Cost Behavior, Driver and Health Management In the competitive time of today no one can escape the financial complications that encircle a business irrespective of the fact whether it is health business or even laboratory operations. Much of the expenses that are included in the accounts of a hospital are generated from laboratory sessions and experiments that are conducted. Every hospital therefore allocates special budget for the laboratory and its associated expenses which include expenses related with the cafeteria, administrative disbursements and admissions. Such a practice is often acknowledged as acceptable but a major drawback linked to it is that it makes the entire laboratory program uncompetitive. In addition this it is also worth mentioning here that most of the laboratory staff while handing the expenses assumes that the costs are fixed, but most of the costs involved are calculated to be 50% variable. If the degree of variability involved is around 50% then it is important that further decisions regarding the costs are taken in accordance while keeping these substantiated facts in mind. Any hospital and its health care management would have to slash its expenses if there is an imbalance in the expenses that are taking place in comparison to the revenues that are being generated. (Langabeer 2008) Despite of the fact that hospitals are normally categorized as non-profit organizations in accounting terminology, it is still important to have a check and balance system through which the difference in expenses and revenues can be effectively monitored. It is a general assessment that the hospital will move for less expensive and cheaper cost drivers and motivators in order to bring down the level of surging expens... ... middle of paper ... ...ome of the procedures that need to be followed and strictly adhered. Similarly systematic placement of other components related to cost accounting such as that of products purchased or sold, the record of the services provided by the health department and the expenses of the services acquired from different companies in the form of purchasing of machinery or hiring of experts for the training of a new machine imported. In addition to this record and data regarding the revenue obtained from customers and sales need also be included. (Penner 2003) References Langabeer R. James 2008 ‘Health care operations management: a quantitative approach to business and logistics’ Jones and Bartlett Learning Penner J. Susan 2003 ‘Introduction to health care economics and financial management: fundamental concepts with practical applications’ Lippincott Williams and Wilkins
Flinker S., Ward D., Calabrese T., (2013). Accounting Fundamentals for Health Care Management, 2nd edition.
The purpose of financial measurement in healthcare is to provide the community with the services it needs, at a clinically acceptable level of quality, at a publicly responsive level of amenity, at the least possible cost. This is done by providing healthcare finance managers with accounting and finance information to help accomplish the purpose of the organization (Nowicki, 2015). When making accounting decisions about budgeting and inventory control, an understanding of economics, statistics, and operations research is needed. Major Financial Measures
First, this text will discuss some background on Labcorp to form a better understanding of the business, and the practices used. Labcorp is one of the largest clinical Laboratories in the world, which includes many wholly owned subsidiaries. The Laboratory Corporation of America (2013) website LabCorp has over 220,000 clients and process over 400,000 samples per day. LabCorp uses an innovative clinical laboratory processing, referral, and specimen testing information systems to create fluent, and easy to use specimen processing and testing. This process has developed through time, and LabCorp has grown into a robust multi- laboratory testing facilities through the buyout, and absorption of numerous specialty laboratories. As the buyout of subsidiaries has been a large part of the growth of this business, information technology had to grow along side, as the connection between all sites became critical for survival, to keep the stance of a premier multifunctional Laboratory tycoon (Laboratory Corporation of America, 2013).
Hicks, L. (2012). The Economics of Health and Medical Care (6th Ed.). Sudbury, MA: Jones and Bartlett Publishers.
Prudent cash management and knowledge of various fund sources is important. Different conditions and benefits are attached to various medical equipment and expansion funding option. A health facility should thus choose an option that enhances cash flow, reduces cost, and enhances efficiency. The simulation does not include the impact of the options on the staff; this should be accounted for in the simulation. Knowledge of different source of funding options and impacts is important in day-to-day management of health facility.
Hospital Corporation of America (HCA). Staff Analysis Statement of Problem HCA, after following a conservative financial policy since its establishment, has entered the new decade preparing to make some changes in order to realign their financial strategy and capital structure. Since its establishment, HCA has often been used as a measure for the entire proprietary hospital industry. Is it now time for the market to realign their expectations for the industry as a whole? HCA has target goals that need to be met in order to accomplish milestones in the future.
