Basic Concepts for Making Informed Financial Decisions for the Clinical Laboratory Part 2- Instrument Selection, Cost Justification, and Implementation

Author: A. Wayne Bruce, Ph.D. MT ASCP
Reviewer: Larry Brace, Ph.D., MT(ASCP)SH

This course provides insight into a number of areas to address when considering and then purchasing analytical instruments for the clinical laboratory. Several processes are addressed including needs assessment, instrument selection, financial analysis, methods of acquisition, and implementation.

Continuing Education Credits


  • Develop a plan for capital equipment acquisition and perform a basic needs assessment.
  • Set minimum standards of performance for potential equipment to be purchased.
  • Perform a work station analysis.
  • Perform an organized market search for a new instrument.
  • Describe an appropriate financial analysis process for the capital equipment being considered for purchase.
  • Perform an operations cost comparison study.
  • Determine the cost per test of the instrument by using the straight line depreciation method.
  • Calculate the break-even point and interpret the results for an instrument purchase being considered.
  • Calculate and interpret operating leverage, payback, net present value and internal rate of return in a financial analysis.
  • Describe a basic plan for new capital equipment implementation.

Course Outline

  • Introduction
      • Introduction
      • Development of a Capital Equipment and Acquisition Plan
      • Which of the following is a valid reason for purchasing a new analytical instrument?
  • Determining Need for Tests and Analytical Instrumentation
      • Needs Assessment for Replacement of a Current Instrument
      • Needs Assessment for an Instrument That Will Provide Additional Tests Available to Providers
      • Determining the Need for a Test
      • What makes a test valid to a Provider?
      • Financial Viability and Need
  • Determining essential system and instrument criteria for a Prospective Analytical Instrument
      • Determining Minimum Performance Criteria
      • Examples of Application Characteristics
      • Examples of Methodology Characteristics
      • Examples of Performance Characteristics
      • Examples of performance characteristics for a test include:
      • Operation Review
      • Workstation Analysis
  • Market Search for an Instrument
      • Introduction to the Market Search
      • The Request for Proposal (RFP)
      • The RFP is only valuable to the persons responsible for selecting an analytical instrument.
  • Financial Analysis
      • Introduction to Financial Analysis
    • Revenue Analysis
      • Revenue Analysis
    • Instrument cost determination
      • Determining Instrument Cost Per Test
      • A new instrument costs $50,000. The instrument is to be depreciated over 5 years and 10,000 patient reportable tests are run per year. What is the cos...
    • Operations cost comparison study
      • Operations Cost Comparison Study
      • A cost comparison was done between three instruments considered for the laboratory. One instrument cost per test was $0.30 per test less than the othe...
    • Introduction to financial measures for decision making
      • Introduction to Financial Measures for Decision Making
      • Which of the following is an assessment of the risk of a purchase of a new instrument for the laboratory?
    • Break-Even Point
      • Break-Even Point Explained
    • Operating Leverage
      • Operating Leverage (OL) Explained
    • Return On Investment Indicators
      • Financial Indicators for Equipment Purchase
      • Net Present Value Example
      • Internal Rate of Return (IRR)
      • Which of the following financial indicators provides a potential percentage return for a prospective purchase of an analytical instrument for the labo...
  • Method of Purchase
      • Method for Purchasing an Instrument
  • Implementation Plan for an Analytical Instrument
      • Implementation of an Analytical Instrument
  • References
      • References

Additional Information

Level of instruction: Basic

Intended Audience: Medical laboratory scientists, medical technologists, and technicians. This course is also appropriate for medical laboratory science students and pathology residents.
Course Description: This course provides insight into a number of areas to address when considering and then purchasing analytical instruments for the clinical laboratory.  Several processes are addressed including needs assessment, instrument selection, financial analysis, methods of acquisition, and implementation.
Author Information: Dr. A. Wayne Bruce has B.S. and M.S. degrees in Medical Technology and a Doctorate degree in Higher Education Administration and Statistics from the University of Minnesota. He has served as Director of a CLS Program for 25 years and as laboratory Director and Technical Consultant for over 35 years. He most recently was Associate Dean at the Northern Ontario School of Medicine. Dr. Bruce is President of Bruce North Country Consulting Services LLC and consults to clinical laboratories on laboratory finance, start-up, management, and accreditation. He currently directs a clinical laboratory. He has numerous publications including a book on quality assurance for the clinical Laboratory and a financial management manual for the Thompson Publishing Group.
Reviewer Information: Larry Brace, Ph.D., MT(ASCP)SH has over 40 years of experience as a medical laboratory scientist. He holds a B.S. degree in Medical Laboratory Sciences and an M.S. degree in Clinical Pathology from Michigan State University and a Ph.D. degree in Pharmacology from the University of Illinois at Chicago. He has been an Associate Director of the Medical Technology Program at Michigan State University, Professor of Medical Laboratory Sciences and Professor of Pathology at the University of Illinois at Chicago (UIC). He was also the Director of Core Laboratories at UIC until his retirement. Dr. Brace has published more than 40 articles in major refereed scientific journals and has nearly 100 presentations (abstracts and podium presentations) at major national and international scientific meetings.

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NPV Equation
NPV Example Calculation fig 8
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