Cost analysis for decision support: The case of comparing centralized versus distributed methods for blood gas testing

Distributed testing, performed in satellite laboratories or at the bedside, is proliferating within healthcare systems. Users prefer it, and it is fas t and convenient. A guide look at marginal costs, however, suggests that co st differentials between distributed and centralized testing may be prohibi tive. Sound decision making on the part of health system administrators req uires a broader understanding of the costs and benefits of testing options. This study illustrates an approach to cost analysis for decision support wh ere opportunity costs (the costs associated with the next best alternative) provide the basis for decision making. Health system administrators need t o understand the opportunity costs involved in their decisions to avoid bei ng misled by analyses that omit important cost elements from consideration. We describe approaches to determining the costs of "stat" laboratory testin g options. The costs of various blood gas testing options are compared amon g a central blood gas laboratory, two satellite laboratories, and point-of- care analysis. Opportunity costs were determined by modeling the substituti on of one testing process for another. The cost analysis finds that a judic ious mix of alternate-site testing methods can generate annual savings of b etween $250,000 and $330,000, and at the same time reduce test reporting ti mes. In other words, technology that superficially appears more costly can deliver better service with lower costs.