CostFlex Systems, Inc. President Michael Ryan, MBA, presented at the 2026 TORCH/TARHC Fall Conference & Tradeshow in Round Rock, Texas. His session, “Breaking Down Borders Between Doctors and Finance: Service Line Reporting on Cost / Profitability,” examined how hospitals can use clear, credible cost data to strengthen collaboration between finance teams and physicians.
The presentation addressed a challenge familiar to rural and community hospitals: costs continue to rise while pricing flexibility remains limited. Michael emphasized that bringing stakeholders together requires more than reporting totals. It requires a shared understanding of how hospital finances connect to the patients treated, the services delivered, and the resources used.
From Cost Accounting to Service Line Insight
Michael introduced healthcare cost accounting as a disciplined way to restate an organization’s financial results in terms of the patients it serves. He reviewed foundational concepts including direct and indirect costs, fixed and variable costs, activity-level costing, contribution margin, and the importance of recognizing step-variable expenses when evaluating operational performance.
The session then explored service lines as a practical framework for connecting clinical activity with financial results. Depending on the organization, patients may be grouped using DRGs, ICD-10 diagnosis and procedure codes, departments, physicians, specialties, CPT®/HCPCS codes, or customized combinations. Michael noted that no single national standard fits every hospital, making thoughtful methodology and transparent definitions essential.
Sharing the Right Data with Physicians
Drawing on case studies from hospitals across multiple HFMA regions, Michael highlighted both the opportunities and the risks of sharing cost and profitability data with physicians. The examples showed that focused, credible reporting can support supply standardization, identify variation, improve resource use, and encourage constructive physician engagement. They also demonstrated why hospitals should carefully select the information they share and concentrate on costs physicians can influence.
Key themes from the case studies included:
- Build credibility by validating the data before presenting it.
- Provide education on reimbursement, cost, and margin so the numbers are understood in context.
- Focus physician reporting on direct or variable costs that are within clinical control.
- Use service line reporting to frame collaboration rather than assign blame.
- Engage a physician champion who can help translate data into action.
Michael’s presentation reflected CostFlex’s commitment to helping hospitals transform complex clinical, financial, and operational data into actionable information. By creating a more reliable view of service line performance, healthcare organizations can support better conversations, stronger decisions, and long-term financial sustainability.