods. An operating budget is typically formulated by the management
team just prior to the beginning of the year, and shows expected activity levels for the
entire year. This budget may be supported by a number of subsidiary schedules that
contain information at a more detailed level. For example, there may be separate
supporting budgets that address payroll, the cost of goods sold, and inventory. Actual
results are then compared to the operating budget to determine the extent of any
Page 18 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 variances from expectations. Management may alter its actions during the year to
bring actual results into line with the operating budget.
An operating budget tends to become less accurate for periods further in the future. To
offset this issue, some organizations routinely update their budget based on the latest
available information.

Capital Budget

Capital budgeting is the process that a business uses to determine which proposed
fixed assets purchases it should accept, and which should be declined. This process is
used to create a quantitative view of each proposed fixed asset investment, thereby
giving a rational basis for making a judgment.
long term assets that the
company has purchased and
is using for the production of
Capital Budgeting Methods its goods or services

There are a number of methods commonly used to evaluate fixed assets under a formal
capital budgeting system. The more important ones are:

• Net present value analysis. Identify the net change in cash flows associated with
a fixed asset purchase, and discount them to their present value. Then
compare all proposed projects with positive net present values, and accept
those with the highest net present values until funds run out.

• Constraint Analysis. Identify the bottleneck machine or work center in a

congestion in
production environment and invest in those fixed assets that maximize the
production utilization of the bottleneck operation. Under this approach, a business is less
system. MOre
work reequests
likely to invest in areas downstream from the bottleneck operation (since
than it can they are constrained by the bottleneck operation) and more likely to invest
process upstream from the bottleneck (since additional capacity there makes it
easier to keep the bottleneck fully supplied with inventory).

• Payback period. Determine the period required to generate sufficient cash flow
from a project to pay for the initial investment in it. This is essentially a risk
measure, for the focus is on the period of time that the investment is at risk of
not being returned to the company.

• Avoidance Analysis. Determine whether increased maintenance can be used to

prolong the life of existing assets, rather than investing in replacement assets.
This analysis can substantially reduce a company's total investment in fixed
assets.

The Importance of Capital Budgeting

The amount of cash involved in a fixed asset investment may be so large that it
could lead to the bankruptcy of a firm if the investment fails. Consequently, capital
budgeting is a mandatory activity for larger fixed asset proposals. This is less of an issue
for smaller investments; in these latter cases, it is better to streamline the capital
budgeting process substantially, so that the focus is more on getting the investments
Page 19 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 made as expeditiously as possible; by doing so, the operations of profit centers are not
hindered by the analysis of their fixed asset proposals.

Cost Finding

A major factor in business planning is the cost of producing the company’s products.
Cost finding is the process by which the company obtains estimates of the costs of
producing a product, providing a service, performing a function, or operating a
department. Some of these estimates are historical (how much did it cost?), while
others are predictive (what will it cost?).

The basic principle in cost finding is that the cost assigned to any object—an activity or
a product—should represent all the costs that the object causes. The most fully
developed methods of cost finding are used to estimate the costs that have been
incurred in a factory to manufacture specific products. The simplest of these methods is
known as process costing. In this method, the accountant first accumulates the costs of
each production operation or process for a specified time frame. This sum is then
restated as an average by dividing the total costs of production by the total output in
the period. Process costing can be used whenever the output of individual processes is
reasonably uniform or homogenous, as in cement manufacturing, flour milling, and
other relatively continuous production processes.

A second method, job-order costing, is used when individual production centres or

departments work on a variety of products rather than just one during a typical time
period. Two categories of factory cost are recognized under this method: prime costs
and factory overhead costs. Prime costs are those that can be traced directly to a
specific batch, or job lot, of products. These are the direct labour and direct materials
costs of production. Overhead costs, on the other hand, are those that can be traced
only to departmental operations or to the factory as a whole and not to individual job
orders. The salary of a departmental supervisor is an example of an overhead cost.

Job Costing

Job costing involves the accumulation of the costs of materials, labor, and overhead
for a specific job. This approach is an excellent tool for tracing specific costs to
individual jobs and examining them to see if the costs can be reduced in later jobs. An
alternative use is to see if any excess costs incurred can be billed to a customer.

Job costing is used to accumulate costs at a small-unit level. For example, job costing is
appropriate for deriving the cost of constructing a custom machine, designing a
software program, constructing a building, or manufacturing a small batch of products.
Job costing involves the following accounting activities:
1. Materials. It accumulates the cost of components and then assigns these costs to a
product or project once the components are used.
2. Labor. Employees charge their time to specific jobs, which are then assigned to the
jobs based on the labor cost of the employees.
3. Overhead. It accumulates overhead costs in cost pools, and then allocates these
costs to jobs.

