Effective cost accounting systems have flexible data integration, the ability to adjust costs by specialty, and more.

As health systems continue to grow and pressure to improve the overall value of care increases, it’s vital to incorporate cost data from providers and professional services across the care continuum to accurately understand the cost to deliver care.

But multiple electronic health record (EHR) systems, provider variation, and differing forms of care delivery—including telemedicine and home visits—make cost accounting more complex than ever.

Despite these difficulties, data similarities do exist across institutional and professional organizations, including patient demographics, payer data, and some clinical data—such as episodic diagnostic data or chronic disease information. Healthcare organizations also share common data related to organizational structures and financial information. For example, most organize financial data in common general ledger and payroll formats containing departments, accounts, job codes, and pay types.

Combining professional services and institutional data for cost accounting allows organizations to more accurately attribute care costs for patients moving across different providers and care sites. Effectively integrating the two requires that organizations have a cost accounting system with six key capabilities:


1. Flexible data integration 

A powerful, yet easy-to-use data loading system helps standardize data from multiple systems into a single costing solution that reclassifies and allocates costs organization-wide.


2. Multi-entity support

Support for hospitals, clinics, medical groups, and other associated entities is critical to improving the validity of costing data across the organization.


3. CPT and modifier support

Providing CPT, HCPCS, and revenue code charge-level support ensures accurate cost calculations and data reconciliation. This support should include capabilities to adjust costs at the CPT- or HCPCS-modifier levels.


4. Ability to adjust costs based on specialty

Accurately allocating shared costs in provider settings requires adjusting methods, e.g. relative value units (RVU), based on providers’ or offices’ specialties.


5. Allocating provider labor directly to patients

The cost accounting system should support allocation of providers’ fully burdened costs to their patients, regardless of where the patients were seen.


6. Accounting for provider type

Abilities to adjust RVUs based on provider type should be supported to account for variations in scope of practice and skill.

Cost accounting or decision support systems should have patient identification or enterprise master patient indexes to allow patient tracking across the care continuum. The system also should combine inpatient and outpatient service line definitions using DRGs or ICD/CPT codes to consolidate professional and facility encounters into standard service lines.


Promoting Better Understanding

Historically, cost accounting has focused primarily on department-level costs within hospitals. Incorporating professional services data allows finance leaders to allocate actual provider-level costs to specific patients using various methods that improve the validity of costing information.

Although this approach may require nontraditional cost accounting reconciliation at the departmental level, having the broader picture with more accurate, sophisticated, and transparent data is critically important to understanding all relevant costs in an increasingly value-focused environment.


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