Introduction to Cost Accounting
Cost accounting is the process of determining the full and incremental costs of providing services and goods to patients and customers. To determine the full cost of providing a service, we must insure that all costs have been included. For instance, a number of departments, which do not provide direct patient or customer services, are absolutely essential to the operation of the institution.
The burden of these overhead departments must be allocated to the using departments. In reality, to make sound management decisions, costs must be known at the procedure, patient, and department levels.
Cost accounting for hospitals is the process of determining the full and incremental costs of providing services and goods to patients and customers. To determine the full cost of providing a service, we must insure that all costs have been included. For instance, overhead departments, which do not provide direct patient or customer services, are absolutely essential to the operation of the institution. The burden of these overhead departments must be allocated to the using departments to correctly identify full costs of services.
Costs may be determined based on historical methods of charging for services, such as patient days and procedures. Products or product lines may also be defined for cost analysis, such as DRGs or a specific type of day surgery patient. Finally, we may wish to determine full and incremental costs within the structure of our organization (revenue center or department). The need to know the cost of each procedure and major product line is essential to financial stability of every healthcare institution. In reality, to make sound management decisions, costs must be known at the procedure, patient, and department levels.
Without accurate cost information hospitals are at financial risk when making decisions considering current operations as well as long-term plans. The cost of providing services is obviously only one of many considerations. Accurate costing, however, has been a major missing component of the decision-making process.
Flexible Dataset Customization
Not every organization fits neatly into 12 month fiscal years and standard FTE hours, but regardless of whether or not your organization fits, Ormed Cost Accounting has you covered. Completely customize datasets per your organization's needs, whether typical or non-standard, and make confident costing decisions hassle-free.
- Datasets may represent a quarter, month, year or any period based on the facility needs
- Choose from a variety of default export file types, and export files to email addresses
- Import data from various file types or directly from other Ormed applications
Complete Departmental Costing Control
Whether your organization is large or small, no matter how many beds it services or staff it employs, its individual departments must have their needs met efficiently and effectively. Ormed Cost Accounting ensures your users have total control over departmental costing and reporting requirements.
- Define multi-tiered reporting structures and group departments by those structures
- Define department types in a variety of ways, including by revenue source, transfers,
and special cases
- Establish department managers; the software sends updates to managers via email
- Efficiently manage departmental charge items
- Automatically calculate departmental allocation tables based on readily available data, or manually define allocation tables as required
Handle Product Groups With Ease
Ormed Cost Accounting includes simple-to-use, in-depth product grouping functionality to ensure sound product costing and accurate revenue reporting.
- Summarize product groups according to your unique organizational needs; create many groups to organize like products, one large group with all products, or anything in-between
- Tie products to charge codes quickly and effectively
- Track product volumes for accurate costing
- Develop critical pathways
Helpful Utilities Out of Box
Working with your organization's costing data requires soundly-designed, flexible utilities: data auditing, import/export, and more. Ormed Cost Accounting comes loaded with powerful and practical utilities to ensure your organizational needs are taken care of.
- Import assumptions between datasets
- Import and export costing data with simple mouse clicks
- Full data analysis finds discrepancies and keeps your data reliable
- Maintain users; add, modify, or remove users and passwords effortlessly
- Create reports for revenue, department, and facility reconciliation
- Maintain classification code database
- Build and maintain a costing task list, and check off tasks as they're completed
Data Modeling for Proactive "What If" Analysis
Ormed Cost Accounting modeling features allow you to modify large amounts of data quickly and easily to forecast change impact and associated pros and cons.
- Define and modify assumptions to evaluate the impact of facility changes such as inflation, new service, equipment purchases, pay raises, union contracts, etc.change impact
- Anticipate and review average revenue realizations
- Review impacts of charge prices and volume changes
- Explore changes in payor volumes
Extensive, Detailed Reporting
Detailed reporting is essential to ensure continued smooth day-to-day operation. Like all Ormed software suites, Ormed Cost Accounting contains an impressive selection of built-in reports based on organizational best practices.
- Summary reports ensure important costing totals are ready for review for upper management
- Item and product reports are available with multiple sorting and categorizing report variations
- Departmental reports make managing department costing a breeze
- All reports can be reviewed on-screen, printed, or exported to a variety of file types (Excel, Lotus, PDF, HTML, etc.)
- User defined reports are available at the patient, doctor, DRG, ICD, and other demographic level
Expert and Complete Implementation Assistance
Expert consulting assists you through the entire implementation process, including one-on–one training of cost accountant and department managers on best practice cost accounting concepts. Webinars are offered on cost accounting, featuring service industry theory and practical experience.