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In an informal survey, patient accounts managers described the present practices taking place in their institutions regarding patient accounts management. In the areas of admitting, billing, credit and collection, and accounting and management, patient accounts managers are finding methods and techniques to respond to the changes created by DRGs and the UB-82.
The implementation of the prospective payment system has affected the financial stability of hospitals. It has forced them to take a closer look at their patient accounting function as it affects cash flow and patient service revenue. This article addresses several new issues relating to patient accounts processing that have created a need for more emphasis on the patient accounting function. Efficient operations and effective accounts receivable management may be the difference between the success or failure of a hospital in today's competitive environment.
Better information on the financing of the health sector is an essential basis for wise policy change in the area of health sector reform. Analysis of health care financing should begin with sound estimates of national health expenditure--total spending, the contributions to spending from different sources and the claims on spending by different uses of the funds. The member countries of the OECD have successfully established such comparative health expenditure accounts in terms of standardized definitions of the uses of funds and breakdowns by public and private sector sources. This has resulted in important research on health system differences which could explain variations in the level and composition of financing. The United States has developed a more detailed approach called National Health Accounts, which expands the OECD method into a more disaggregated 'sources and uses' matrix. In the developing countries, analysis of health expenditures has been much less systematic, despite several decades of calls by international researchers for more attention. This paper reviews previous work done in developing countries and proposes renewed attention to national health expenditures, adapting the recent experience of the United States. Because most developing countries have more pluralistic health financing structures than are found in most industrialized countries, an enhanced and adapted version of the 'sources and uses' matrix method is proposed. This method should be modified to address the relevant categories of expenditures prevalent in the developing countries. Examples of recent applications of such 'national health accounts' from the Philippines, Egypt, India, Mexico, Colombia and Zambia are presented. Experience to date suggests that development of sound estimates using this method in low and middle income countries is feasible and affordable. National health accounts estimates can significantly influence policy. They provide decision makers with a holistic picture of the health sector, showing the actual emphasis of spending and the roles of different payers. They also provide a consistent framework for modelling reforms and for monitoring the effects of changes in financing and provision. An easy to use software tool has been developed for training and data management. Regional networks of collaborating national groups are proposed as a first step in expanding use of the method and to gain both national and cross-national comparative benefits.
This paper describes the rules for the proper implementation of a responsibility accounting system in a mental health center. Responsibility accounting, which relates the costs to the functions that authorize their incurrence, is presented as a technique that aids the unit's manager in controlling costs. The article discusses the rules that should be followed for proper cost association, presents a illustrative statement for a mental health center, and discusses some existing practices, such as line--item accounting, that may appear to conform to good responsibility accounting practices but in reality do not.
Emerging perspectives of control in human service delivery organizations are facilitated by rational accountability formulations whose tenets and assumptions remain basically unquestioned in organizational and accounting literature. This paper critiques the underpinnings of rational accountability formulations and their appropriateness for human service delivery organizations. In turn, a non-rational metaphor of the role of management accounting information is proposed which recognizes uncertainty for what it is rather than assuming the very certainties that cannot be found in the delivery of human services.
PURPOSE: The skyrocketing cost of medical care in the United States has resulted in multiple efforts in cost containment. The present work offers a rational computer-based cost accounting approach to determine the actual use of resources in providing a specific service in a radiation oncology center. METHODS AND MATERIALS: A procedure-level cost accounting system was developed by using recorded information on actual time and effort spent by individual staff members performing various radiation oncology procedures, and analyzing direct and indirect costs related to staffing (labor), facilities and equipment, supplies, etc. Expenditures were classified as direct or indirect and fixed or variable. A relative value unit was generated to allocate specific cost factors to each procedure. RESULTS: Different costs per procedure were identified according to complexity. Whereas there was no significant difference in the treatment time between low-energy (4 and 6 MV) or high-energy (18 MV) accelerators, there were significantly higher costs identified in the operation of a high-energy linear accelerator, a reflection of initial equipment investment, quality assurance and calibration procedures, maintenance costs, service contract, and replacement parts. Utilization of resources was related to the complexity of the procedures performed and whether the treatments were delivered to inpatients or outpatients. In analyzing time motion for physicians and other staff, it was apparent that a greater effort must be made to train the staff to accurately record all times involved in a given procedure, and it is strongly recommended that each institution perform its own time motion studies to more accurately determine operating costs. Sixty-six percent of our facility's global costs were for labor, 20% for other operating expenses, 10% for space, and 4% for equipment. Significant differences were noted in the cost allocation for professional or technical functions, as labor, space, and equipment costs are higher in the latter. External beam treatment-related procedures accounted for more than 50% of all technical and professional revenues, simulation for 8% to 10%, and other physics/dosimetry procedures for 11% to 14% of revenues. Some discrepancies were identified between the actual cost and level of reimbursement of various procedures. Details are described in the manuscript. CONCLUSION: It is imperative to develop an equitable reimbursement system for radiation oncology services, based on cost accounting and other measures that may enhance productivity and reduce the cost per procedure unit, while at the same time preserving the highest quality of service provided to patients.
