Cost accounting in healthcare is complicated because service costs are highly variable. Healthcare can bring in cost-accounting models from other industries to streamline the process.
At Becker's Hospital Review 7th Annual CEO + CFO Roundtable in Chicago, Nov. 12-14, Infor Healthcare Solutions Senior Vice President Mark Weber and Financial Strategy Director Chuck Whinney discussed the industry's challenges and opportunities when it comes to cost accounting.
Mr. Weber highlighted the importance of factoring in the cost of patient procedures and coordinated care. "Determine what your cost-of-care variation is," he said. "We looked at cost per surgeon. Some surgeons were always more expensive than others because some always used a more expensive gizmo than others. Drill into that variation — determine what level of variation matters and what doesn't. Identify the areas that bend the curve."
This information should be used to help clients with their payer negotiations, according to Mr. Weber.
He also said the following process manufacturing-based cost model applies to healthcare:
Supply, labor, equipment, facility and process costs + unutilized capacity, general overhead and exclusions = Reconciled general ledger account-level expenses
At the end of the day, we need to get our physicians and clinicians engaged in this information — historically, we as an industry haven't done a great job with that," said Mr. Whinney.