William A. Kramer and Assoc., Inc.
Financial Management Solutions for
Small and Medium Sized Hospitals
Practical Uses of Cost Accounting
Today's hospital needs a cost accounting system that provides a reliable means of determining the cost of delivering each service.
The practical uses of a cost accounting system include:
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Pricing hospital services based on costs |
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Evaluating the profitability* of physician treatments or protocols |
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Providing accurate data to assist in negotiating with health care purchases |
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Dealing with more intense economic competition among health care providers |
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Identifying excess costs in the delivery of services |
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Developing department and hospital wide budgets |
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Tracking the profitability* of existing services |
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Forecasting the feasibility of new services |
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Tracking the profitability* of existing managed care contracts |
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Providing reliable costs using the techniques of standard cost accounting |
*Note: Profitability is payment minus cost. Your cost accounting system must have the capability of prospectively determining payment as well as standard cost.
What is the purpose of Cost Accounting? Why do I need it?
The Argument for Standard Cost Accounting vs Allocated Costs