Page 20 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 Job costing results in discrete “buckets” of information about each job that the cost
accountant can review to see if it really should be assigned to that job. If there are
many jobs currently in progress, there is a strong chance that costs will be incorrectly
assigned, but the very nature of the job costing system makes it highly auditable.
If a job is expected to run for a long period of time, then the cost accountant can
periodically compare the costs accumulated in the bucket for that job to its budget,
and give management advance warning if costs appear to be running ahead of
projections. This gives management time to either get costs under control over the
remainder of the project, or possibly to approach the customer about a billing increase
to cover some or all of the cost overrun.

Job costing demands a considerable amount of costing precision if costs are to be

reimbursed by customers (as is the case in a cost-plus contract, where the customer
pays all costs incurred, plus a profit). In such cases, the cost accountant must carefully
review the costs assigned to each job before releasing it to the billing staff, which
creates a customer invoice. This can cause long hours for the cost accountant at the
end of a job, since the company controller will want to issue an invoice as soon as
possible.

Page 21 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 UNIT 3: PRINCIPLES OF MARKETING
EXPLORE

LECTURE ACTIVITY 3.1 Laboratory-Customer Relationship

Theoretically, all laboratories are competing for the same market. In actual practice,
the current competitive environment is driven by changes in the role of the hospital
laboratory.

Clinical laboratorians provide information and services that contribute to maximizing

the effective delivery of care in today's complex healthcare system by assuring that the
correct test is performed on the right person, at the right time, producing accurate test
results that enable providers to make the right diagnostic and therapeutic decisions
using the right level of health care resources.

Laboratory information enables physicians and other healthcare professionals to make

appropriate evidence-based diagnostic or therapeutic decisions for their patients.
Clinical laboratory services are the most cost effective, least invasive source of the
objective information used in clinical decision-making. Clinical laboratory services have
a direct impact on many aspects of patient care including, but not limited to, length of
stay, patient safety, resource utilization, and customer satisfaction.

While technology continues to improve the productivity of today's laboratories, new

technologies, new diseases, and disease strains continue to drive the need for more
tests and testing. Changes in the world, such as bio-terrorism and the speed with which
diseases spread globally drive the need for rapid diagnosis.

Thus, the clinical laboratory professional is an indispensable partner in providing patient

care, and making direct improvements in the lives of patients, in the maintenance of
the public's health, and in the effectiveness of individual health care providers

Until fairly recently, the typical institutional laboratory served a captive in-house market.
Although lip service was given to attracting outpatient work, it was generally
understood that a hospital laboratory could not compete with an independent
laboratory for outpatient market because of the expense involved in providing a 24-
hour, on-demand service.

LECTURE ACTIVITY 3.2 Marketing Philosophy

The marketing era started to dominate around 1950, and it continues to the present.
The marketing concept recognizes that the company's knowledge and skill in designing
products may not always be meeting the needs of customers. It also recognizes that
even a good sales department cannot sell every product that does not meet
consumers' needs. When customers have many choices, they will choose the one that
best meets their needs.

The marketing concept and philosophy states that the organization should strive to
satisfy its customers' wants and needs while meeting the organization's goals. The best
Page 22 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 way to meet the organization's goals is also by meeting customer needs and wants. The
marketing concept's emphasis is to understand the customers before designing and
producing a product for them. With the customer's wants and needs incorporated into
the design and manufacture of the product, sales and profit goals are far more likely to
be met.

With the customer's satisfaction the key to the organization, the need to understand the
customer is critical. Marketing research techniques have been developed just for that
purpose. Smaller organizations may keep close to their customers by simply talking with
them. Larger corporations have established methods in place to keep in touch with
their customers, be it consumer panels, focus groups, or third-party research studies.
Whatever the method, the desire is to know the customers so the organization can
better serve them and not lose sight of their needs and wants.
The idea of keeping close to the organization's customers seems simple. In reality, it is
very easy to forget the customer's needs and wants. Sometimes the management is so
involved with the product that their own desires and wants begin to take dominance,
even though they have adopted the marketing concept.

Yet it is easy for managers to forget the marketing concept and philosophy. For
example, many years ago—before there was a Subway on every corner—a college
student opened a small submarine sandwich shop near his university's campus. The sub
shop was an immediate success. By using the marketing concept, the young
entrepreneuer had recognized an unmet need in the student population and opened
a business that met that need.

