Hospital administration costs can be mercifully expensive costing $361 billion per year in the USA alone, three times what is spent on cancer. Therefore, finding a costing system that gets the most efficient results from administration is crucial, so that more can be spent on hospital's core duties of providing health care. However, despite the rather costliness it serves a central purpose of effectively overseeing the hospitals activities and making sure care quality and safety standards are kept intact. Going into further detail this may involve making sure national/state rules and procedures are adequately followed and managing financials of the hospital, be it setting budgets, providing extra funds to a department or cutting expenses.
In order to apply ABC to hospital administration we have to first split costs into cost pools, some of which are stated below:
Cost Pool Cost Driver
Staffing Number of employees
Registration Number of patients
Education and Training Number of new employees
Receptionist Hours worked
ABC costing in administration is usually applied in much the same way as in other hospital departments or even as in other industries, however as seen in its application at the “Shahid Faghihi” Hospital there can be two major variations when used to find costs of administrative activities.
The first of these is that the interpretation of the word “activity centres” is different in administration to other sectors. Unlike other departmental services, “administ...
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...ivity based costing to a surgical unit is identifying activities. This requires great insight into the treatments of specific diseases. The next step, which is the most important one, is to establish cause-effect relationships between resources consumed and physical activities and allocate costs to the chosen cost drivers accordingly. At last, some refinements should be taken into account, such as risks, overtime, charge for early starts and over runs etc.
If A&E Department and Surgical Unit are compared, we see the cost pools and the cost drivers are usually the same. The difference lies in the nature of each department, for example, A&E is a medical treatment facility specialising in taking care of patients who present themselves without a prior appointment, whereas the patients in the surgical unit are constant and are treated as per their given appointments.
I attended the Saturday Lab 1 session discussing the Denison Specialty Hospital case study. In our session, we had a through discussion into the different budget terminology. I learned about the difference between accrual and cash accounting methods, which is based on the timing of when the revenue and expenses are recognized. I also learned about responsibility centers as an organizational unit under the supervision of a manager, who is responsible for its activities and results. In addition, the manager is accountable for the budget of the department that they head. Therefore, a centralized form of management in developing the budget because it makes easier to because the information for the department budget is located
The following inputs are critical to our program logic model: financial resources, planning processes, materials, equipment, staff, patients and their families, space, and research and best practices.
It is vital that the operating budget ties in with long-term strategies by planning, setting objects with goals, and forecasting the future. According to Mr. Wright, Robertwood Johnson University Hospital adopted the GE Model of “operation excellence” with long-term strategies with their operating budget. With the ” operations excellence” strategy, the organization has over the years transformed the operating budget by accurately tracking and constantly improving their revenue cycle yearly by setting payment practices to generate revenue to achieve specific financial objectives of greater demand with the maximum revenue margins along with eliminating waste and streamlining the budget by cutting expenses and prioritizing programs
The nurse executive is responsible for budget planning for the division. Areas of focus include strategies to improve productivity and feasible tactics to reduce agency staff and overtime (OT) for the division. Identified in this paper is the importance of operational and financial performance indicators for the organizations internal goals. Focus on benchmarking through data analysis is vital. In addition, setting realistic goals that are compulsory to promote cost savings, while maintaining patient safety as a priority is important in creating an improved patient experience. In planning for modifications to obtain a favorable budget, adjusting full time equivalents (FTEs) to fluctuating volumes is important. To improve the productivity plan effectively are evaluation and management of scheduling, staffing, and skill mix are necessary to obtain favorable productivity.
The ability of a unit to survive is largely dependent upon the hospitals internal financial budgetary performance and the external needs within the community. Developing a financial budget is a process that should use teamwork to plan and implement in order to be effective. The budget sets perimeters for administrators to follow throughout the year, allowing the director to report variances while providing guidance to maintain a minimum variance and adjust when possible (Finkler & McHugh, 2008). By using all department managers in the planning process of the new budget, the nurse executive is able to develop effective strategies for all departments while investing in the goals. This eliminates many problems associated with budget and identifies areas that need improvement or expansion. Because of the competition, declining margins, and other economic pressures, nurse executives need to take steps to control costs and increase revenues for this unit. The overall goal of the financial performance within the organization is to meet the total budgetary needs of the unit to produce favorable outcomes. My focus will be to propose the expansion of a new Joint Replacement Unit (JRU) within the hospital, while identifying the major operating components of the budget for this organization. The importance of reviewing the budget for a newly developed unit is to allow the nurse executive and administrative team to manage the existing organizational programs within in the facility, plan for goal accomplishments for the new unit, while controlling costs.
