Cost management and the renewed imperative for cost accounting
Abstract
The American healthcare delivery system is in the midst of tremendous change and is experiencing increasing financial pressure; yet adoption of cost accounting systems is still not widespread in the USA. The industry, consequently, has not fully tapped the potential of cost accounting to support management decision-making. Historically, there has been scant guidance to help providers match the power and sophistication needed from their costing systems with the imperatives of the reimbursement environment. Fortunately, national benchmarks, such as the Precision Risk Framework, the HFMA-Strata L7 Model and the Costing Maturity Model, are emerging. Adoption of these methodologies will allow healthcare entities to assess the efficacy of their current costing efforts and choose costing system elements that will give them the greatest return on investment (ROI). Each of these models is briefly presented and reviewed in this paper. Finally, 11 tactics are introduced that financial leaders can use to improve their costing efforts, regardless of their selected technologies, and without large capital expenditures.
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Author's Biography
Paul Selivanoff has nine years’ experience as a healthcare chief financial officer (CFO). He was previously with Adventist Health, where he assisted with development of business intelligence and costing strategies. At Adventist Health, Paul pioneered the use of Windows and Microsoft Office to automate report creation and distribution. He has also been Senior Financial Analyst at the St. Elizabeth Regional Medical Center of Catholic Health Initiatives and Vice President/CFO at McAllen Heart Hospital. Paul’s areas of interest include project management, efficiency, operations management, business process improvement, total quality management (TQM), process design and re-engineering, benchmarking, cost accounting, labour productivity, budgeting and financial modeling for hospitals, health systems and related entities.
David Hammer is Vice President, Resources Global Professionals (RGP). In his leadership role at HPMC, he works with health systems and physician practices to optimise revenue cycle and managed care outcomes. Prior to joining the firm, David was Senior Vice President of Revenue Cycle Advisory Solutions at MedAssets, and was also a partner at Accenture. David focuses on revenue cycle, managed care, and healthcare reform issues for physicians, hospitals, health systems, and related entities. He serves many of the largest health systems, MD-led clinics, and academic medical centers in the USA. He was also formerly VP of Enterprise Revenue Management at McKesson and was previously Chief Revenue Officer for Charter Behavioral Health, a health system with over 100 facilities . David has over 30 years of healthcare experience, including executive Leadership and direction, revenue cycle transformation, information system planning/implementation and consulting. He has worked for a variety of leading health systems, software vendors and professional services firms.
Citation
Selivanoff, Paul and Hammer, David (2019, December 1). Cost management and the renewed imperative for cost accounting. In the Management in Healthcare: A Peer-Reviewed Journal, Volume 4, Issue 2. https://doi.org/10.69554/RLJK6077.
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