Unfortunately, the story does not end at this point. The sub shop was so successful that it
began to outgrow its original location after about three years. The shop moved to a
larger location with more parking spaces, also near the university. At the new sub shop,
waiters in tuxedos met the students and seated them at tables with tablecloths. Besides
the traditional subs, the shop now served full meals and had a bar. Within a few months
the sub shop was out of business. The owner of the shop had become so involved with
his business vision that he forgot the customers' needs and wants. They did not want an
upscale restaurant—there were other restaurants in the area that met that need, they
just wanted a quick sub sandwich. By losing sight of the customers' wants and needs,
the owner of the sub shop lost his successful business.

EXPLAIN
LECTURE ACTIVITY 3.3 Marketing Environment for Clinical Laboratory
Service
Many forces influence the delivery of laboratory services. Many of these are outside the
control of the manager, but all must be understood and factored into the marketing
strategy. The market environment is a vibrant, interactive ecosystem; conditions are
constantly changing. The manager must be alert to its evolving character and develop
strategies that turn these events to the laboratory’s advantage.
Macro-factors (events outside the organization) such as the total patient population,
their purchasing habits, and competition determine opportunities and limitations of the
potential customer base.

Page 23 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 The market environment is beyond the control of either the manager or the
organization. However, these macro-factors set the possibilities and limitations common
to all providers of laboratory services. Extra-environmental forces include such things as
the characteristics of the population, climate, geographical features of the service
area.

With these factors in perspective, managers can focus on the parts of the market
environment that may be responsive to the actions taken by a specific laboratory or its
competitors. These include the objectives, resources, organizational flexibility, and
commitment of the laboratory to meeting the needs of its customers.

LECTURE ACTIVITY 3.4 Laboratory Customer

In order to market your product or service, it is imperative that you tailor your marketing
and sales efforts to specifically reach the segment of population that will most likely buy
your product or service. It is critical that you first determine or clearly identify your
primary market. Your energies and funds then can be spent more efficiently.

If you don’t know who your customers are, how will you be able to assess whether you
are meeting their needs? Since success depends on your being able to meet
customers’ needs and desires, you must know who your customers are, what they want,
where they live and what they can afford.

We’ve all heard a business owner say, "My product is terrific! It appeals to everyone."
Many of us have also seen small businesses that try to be all things to all people. This is a
difficult, if not impossible, bridge to cross.

Targeting your market is simply defining who your primary customer will be. The market
should be measurable, sufficiently large and reachable.

There is no question that the person toward whom the laboratory directs its professional
concerns is the patient. However, the laboratory must also identify the customer – the
entity (patient, physician, parent, employer, insurance company, government agency)
that sends the patient to the laboratory. The laboratory manager must further
understand why a patient comes to this particular laboratory and the factors that
influence this decision.

For marketing purposes, the purchasing decision makers can be divided into two basic
groups:

1. Captive users: those who are committed to specific laboratory

2. Discretionary buyers: those who can choose among several laboratories

LECTURE ACTIVITY 3.5 Four P’s of Marketing

The 4 Ps of marketing include product, price, place, and promotion. These are the key
elements that must be united to effectively foster and promote a brand’s unique value,
and help it stand out from the competition.
Page 24 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 Product

A product refers to any item that intends to satisfy the needs and wants of a target
customer. It can be a tangible good, such a clothing item or piece of software, or
intangible, like a service or experience (think legal services or a cruise).

Marketers must always have a clear concept of what their products stand for, and
what differentiates them from the competition, before they can be marketed
successfully. Today, the internet can be considered either the medium for purchase, via
e-commerce, or the product itself, such as a social media service. Because of this, it’s
vital that marketers fully understand the product they are selling, how it meets the
needs of their target customer, and what makes their product stand above the
competition.

Price

First comes the product, and immediately after comes a determination of its value
among target audiences. Pricing strategy is an art and a science, in that it involves
both market data and careful calculations, as well as skillfully balancing between
pricing that is too high or too low, and understanding how skewing either way might
damage the brand.

Price not only refers to the monetary value of a product, but also the time or effort the
customer is willing to expend to acquire it. Determining this will be a critical factor in
revenue for the brand as it will impact profit, supply, demand, and how much
marketers should spend on a promotion or marketing strategy. This, in and of itself, is
why this ‘P’ is one of the most important. If a product is priced too high or too low, the
product – and brand – could fail.

