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Adoption of new technologies, including diagnostic tests, is often considered not to deliver the expected return on investment. The reasons for this poor link between expectation and outcome include lack of evidence, variation in use of the technology, and an inability of the health system to manage the balance between investment and disinvestment associated with the change in care pathway. The challenges lie in the complex nature of healthcare provision where the investment is likely to be made in the jurisdiction of one stakeholder while the benefits (as well as dis-benefits) accrue to the other stakeholders. A prime example is found in the field of laboratory medicine and the use of diagnostic tests. The current economic tools employed in healthcare are primarily used to make policy and strategic decisions, particularly across health systems, and in purchaser and provider domains. These tools primarily involve cost effectiveness and budget impact analyses, both of which have been applied in health technology assessment of diagnostic technologies. However, they lack the granularity to translate findings down to the financial management and operational decision making at the provider department level. We propose an approach to translational health economics based on information derived from service line management and time-driven activity-based costing, identifying the resource utilisation for each of the units involved in the delivery of a care pathway, before and after adoption of new technology. This will inform investment and disinvestment decisions, along with identifying where the benefits, and dis-benefits, can be achieved for all stakeholders.

Original publication




Journal article


Health Serv Manage Res

Publication Date





43 - 50


financial management, health economics, laboratory medicine, technology adoption, translational leadership, value-based healthcare