Cost Accounting Systems and the Health Sector

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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

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