Traditionally, many hospital costs have been allocated to patients using indirect measures that do not always reflect the value of the resources used to provide care. When, for example, costs are allocated by multiplying the patient's charges by the hospital's ratio of costs to charges, the allocated cost does not reflect actual cost because the hospital does not uniformly charge for services in proportion to their cost. The choice of method for cost allocation will be as important for the newly developed case-mix cost-accounting systems as it has been for traditional cost-accounting systems. To illustrate how the use of an indirect cost-allocation method might affect the output of a case-mix cost-accounting system, operating room, radiology and clinical laboratory costs were assigned to 106 hospitalized inguinal hernia patients in two diagnosis-related groups (DRGs) using both the hospital's existing cost-allocation method and a method that measures costs directly. Total costs and the costs in each department were significantly lower in each DRG using the direct method. It was concluded that patients in these two DRGs were being assigned more than the actual cost of their care with the existing cost-allocation method and, therefore, that the existing method prevented the case-mix accounting system from providing accurate management information.
This study examined the performance of 516 practicing accountants on the Group Embedded Figures Test. The present accountants scored significantly more field-independent than the published test norms and the 124 accountants in Pincus's 1985 sample. Significant differences were also noted between traditional (entry immediately following collage at age 22) and delayed-entry (late entry or second career) accountants. Gender differences noted in the norms were not observed for the current sample.
This study examined the performance of 49 accountants on the Group Embedded Figures Test and the Figural Intersections Test and used the two sets of scores to measure not only the accountants' field dependence-independence but also whether they may be mobile or fixed. This combination of test scores led to dividing accountants into one of four cognitive subtypes (field-independent scorers, both fixed and mobile, and field-dependent scorers, both fixed and mobile). The implications of mobility-fixity for accountants are discussed.
This study examined the performance of 127 accountants on the Group Embedded Figures Test and assessed the accountants' use of and attitude toward using computers to complete job-related tasks. The data support Bernardi's (1993) finding that there has been a shift over time in scores on field independence among accountants. Comparison of field-independence scores by computer use and attitudes support Bernardi's (1993) hypothesis of an association between the shift in field independence and accountant's use of and attitude toward computers.
If a healthcare facility's accounts receivable operation is experiencing problems, the patient accounts manager should survey all areas of his or her responsibility to determine the best method of resolving the difficulties. One effective technique to reduce billing problems is to take a proactive--not reactive--approach. If mistakes can be corrected before they get out of control, and if the patient accounts manager can ensure that claims will not be denied, a healthcare facility's accounts receivable should remain in good condition.
Total quality management (TQM) represents a paradigm shift in the organizational values that shape every aspect of a healthcare provider's activities. The TQM approach to quality management subscribes to the theory that it is not the work of employees of an organization that leads to poor quality; rather, it is the poor design of systems and procedures. In a book recently published by HFMA, Management Accounting for Healthcare Organizations, third edition, authors Suver, Neumann and Boles point out that the changes in behavioral focus and organizational climate brought about by TQM will have a major impact on management accounting function in healthcare organizations. TQM will require new methods of accounting that will enable the effects of declining quality to be recognized and evaluated. It also will require new types of management accounting reports that will identify opportunities for quality improvement and will monitor the effectiveness of quality management endeavors. The following article has been adapted from the book cited above.
