Case Scenario:
Pick 3.1
In a hospital setting it is common to group expenses by diagnosis and procedure for planning and control (Baker & Baker, 2014). This is how my organization does it as well. This is beneficial since it matches cost against common classifications of revenue (Baker & Baker, 2014). In my organization the revenue is listed by procedure or diagnosis, making it easy to search and reference certain outcomes. We can also see patterns develop. We can easily search how many of a certain exam we performed or what was performed per diagnosis for example. I think this works well since we are mainly an outpatient facility, but do have some animals stay over night.
DIC 3.1
The author states that it is common to group expenses by diagnoses and procedures for purposes of planning and control, as grouping is beneficial because is matches costs against common classifications of revenue. I am not sure how this is done at the non-profit alcohol and substance treatment center where I work, but to quote Baker and Baker "much of the revenue in many healthcare organizations is designated by their diagnosis (DRG's) or procedures." Grouping by location is also used as it allows room for competition as it relates to pricing. Except grouping by location would be limited given a patient's diseases will be unaccounted for along with variances among the population. Having said that, I think grouping expenses by both diagnosis, procedures and care centers would be ideal considering DRG's controls cost, promotes efficiency and enhances transparency.
Taylor 3.1
Research by Baker and Baker (2014) supports that it is common to group expenses by diagnoses and procedures for purposes of planning and control. I do believe that grouping by diagnoses and procedure are beneficial because it matches costs and common classifications of revenues. However, grouping by care setting recognizes different areas that services are delivered. It was also researched that payments based on DRGs have gradually become the principal means of reimbursing hospitals for acute inpatient care in most high-income countries.5 The most frequent reasons for introducing DRG-based payments are to increase efficiency and contain costs.5 Street et al. have reviewed the little evidence that is available on the impact of different DRG-based payment systems in high-income countries in Europe.6 Their findings suggest that DRGs generally help to increase hospital efficiency by reducing the average length of stay but that they also increase case volumes.
Tomlinson 3.1
Grouping expenses by diagnosis and procedure codes is common practice and is a good measurement to use for control and planning. I'm more familiar with the outpatient side of the equation, so Current Procedural Terminology (CPT) codes. Finance sends leadership daily reports that show by CPT code, what each physician is billing. These codes list a description of the service provided, so we can understand what supplies, labor, etc. are associated with this code. We can use this data to start to see trends or outliers with billing, revenue, and expenses. Especially, if you are budgeting based on a flexible budget versus a static budget, it's important to understand what expenses are attributed to a particular CPT code. If you don't budget appropriately, your budget won't flex appropriately to support the operations.
Taylor 3.2
From my own workplace, an example of indirect cost could be the cost of the annual company Barbeque to thank the employees for all their hard work the annual event is usually held right before the fall to help take the edge off, and to get us to the much-needed Christmas holiday this would be an example of an indirect cost. A good example of a direct cost would be the company pharmacy which is the place to where the psychiatrist send all the clients prescriptions so our clients can manage their symptoms.
Mazanec 3.2
Direct costs are those that directly relate to specific departments, or cost centers, whereas indirect costs are overhead from support departments (www.quizlet.com). Baker and Baker (2014) also refer to this as costs that are easily traced to a service or department (direct) to those that cannot. Those that cannot are indirect costs.
There are many examples within my workplace that have direct and indirect costs. For example, direct costs of the operating rooms are the surgical instruments, personal protective equipment, and implants that are used with each surgery performed. Indirect costs would be the electric utilities used to run the machines and equipment and the cleaning supplies used to sterilize the spaces before and after surgery. Other indirect costs would be any administrative salaries paid as part of the decision-making process for the organization that may or may not include decisions made for the OR.
Muhlecke 3.2
From your own workplace give an example of a direct cost and an indirect cost.
Examples of direct costs in our clinic are employee salaries, supplies and medical equipment that provide patient care. Indirect cost includes office supplies, facilities maintenance, fitness gym, interns, computers, leave and cell phones. Other examples of indirect cost that the medical community use a lot in the military is medical conference cost for senior leaders to attend.
The direct cost in a medical facility is associated with what is responsible for the main product in this case patient care. Everything that directly helps provide patient care without intervening is the direct cost. Indirect cost are the overheads that run operations on a daily basis but not directly associated with patient care.
Buda 3.2
Costs are categorized as direct and indirect. A direct cost is a cost that can be attributed back to something specific such as a patient, a procedure, or a work unit (Baker & Baker, 2014). At our organization, surgical implants are a type of direct cost. When a patient receives an implant, the cost of the implant is attributed to that specific patient. Similarly, the expenses for supplies used during the procedure to place the implant are direct costs as they are traced to that specific procedure.
An indirect cost is one that cannot be assigned to a specific item or area (Baker & Baker, 2014). These costs can account for large portions of actual expense for an organization (Anania, 2015). Since these costs cannot be traced to a specific area or patient, they need to be allocated in some manner. At my organization, my work is an example of indirect cost. I work as an analyst for Clinic Operations, and the work I do cannot be charged back to any specific clinical department, patient procedure, or patient care unit, so the cost associated with my work needs to be allocated. Another example of indirect cost is space. Space-related expenses, like power, water, maintenance, and housekeeping, are combined, and a price per square foot is determined. Departments are charged for space based on their usage.