Experience of a Break-Even Point Analysis for Make-or-Buy Decision / 대한진단검사의학회지

ABSTRACT

BACKGROUND: Cost containment through continuous quality improvement of medical service is required in an age of a keen competition of the medical market. Laboratory managers should examine the matters on make-or-buy decision periodically. On this occasion, a break-even point analysis can be useful as an analyzing tool. In this study, cost accounting and break-even point (BEP) analysis were performed in case that the immunoassay items showing a recent increase in order volume were to be in-house made. METHODS: Fixed and variable costs were calculated in case that alpha fetoprotein (AFP), carcinoembryonic antigen (CEA), prostate-specific antigen (PSA), ferritin, free thyroxine (fT4), triiodothyronine (T3), thyroid-stimulating hormone (TSH), CA 125, CA 19-9, and hepatitis B envelope antibody (HBeAb) were to be tested with Abbott AxSYM instrument. Break-even volume was calculated as fixed cost per year divided by purchasing cost per test minus variable cost per test and BEP ratio as total purchasing costs at break-even volume divided by total purchasing costs at actual annual volume. RESULTS: The average fixed cost per year of AFP, CEA, PSA, ferritin, fT4, T3, TSH, CA 125, CA 19- 9, and HBeAb was won 8,279,187 and average variable cost per test, won 3,786. Average break-even volume was 1,599 and average BEP ratio was 852%. Average BEP ratio without including quality costs such as calibration and quality control was 74%. CONCLUSIONS: Because the quality assurance of clinical tests cannot be waived, outsourcing all of 10 items was more adequate than in-house make at the present volume in financial aspect. BEP analysis was useful as a financial tool for make-or-buy decision, the common matter which laboratory managers meet with.