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 fast and convenient. A guide look at marginal costs, however, suggests that cost differentials between distributed and centralized testing may be prohibitive. Sound decision making on the part of health system administrators requires a broader understanding of the costs and benefits of testing options. This study illustrates an approach to cost analysis for decision support where opportunity costs (the costs associated with the next best alternative) provide the basis for decision making. Health system administrators need to understand the opportunity costs involved in their decisions to avoid being misled by analyses that omit important cost elements from consideration. We describe approaches to determining the costs of "stat" laboratory testing options. The costs of various blood gas testing options are compared among a central blood gas laboratory, two satellite laboratories, and point-of-care analysis. Opportunity costs were determined by modeling the substitution of one testing process for another. The cost analysis finds that a judicious mix of alternate-site testing methods can generate annual savings of between $250,000 and $330,000, and at the same time reduce test reporting times. In other words, technology that superficially appears more costly can deliver better service with lower costs.