Financial managers do cost allocation to bill patients for the services
provided. Indirect and direct costs are separated to differentiate
products or services provided to the patient (direct costs) and other
operational costs of the organization, not traced back to the patient
(indirect costs) (Nowicki, 2018). This ensures that the patient is only
paying for the products and services they require while hospitalized.
Financial managers use several methods are used to allocate costs by
financial managers, such as direct, step-down, double, and multiple
apportionments (Nowicki, 2018). To complete this task, financial
managers use multiple resources. These resources include
organizational charts, which identify who is responsible for each
functional area within the organization, and revenue center
identification, which separates what generates revenue and what
does not (Nowicki, 2018). Three methods are used to assemble costs.
These methods include responsibility, full, and differential costing
(Nowicki, 2018).
Utilization rates are assessed and evaluated in order to ensure the
right steps are taken at the right time to secure appropriate payment
for the hospital and coverage for the patient (Bragg & Koroly, 2019).
This relates to volumes and revenue generation because this process
shows areas that are losing revenue due to a lack of need for the
patient. By accomplishing this review, measures can be taken to
improve organizational oversight, systematize processes, improve
training, and create feedback (Bragg & Koroly, 2019). Overall this
process allows for making appropriate decisions for care based on the
patient's needs that can avoid any additional costs to the patient and
organization.
Reference
Bragg, L., & Koroly, A. (2019, April 1). Utilization Review: 5 Reasons
Hospitals Lose Revenue. Hfma.
https://www.hfma.org/topics/hfm/2019/april/utilization-review--5-
reasons-hospitals-lose-revenue.html
Nowicki, M. (2018). Introduction to the financial management of
healthcare organizations (pp. 132-170). Chicago, IL: Health
Administration Press. Samaris, D. (2013). Anticipating utilization
trends key to adapting in an evolving market. Healthcare Financial
Management, 67(4), 26-28.