One primary key to a successful health care organization is having a strategy to achieve the mission of the organization. This is particularly true in reference to creating a budget and generating revenue for a profitable bottom line of a hospital. Executives are experiencing a gap that is continuously widening between technology and hospital demands, which is causing additional conversation around pricing. According to Nugent (2004), there are three major themes to consider when it comes to strategic pricing. These themes include pricing at the margin (pricing new business to cover variable costs and margin, if capacity exists), cross-subsidizing (funding one service with profits from another service) and testing what the market will bear
In accordance to the statement of revenues and expenses of the health facility, financial ratios are on the decrease. This implies that a pay rise to staff would actually lead to a decrease in net income. The financial report of year 2008 and 2009, show that there has been an increase in expenses by a margin of 10%. In order to overcome this challenge, Patton-Fuller community hospital need to work on expanding the sources of revenues (Patton hospital)
Porter, M.E., (2010). What is the value in healthcare? New England Journal of Medicine. 363:2477-2481
Identify the variable and fixed costs associated with your selected health care business. Discuss how these costs are affected by changes in productivity levels. Determine what steps you could take to reduce at least two of those costs. (15 points)
12). HSC Pediatric Center, like many other hospitals in this country, have been slow to change. According to Hines (2004), “this slow change has been due to operational Improvement efforts have been stymied by lack of automation, inaccurate data, poor business intelligence and reporting” (pg. 19). Due to this high cost in supply-demand HSC wanted to introduce new ways to manage wasted supplies. Our hospital assumed that the medical supplies were being utilized more than they actually were. When our hospitals data is collected this was not the case. HSC was ordering more supplies thinking that that current supply had run out. Unknowingly, theses supplies were tucked away in closets, under patient cribs and in other places where inventory is not accurate. Two suggestions were implemented to combat this ongoing issue; the use of electronic id tags for larger devices and the implementation of the Omnicell to house other
The financial statements from Johns Hopkins Hospital (JHH) were used to calculate and analyze the meaning of the financial health of the organization from the years 2010-2012 (Appendix A). The following five major types of ratios were used: common size, liquidity, solvency, efficiency, and profitability
When there is more productivity needed, staffing should be up to its demand (Ellerbe, Sept-Oct 2013). The metrics should consider the number of patient’s visits per provider at a given time period according to each department along with the cost of each procedure and its throughput time (Kämäräinen, Peltokorpi, Torkki & Tallbacka, 2016). For example, If PCS determines the average amount of patient’s seen during a given period at a certain department with the total cost of procedures, as well as the throughput of getting the procedures done, the organization will be able to know what the peak high patient volumes periods are according to department and when the organization receives their highest profits. Therefore, by scheduling the physicians and medical staff accordingly to the high peak periods where there is high profits and on the other hand, less staffing scheduling during the lesser peak hours. As a result, it will increase productivity during the most peaked periods where profit gains will more likely at its
Businesses use cost accounting to help manager illustrate potential areas to reduce cost and process for services and goods, describes how goods and services should be priced to reflect their true cost (Conway-Schempf & Ph, 2001). Cost accounting is the process of accumulated, measuring, interpreting and the reporting of cost information that is relevant to the stockholders of the business. Managers as well as management use cost accounting to help in justifying the capacity in helping to cut costs for the company in order to increase that company’s profit. Internal use, versus external use tools allow users such as financial accounting, cost accounting who do not need to follow the General Accepted Accounting Principles (GAAP) because they use a more practical type if accounting. The importance of cost accounting," 2011). It also gives managers a good idea of what the actual cost of the processes, depart...
Purchasing locally can assist with decreasing the cost of goods. In-patients can select foods, adequate and will be consumed that will provide a balanced meal during patient’s recovery resulting in the decreasing the waste of food. The labor costs for the room service call center, meal preparation and serving meal trays to in-patients can be monitored and assessed by using activity base costing. The definition of activity base costing is a method of assigning cots to products or services based on the resources that they consume (economist.com definition). The process assists with maintaining and processes the data of these activities and services to allocate costs. The two step process will trace the resource costs of activities followed by tracing activity costs to products and services to determine their costs, thus providing useful data in maintaining and find additional ways to bring down the cost of room service (Neriz, Núñez & Ramis 2014). To maintain productivity monitoring, the time a ticket for service is processed to actually delivered to the patient can indicated any slow process that may need to be