Page 62 - BusinessWest October 31, 2022

Accounting & Tax Planning
Modern
Cost Accounting
How Medical Practices Can Improve Patient Care and the Bottom Line
rately capturing all of the costs associated with patient care. These costs can include everything from the cost of medica- tions to supplies, overhead, and the cost of labor. Additionally, cost accounting must take into account both direct and indirect costs. Direct costs are those that can be easily traced back to a specific patient or procedure, while indirect costs exist across the entire organization and cannot be directly linked to any one patient or procedure.
Organizations must also consider cost accounting when making decisions about billing and reimbursement. In order to set billing rates that reflect the true cost of care, cost accounting must be as accurate and up-to-date as possible. The pandemic has made this even more challenging, with many new factors, such as the cost of pre-visit COVID-19 testing.
There are several reasons why a more modern cost account- ing approach is needed in
TBy James T. Krupienski
he cost of delivering healthcare has been ris-
ing for years, and the current cost-accounting approach may no longer be effective in the post- COVID-19 world. A more modern cost-account- ing approach is needed to accurately reflect the
true cost of care and improve decision making.
In cost accounting, all of the various costs incurred in run-
ning a healthcare organization are tallied and categorized. This information is then used to inform decision makers about how to best allocate their resources. Healthcare cost accounting has traditionally been a very complex and manual process, involv- ing a lot of data entry and number crunching. However, as healthcare organizations have become more data-driven, cost accounting has had to evolve to keep up.
One of the biggest challenges in cost accounting is accu-
healthcare post-COVID. First, the pandemic has
Accounting
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62 OCTOBER 31, 2022 ACCOUNTING & TAX PLANNING BusinessWest