Abstract Today healthcare industry is becoming challenging due to health reforms and competitive pressure. The only valid business strategy can manage the cost and quality of patient care. It is imperative to understand the concept of cost accounting to accept these challenges. Cost accounting models can be used in different areas which could be cost management, pricing or planning. As it is planning process and could give insight into the volume, margin analytics.
For these activates managers require information which is created by the business’s managerial accounting system, which in turn uses organizations and subunit data, and this is designed for managers. It is important to form internal control system so that it could verify or record the information through audit method. Cost industry is not new to the health industry, and it has grown in years. These consistent changes in health industry could be due to any external factors or any of reforms in the health industry. There was an introduction of Affordable Act in 2010 which increased the focus on the accounting system.
Healthcare organizations should compare the cost as there is a lot of pressure from the stakeholders on health care. Different tools and techniques that are widely used for cost analysis Healthcare organizations should be caring for their revenues and inventory as by doing so they can manage their working capital. There are different types of cost accounting methods which financial institution can use. According to Mariana, (2013) suggest as the “ABC method which could help in identifying the incorporated cost and ongoing owns regarding the cost throughout the organizations is what provide control of an organization resource.
It is still tough to know the financial direction of any organization as there is a consistent change in industry. There could be different external factors that could directly affect the internal factors effect of any organiCost Accounting /Cost Concepts Monika Nanchahal HA 520-01: Healthcare Finance Management Abstract Today healthcare industry is becoming challenging due to health reforms and competitive pressure. The only valid business strategy can manage the cost and quality of patient care. Knowledge of cost accounting can help managers to accept these challenges.
Cost accounting models can be used in different areas which could be cost management, pricing or planning. As it is planning process and could give insight into the volume, cost and margin analytics. For these activates managers require information which is created by the business’s managerial accounting system, which in turn uses organizations and subunit data, and this system is for managers. It is important to form internal control system so that it could verify or record the information through audit method. Cost accounting is a type of accounting process that aims to capture a company’s cost of production by assessing the input costs of each step of production as well as fixed costs such as depreciation of capital equipment. ” (Investopedia. com).
Cost industry is not new to the health industry, and it has grown in years. It is believed that cost accounting developed in the industrial revolution. Cost accounting was significantly covered the topic in the literature by the 20th century. There are different kind of cost accounting, i. e. Standard Cost Accounting, Activity-based Costing, Lean accounting, and Marginal Costing. The consistent changes in health industry could be due to any external factors or any of reforms in the health industry. There was an introduction of Affordable Act in 2010 which increased the focus on the accounting system. Healthcare organizations should compare the cost as there is a lot of pressure from the stakeholders on health care. Different tools and techniques that are available for cost analysis Healthcare organizations should be caring for their revenues and inventory as by doing so they can manage their working capital.
There are different types of cost accounting methods which financial institution can use. According to Mariana, (2013) suggest as the “ABC method which could help in identifying the incorporated cost and ongoing owns regarding the cost throughout the organizations is what provide control of an organization resource. ” It is still tough to know the financial direction of any organization as there is a consistent change in industry. There could be different external factors that could directly affect the internal factors effect of any organization.
According to Mariana regrouping is important as one should know what goes where and cost should go to the right department. Organizations allocate the cost from some departments to other departments and ultimately to their patient and products. Cost accounting helps in analyzing and interpreting the data, which could assist in providing information to the stakeholders regarding the economic importance of the business. As there are pros and cons of everything, this method does have too. The pros are it could cion, awareness, and know-how to prove indications in trying to do cost.
According to gape ski (2012). “due to a large number of the cost, it is not always possible to capture them in their entirety, and the cost is placed in the appropriate field so that it is billed correctly. ” Cost accounting has a significant role in U. S. healthcare system and hospital as they are making the transformation to value-based care. So it is important for the manager to understand the importance of capturing the cost. In healthcare organizations there are the different department, the manager should have liability to obtain the value so that the bodies remain ustainable Managers of health care business have many responsibilities including planning, budgeting and overseeing routine operations.
Along with they should provide the quality care to the patient at very reasonable price. According to Judy Hanover, IDC health insight “Cost Accounting represent an actual challenge to providers. To be successful at cost account, cost containment, and accountable care’s hospital must not only take sophisticated analysis but also come to terms with failures in their process and delivery of attention. “