The provisions of the Financial Accounting Standards Board (FASB) Statement No. 109, Accounting for Income Taxes, require all organizations that issue financial statements to shift the focus of their accounting for income taxes from the income statement to the balance sheet. This change can alter significantly a healthcare organization's financial position. The change also may affect the way in which investors, lenders, regulators, and other users of financial statements evaluate corporations in the healthcare industry. Hospitals and other healthcare organizations, particularly for-profit organizations, therefore, should review carefully their methods of accounting for such items as deferred tax assets and loss and expense reserves.
The author reviews cost-accounting techniques and systems used by manufacturing companies. Some of the concepts and techniques used by for-profit companies can be implemented for health care institutions. Nurse executives can learn many lessons in product cost accounting from these for-profit companies. Understanding the various cost-accounting methodologies and techniques that are available can help nurse executives design, implement, and use a cost accounting system that will identify the costs associated with products and services provided. The author also reviews and explains standard costing systems. These systems can serve as valuable tools for budgeting, evaluating, and controlling departmental costs. When used in these instances, they can prove useful, and they furnish important information that is necessary for pricing products, determining alternatives or substitute services, and controlling costs.
Accounts receivable financing is a potential tool for managing a provider organization's working capital needs. But before entering into a financing agreement, organizations need to consider and take steps to avoid serious problems that can arise from participation in an accounts receivable financing program. For example, the purchaser may cease purchasing the receivables, leaving the organization without funding needed for operations. Or, the financing program may be inordinately complex and unnecessarily costly to the organization. Sometimes the organization itself may fail to comply with the terms of the agreement under which the accounts receivable were sold, thus necessitating that restitution be made to the purchaser or provoking charges of fraud. These potential problems should be addressed as early as possible--before an organization enters into an accounts receivable financing program--in order to minimize time, effort, and expanse and maximize the benefits of the financing agreement.
How satisfied is the average finance executive with the performance of his institution's patient accounting system? Not very. What causes this dissatisfaction? A variety of factors: Not enough flexibility, the inability to modify or expand the system, the lack of system interfaces, and inadequate support. These are all leading contributors to the finance executive's dissatisfaction. How much information does he have about the alternative patient accounting system vendors in the marketplace? On average, limited information. Many vendors who offer patient accounting systems have not done enough to disseminate information about their products to hospital decision makers. If the finance executive were more knowledgeable about the alternatives available, would he then be able to select a patient accounting system that fully meets the institution's needs? It would improve the odds. However, merely knowing about the alternatives is only the first step. He must be able to fully evaluate the institution's near and long-term needs to create the best match possible. The finance executive must also accept the possibility that there may not be a single system in the marketplace that can accommodate every perceived need. Only by knowledge of the marketplace will he be in a position to fully evaluate the potential benefits of the available systems.
Currently much interest is focused on the uses of cost-accounting systems within the hospital industry. Proponents frequently contend that such systems will help hospitals successfully adapt to new methods of financial reimbursement because they are essential to a number of major management functions, including competitive bidding, cost management, pricing, and profitability assessment. This article reports the results of a study conducted to examine the extent to which hospitals in a major market are actually beginning to use standard cost-accounting systems and identify factors that either aid or hinder the diffusion of these methods. Chief financial officers from 94 hospitals (83 percent response rate) participated in the study during the summer of 1986 where less than half of the hospitals (43 percent) had recently purchased a cost-accounting system. Detailed information about the interface of cost-accounting systems with other application systems and their specific management uses is reported.
This paper explores the quantitative implications of accounting differences by examining detailed cost information on five health maintenance organizations (HMOs). Standardized cost allocations and actual medical expenses were compared to those publicly reported by HMOs in medical loss ratios (MLRs) and administrative expense ratios (AERs). Differences in accounting and actuarial practices were found to have a small percentage impact on the MLR and the AER, but they accounted for a large percentage of observed differences in reported MLRs and AERs. Policies that regulate MLR floors or AER ceilings encourage HMOs to adopt accounting practices producing the most favorable ratios for regulatory purposes.