Diagnosis: Financial analysis/Break-even point
• Break-even analysis is the process of calculating the sales needed to cover costs so that there is zero profit or loss.
• In the laboratory, break-even analysis can be used as a screening tool to determine whether bringing a new assay in-house makes financial sense.
• A break-even analysis is not the only determining factor in the decision regarding whether a laboratory test should be performed in-house.
• Clinical needs and physician and patient satisfaction can override a break-even analysis.
• Break-even analysis is usually based on the assumption that the selling price of a product (e.g., a laboratory test) is constant.
• Break-even analysis can be used to help determine the price of a new assay. However, because most insurance reimbursement rates are fixed, the prices charged by the laboratory will be less important than reimbursement rates.
• Break-even analysis is important for both for-profit and not-for-profit laboratories.
