In 2009, microbiologist Zachary Zaret was pursuing a master’s degree in healthcare administration at The Ohio State University (OSU) when he discovered he had an “addiction to peering behind the curtain,” as he put it. He was working as a lab customer service supervisor at the OSU Medical Center at the time and wanted to better understand how the lab fit into the broader health system, so he took a course called, “Health Services Financial Decision-Making,” and a seed took root in his brain.

OSU’s former chief financial officer (CFO) taught the course. “He told us that finance isn’t just finance,” said Zaret, now a senior healthcare consultant with ARUP Healthcare Advisory Services. “Finance is everything. You don’t make a financial decision in healthcare in isolation from the greater context of the patient. You’re balancing the financial aspect with the patient impact, operations, and quality.”

Benchwork can make laboratorians adept at addressing quality and operational concerns, but finance isn’t a typical area of study for most of them. For Zaret, however, it made perfect sense. While still streaking specimen plates during his day job, Zaret worked at better understanding how money truly flows through a lab.

“It seems nerdy to say cost accounting is a passion, but I just had really strong opinions on it,” Zaret said with a laugh.

In 2012, Zaret became a supervisor in specimen processing at Oregon Health and Science University (OHSU). Just as importantly, he found a financial mentor who was looking at laboratory economics in the same way he had been. With her help, Zaret said, he developed more thorough philosophies on cost accounting. Two years later, Zaret hit his stride in his own niche, accepting a role as OHSU’s manager of laboratory finance, which allowed him to put his ideas into practice. His multidisciplinary approach gave him unique insights and allowed him to see what a typical financial analyst might overlook. He knew how tests were being performed in the lab, and he was learning that most accountants were only looking at laboratory finances from a surface level.

“What does it actually cost to perform a test?” Zaret said. “Your typical CFO or COO [chief operations officer] certainly knows the average cost to perform a test, and they know the average margin on that test. But if that test goes away, what other expenses will go away with it? It might not immediately be apparent, but that answer can transform what you’re looking at financially.”

Zaret said he began to understand the different methods of cost accounting, each with its own assumptions and inputs. Choosing the wrong method can cause results to vary wildly, often with unintended negative impacts on the lab’s greater financial decisions. Inaccurate cost accounting can lead decision-makers to invest less than they need to, or it can cause them to not take the lab seriously as a revenue generator. A few oversights could drive leadership to sell a laboratory to a commercial lab without ever seeing its true value.

Unlike many in the healthcare field, Zaret said, he’s spent his entire career in academic medical centers, which can be sprawling organizations with departments deliberately siloed off. However, the “messiness” of academia, as Zaret called it, prepared him for the complexities of healthcare finances. Zaret said he’s seen firsthand what his former university instructor was trying to teach all those years ago. Realistically, there are no silos.

Since joining the ARUP Healthcare Advisory Services team in 2022, Zaret has shared his laboratory-specific financial knowledge and skills with clients, developing tools and templates to help them recognize exactly what their costs are. As a result, he helps them to see the true value of their labs instead of just service line figures. While he also works with clients on topics such as outreach and stewardship, he predictably still ends up surrounded by spreadsheets.

“I like to think I’m a generalist on the team,” Zaret said. "But I’m probably mostly ‘the finance guy.’”

He recommends that laboratory managers examine the financial aspects of their labs from as many angles as possible. He believes they should fiercely advocate for themselves, have a consistent message, and send that message to people whenever the opportunity arises. If health system decision-makers cannot be made to see the laboratory for the revenue generator it can be, Zaret said, those labs face stagnation.

Spreadsheets or no spreadsheets, Zaret never lost his love of microbiology. In his spare time, he’s still a scientist—in the kitchen, at least. Specifically, he loves fermentation, and he frequently makes kimchi dishes and experiments with fermentation in baking. About 10 years ago, Zaret said, he visited the Baltic states in eastern Europe where he had a loaf of rye bread, and he’s been chasing a recipe for it ever since. Making a good rye loaf requires pure chemistry, letting the fermentation develop the flavors and then applying heat.

“I don’t know exactly what it was, but I’m on a crusade to recreate it,” Zaret said. “It was really tart, but really sour, and also sweet. I bake a lot of 100% rye breads that are dark and dense and just incredible.”

In 2024, Zaret presented at an Association for Diagnostics & Laboratory Medicine (ADLM) conference, where he compared cost accounting to—of all things—his baking and fermentation experiments. Cost accounting is cyclical, just like Zaret’s rye experiments. First, cultivate a starter (build a prospective cost sheet), then bake and taste (compare your projections to what was spent), and finally, tweak the recipe and start again (make continuous updates until you achieve the result you expect).

The main difference is that there is no oven in cost accounting.

“But it can make you sweat,” Zaret said with a laugh.