Place

The internet age has introduced new challenges when it comes to reaching your
customers. Place refers to providing customers access to the product, and it also calls
into play convenience for the customer. Marketing, through digital means or otherwise,
is about putting the right product, in the right place, at the right price, at the right time,
in front of the customer.

Some key questions that marketers need to answer include:

1. Where are target customers shopping?

2. Are they using desktops or mobile devices?
3. Are they shopping for similar products online, or in brick-and-mortar stores?
4. Where are they engaging on social media?

Even though transactions with your company may take place exclusively in-store or
online, customers likely interact with your brand or your specific products in a variety of
places. It’s important to consider how each of these places influences the overall
customer experience.

Page 25 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 Promotion

Now, how to make an audience aware of the product? Within the framework of the
four Ps, promotion refers primarily to marketing communications.

These communications use channels such as public relations, advertising, direct

marketing, email marketing, social media marketing, or sales promotions; think of it as
any way marketers disseminate relevant product information to their target customers.

LECTURE ACTIVITY 3.6 Marketing Plan

A marketing plan is a roadmap that helps you set goals, understand your target
audience and optimize the impact of your marketing campaigns.
In simple words, it helps you get a clearer view of the what, why and how of all your
marketing activities.

A good marketing plan also helps you communicate the “big” strategy and the
different tactics involved to your marketing team. Last but not least, it lets you track the
success of your campaigns.

A marketing plan should ideally include:

1. Your long-term and short-term marketing goals
2. A description of your target audience or buyer persona
3. One or more high-level marketing strategies and tactics

The Benefits of Marketing Plan

1. Understand your business. Conducting thorough research on current market

conditions and where your company stands can help you identify the strengths
and weaknesses of your business, as well as new opportunities.
2. Align marketing goals with business goals. Without a plan, it can be easy to lose
your sense of direction. A marketing plan helps you ensure that your marketing
goals are aligned with the vision, mission and goals of your business.
3. Ensure everyone is on the same page. Having a working document of your
marketing makes it easier for not just your team, but also the entire company to
work together towards a common goal.
4. Stay focused on what’s important. A marketing plan is a constant reminder of
your goals and strategies, which keeps you from getting sidetracked.
5. Make better decisions. Planning ahead of time can prevent you from making
hasty decisions when difficult situations arise.

Page 26 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 EVALUATE
MODULE 4 UNIT 2 and 3 — QUIZ
For OBL Students: Wait for the instructions of the class instructor.
For CBL Students: Answer the set of questions given below.

Page 27 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 UNIT 4: CURRENT TRENDS IN LABORATORY MANAGEMENT

EXPLORE
LECTURE ACTIVITY 4.1 Overview on Management of Change

Change management is a systematic approach that includes dealing with the

transition or transformation of organizational goals, core values, processes or
technologies.
The purpose of every organizational change management initiative is to successfully
implement strategies and methods for effecting change and helping people to accept
and adapt to change.
As organizational changes in the agile workplaces happen daily, change
management and change communication teams have become crucial performance
drivers for many companies.

Three Most Common Types of Organizational Change

1. Any organizational change that improves and optimizes on previously established

processes, strategies and procedures.
2. Change that moves an organization away from its current state to a new state in
order to solve a problem, such as mergers and acquisitions and automation.
3. Change that radically and fundamentally alters the culture, core values and
operations.

ELABORATE
LECTURE ACTIVITY 4.2 Introduction to New Operational Strategies
Using your external references, list down five (5) advancement in technologies that
specifically addressed the laboratory’s operational management. (20 points)

Local Setting Global Setting

Advancement Description Advancement Description

[1] [1]

[2] [2]

[3] [3]

[4] [4]

[5] [5]

Page 28 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.
 REFERENCES:

1. McPherson, R.A. & Pincus, M. R. (2011). Henry’s Clinical Diagnosis and Management
by laboratory methods, 22nd edition. P.A. United States: Saunders Elsevier

2. Garcia, L.S. (2014). Clinical Laboratory Management, second edition. Washington

DC, United States: American Society for Microbiology

3. World Health Organization (2011). Laboratory Quality Management System. France.

(WHO)

4. CLSI. Quality Management System: A model for Laboratory Services; Approved

Guideline— Fourth Edition. CLSI document QMS01-A4. Wayne, PA: Clinical
Laboratory Standards Institute; 2011

Page 29 of 29
Property of and for the exclusive use of SLU. Reproduction, storing in a retrieval system, distributing, uploading or posting online, or transmitting in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited.