An ABC analysis provides a thorough and complete examination of your hospitals inventory system. It examines the relationship of several different financial metrics; this includes a profit margin (the amount of revenue left after all costs, fees, taxes, etc.) and mark up percentage (the amount added to the cost of an item to cover overhead, costs, and profit) calculation for each item, lab test, and diet. Additionally, a cycle count schedule is created, and annual usage information is determined. Most importantly, the cost of goods (COGS) as a percentage of revenue is determined for each category, and reviewed against industry benchmarks and standards to see where you place.
Read more information on an ABC analysis HERE.