When determining which method of cost accounting to utilize, hospitals have a crucial choice on their hands. At first glance, the decision may seem inconsequential; with all your costing data being equal, wouldn’t any accounting system reach the same conclusions? As you research the many options, consider the benefits of activity-based cost accounting for hospitals.
Hospitals that use different approaches could find their profit margins diverging significantly over time. Of all the methodologies they could use, there is one that stands above the rest: activity-based cost accounting for hospitals. Rather than inaccurate and time-consuming systems that hinge on outdated cost-to-charge ratios and standards, activity-based cost accounting matches known expenses to the cost of specific services that received the benefit.
It may sound complicated, but CostFlex has done the difficult part for you. As part of our Cost Accounting software suite, we have developed a proprietary Procedure-Level Cost Accounting solution that simplifies activity-based costing, creating the best accounting method for hospitals today. Let us explain why!
Here are the top four benefits of activity-based cost accounting for hospitals:
1. Improved Accuracy
The key to accuracy is in the little details. The more you can hone in on specific factors, the more accurate your results will be. Instead of adding overhead expenses after a given procedure, CostFlex’s Procedure-Level Cost Accounting tool synthesizes all of a hospital’s known expenses into costs. The result is a boost in specificity as individual procedure-level costs are taken into greater account.
2. Better Decision Making
The natural result of improved accuracy is better decision-making. Minor variances in cost accounting today can cause major miscalculations down the road. As a hospital decision-maker, you will be using these cost accounting conclusions in order to make choices that affect the entire business.
Staffing considerations, budgets, insurance contract negotiation, revenue projections, and even physician performance reviews often begin with cost accounting analysis. Perfecting these aspects is integral to a well-functioning hospital. Why would you want to base these important decisions on incomplete or inaccurate information? With CostFlex’s Procedure-Level Cost Accounting solution, that will no longer be a concern.
3. Ideal Customization
Most activity-based cost accounting software was not developed with hospitals in mind. Certain software is generically designed to appeal to a variety of industries and is not likely to provide the results that you need. Not only will these programs be more difficult to initiate and sync with your existing expense reports, but they also won’t provide the flexible functionality necessary to analyze costs and groupings unique to your hospital.
CostFlex’s proprietary software is different. Our entire Cost Accounting suite — including Procedure-Level Cost Accounting, our activity-based costing tool — was built from the ground up with hospitals in mind. Every feature coded into our software was done so for the benefit of those in the healthcare industry.
Our system fully burdens costing data at the procedure level before automatically rolling them to the patient level. This ensures accurate and dependable patient and service line costs. Customize these service lines further to suit the needs of your facility. Hospitals define how they want the data reported and grouped (such as by patient demographics), so there will be no misunderstandings when it comes to the results.
4. Increased Efficiency
CostFlex’s activity-based cost accounting solution allows hospital financial management to operate as efficiently as possible. First, our software ties directly into a facility’s monthly General Ledger expenses. It simultaneously accesses the services and procedures that the hospital provided during that same period. After the initial set-up, these function autonomously to provide effortless up-to-date analysis.
Our Procedure-Level Cost Accounting tool’s interface is user-friendly and easy to navigate. It also has the lowest staffing requirement among cost accounting software in the healthcare industry. What better way to reduce expenses than by eliminating excess labor in your accounting department?
With CostFlex’s standard turnkey installation, even the installation process is more efficient. One of our dedicated project managers will come to your hospital in person. They will train your staff on the ins and outs of our system and oversee the initial set-up to the specifications required by your facility. Once installed, your organization will reap the benefits of activity-based cost accounting for hospitals — giving it everything it needs to excel in the healthcare market.