costs with differed distributions.

costs with differed distributions.

not passed on to the patient; instead the cost is subtracted from that unit’s budget when the service is used by its staff. This helps the organization offset certain costs with differed distributions. Healthcare organizations must utilize organizational charts, as well as a commensurate chart of accounts, in order to identify who is responsible for each functional area and which area or department is considered a cost center and/or a revenue center. Even though all departments are cost centers, only the departments that make a profit are considered revenue centers (Nowicki, 2018).

Healthcare financial managers must also understand how different volumes and payment outcomes will affect their organization. Utilization declines can be seen in the inpatient setting due to healthcare reform and changing demographics, while outpatient utilization is showing increases due to the expansion of health coverage under the Affordable Care Act. According to Samaris (2013) “reducing utilization can help organizations decrease costs and increase their eligibility for narrow or tiered networks” (p.26). Hospitals and health systems need to demonstrate that they can reduce costs significantly by driving utilization out of the system in order to participate in the highly selective networks (Samaris, 2013). Lower utilization can be achieved by reducing unnecessary readmissions through initiatives such as home care or short-term rehabilitation centers, when patient is unable to be discharged home safely. The case managers in the hospital work tirelessly from the time the patient arrives on the unit to expedite their safe discharge. Also, while working in an inpatient setting myself, I have witnessed the decline in the volume of patients. My oncology unit in particular suffered a decline, as more cancer treatments are now being offered on an outpatient basis. This change in volume has led to bed reduction and the conversion of semi-private rooms into completely private rooms, in an effort to increase patient satisfaction and reduce costs .

References

Nowicki, M. (2018). Introduction to the financial management of healthcare organizations. (7th ed.) Chicago, IL; Health Administration Press.

Samaris, D. (2013). Anticipating utilization trends key to adapting in an evolving market. Healthcare Financial Management, (4). Retrieved from https://search-ebscohost-com.ezproxy.snhu.edu/login.aspx?direct=true&db=edsbig&AN=edsbig.A339635352&site=eds-live&scope=site

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