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In today’s evolving healthcare market, it is important to make fully informed investments. Even when you know the up-front costs of a laboratory information system (LIS) or other IT system, you may not realize the full cost of the product throughout its lifespan. Calculating total cost of ownership (TCO) helps you understand costs that are not as transparent as the initial purchase price, providing a more complete picture that can help you make an informed decision about the LIS that best fits your budget and your laboratory.

No Two Labs are the Same

Every laboratory situation is unique. The common denominator is that an LIS is an integral component of overall organizational success. From a business stance, pinpointing exact costs is less important than making sure the value added by the LIS exceeds that cost. In the rapidly changing healthcare market, it is imperative that laboratories have a close eye on costs and efficiency; therefore, being aware of the total cost of your system is important. The LIS is not necessarily justifiable as a cost-saving device, but rather on the basis of value added in more efficiency, accessible data, and improved safety.

Evaluating TCO to Understand All Costs

The idea of TCO is that IT users should evaluate a purchase or investment not only by looking at the initial costs, but also by evaluating the full costs of use over the lifetime of the product. There may be some hidden costs that are not apparent in the up-front purchase amount. In deciding which LIS to purchase, you can use TCO to compare costs as “apples to apples.” You cannot get TCO from your software vendor because it is highly dependent on many factors specific to your facility and how you use the product. You can prepare your own TCO estimates or use TCO calculation tools offered by vendors.

TCO to Help Make an Informed Decision

TCO attempts to consider all aspects of costs relating to operating your LIS so that decisions can be made with clarity. Direct costs will be easier to determine, whereas indirect costs may take some estimation but still are an important component of TCO. Often, TCO is performed as a tool to help make a purchasing decision; however, TCO can also be used on an ongoing basis to keep current on ROI estimates and to define annual budgets.

Download the White Paper for More Details

Orchard’s white paper, Total Cost of Ownership for a Laboratory Information System, discusses TCO throughout the lifetime of the LIS, including startup, operational, and retirement costs.


Our Commitment

Orchard is committed to keeping you informed and being a trusted resource you can turn to for industry-related education. As always, we welcome your feedback. Follow us on Twitter at @OrchardSoftware, and feel free to respond to this post by emailing us at news@orchardsoft.com.