With consolidation among hospital systems over the last few years there has been a trend toward ways to streamline processes. By having “shared services” such as laundry services, human resources and radiology and diagnostic services it’s possible to lower costs and have common processes. The advent of health care reform and the Affordable Care Act (ACA) with its Information Technology (IT) incentives has led to greater interest in risk management and IT solutions. While there was a decrease in 2012 on outsourcing IT services the finalization by the Supreme Court of the ACA and President Obama’s re-election cemented the need for an IT solution (Kutscher, 2012)
A continuous and appropriate financial management is highly essential to sustain and integrated a healthcare program. To build a sustainable integrated program cost calculation and pro formas are necessary to create monthly metrics, program accountability and fiscal sustainability this
Finally, effective operations managers must realize that short-term gains at the expense of their partners (e.g., patients, physicians, payers) will almost certainly translate into long-term difficulty. As we move toward a more effective delivery system with less demand for resources, we will see vast shifts in how care is delivered. (Henderson, 1995)
The balance between quality patient care and medical necessity is a top priority and the main concern of many of the healthcare organizations today. Due to the rising cost of healthcare, there has been a change in the focus of reimbursement strategies that are affecting the delivery of patient care. This shift from a fee-for-service towards a value-based system creates a challenge that has shifted many providers’ focus more directly on their revenue. As a result, organizations are forced to take a hard look at the cost of services they are providing patients and then determining if the services and level of care are appropriate for the prescribed patient care.
Healthcare administration is a field that is often overlooked, but is essentially the beating heart of any healthcare organization. With more and more hospital, and clinics, and other healthcare organizations popping up everywhere there is a need for people like me to manage the day-to-day operations. I am choosing to apply to this program because I want to study how the U.S. healthcare system operates. I want to learn the essential skills of operating a healthcare facility such as managing a budget, reducing healthcare costs, analyzing the efficiency of an organization and proposing ways to improve it. This program is going to give me the necessary education and skills so I can carry out my goal of being a healthcare administrator.
Over the last few decades, various laws have been established with the main purpose of making the system equal and more efficient for all. The U.S. hospital system has become more complex and less efficient due to significant political and monetary interference along with the passage of these laws. The most recent amongst those laws is the Affordable Care Act (ACA), which was signed into legislation by President Obama in 2010. Various provisions in the ACA includes universal health insurance coverage, significant changes in the payment for health services and changes in the health care organization delivery and workforce policy. Thus, ACA has a significant influence on the current U.S. healthcare system.
There are a couple of problems affecting the surgical services department. One of them is that the unit /hospital pays a lot of money for surgical supplies and equipment. The second problem is labor and productivity. The two problems are included in the operational and personnel budget. These types of budgets are the highest cost to the department; personnel budget being the highest then the operational budget (Marquis & Huston, 2012).
When dealing with health care financial management plays a key part of health care financial planning. Several of the financial decisions are made on a daily basis from accounting and all other business transactions that occur. Most of the decisions that are made are made, according to the organizations fiscal objectives, although some are made on the generally accepted accounting principles. Keeping accurate financial records keeps the organizations free from audits and mismanagement of funds.
Others feel that ABC would be more widespread in industry if it were marketed better by the cost accounting profession itself [1]. As the dust has settled, ABC has turned out to be less a revolutionary technique than a useful refinement to proven systems. The costs of products and services must be accurate, or management can be misled. Decisions... ...
Operations management is the organizing and controlling of the fundamental business activity of providing goods and services to customers (Encarta, 2005). In the healthcare industry, operations management generally focuses on providing a service of healthcare to patients. An organization has three basic functional areas, and theses are: finance, marketing, and operations (Operations Management, 2004, p.4). Since operations is one of the three basic functions of an organization it holds a strong significance in the healthcare industry. The contents of this paper will explain what operations management means to the writer, and why is operations management important to a healthcare organization.