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Cost model for hospitals

Table of contents:

Anonim

1. HOSPITAL PRODUCTS

Usually, the definition of a product in organizations dedicated to the provision of services presents difficulties, mainly related to the non-existence of a tangible physical good. This also happens with hospital institutions, even more so taking into account the diversity of care services that are carried out there.

The traditional view on this issue has been based on the services that today we could call "intermediate", such as studies, surgeries, bed days, etc. A costing system based on this conception will propose to departmentalize the hospital, establishing main services (who provide medical services), intermediate or support services, and primary services and determining the costing units for each one.

Another, more modern point of view emphasizes the need for patients to obtain a response to a specific pathology. This response involves the performance of the medical practices indicated above.

The determination of costs per patient requires the determination of the quantities of goods and services consumed by each patient during the process, and the unit costs of each one of them, so that this conception about the hospital product does not replace the previous one, but rather that from it builds a new dimension of analysis of production.

2. THE COSTING MODEL

The proposed costing model establishes the patient as the final costing unit, considering that, during his stay, he consumes resources in order to achieve a response to a pathology. This answer will be different for each patient, and the cost system must record this, identifying what each one consumed, considering it as an order. The starting point to achieve this is the medical history.

In the hospital setting, medical records reflect all the medical activity carried out on each patient, which will be different in each case. What will be necessary is that this is transferred to the cost system, for which the information systems will have to be adapted.

For this reason, to define the model, the medical services in charge of each patient have been considered as “final”, since they are in charge of monitoring the patients during their stay in the hospital, that is, they are responsible for the interventions, days of hospitalization, practices and supplies consumed. This implies that they will accumulate their own costs (basically medical fees, and medications and disposable materials identifiable with each patient), plus those costs arising from “intermediate” services. All of these costs will be accumulated per patient, so that individual costs can be determined. Thus, the cost of a given patient will be the sum of the medical fees of the service in charge of the same, plus the supplies consumed by said patient, plus the cost of all practices,interventions and days of hospitalization used.

On the other hand, in intermediate and support services we find continuous production processes. These are structures whose purpose is to support medical benefits or to support medicine. Here it corresponds to determine costing units for each service or cost center, obtaining unit costs of services. For this, the existing relationships between the productive factors and said costing units must be established. In the case of support services, they may be consumed by intermediate services or final medical services, while intermediate services will only be consumed by final ones. It should be noted that there must not necessarily be a single costing unit for each cost center, but rather that all the corresponding units must be determined for each case.

To achieve this, in the first place, the cost centers in which the hospital's income and costs will accumulate must be defined, also defining which are final, intermediate, support and structural medical services.

Second, the cost units of each center must be defined. The production capacities of each one must be established, and the relationship between the cost factors and the determined units.

In addition to the definition of cost centers and costing units, there must be a chart of accounts with the necessary opening in order to be able to provide information about the behavior of costs, and the nature of economic events.

As a final comment, one of the main objectives of determining costs is to assist the commercial area in setting or discussing prices for services. Therefore, the costing used in this work is complete. This does not preclude separating costs by variability, in order to allow marginal analysis. Later we will see some examples of decisions that can be answered through marginal analysis tools.

3. COST OF INTERMEDIATE SERVICES

Intermediate services are those that the patient receives during their stay in the hospital, within the framework of the process of medical response to a specific pathology. They are basically diagnostic medical services, operating rooms and hospitalization sectors. They have the characteristic of having significant fixed costs (human resources and fixed assets). They consume medications and disposable materials without identification with a particular patient (eg x-ray films).

For its costing it is necessary to establish cost centers and determine the costing units for each of them. The complexity of benefits means that there must not necessarily be one for each one, so the relationships between the factors and each unit must be established. Some costing units are mentioned below and then some cost calculations are exemplified.

Possible cost units for these services are listed below.

  • OPERATING ROOM: surgical time INTERNATION: patient-day LABORATORY: Laboratory determination RADIOLOGY: Rx plate EXTERNAL CONSULTANTS: Consultation

These are just a few intermediate service cost centers and care structures. It should be noted that in some cases a larger opening may need to be made. For example, in radiology there are many types of radiographic plates. In order to cost more accurately, it is necessary to open as many costing units as possible, for which the support of those responsible for the area must be counted on.

4. PATIENT COSTS

There are costs that will be assigned directly to each “order”. They are those corresponding to final medical services (surgical fees or for inpatient care), and the costs of supplies assignable to patients.

The costs of intermediate services will be determined when each of these units is paid for. The medical history records how many units were consumed by each patient.

4.1 COSTS FOR PATHOLOGIES

In order to facilitate hospital management, focusing it on patients, patient classifications have been created. The most widely applied system is that of Diagnosis Related Groups (DRG). This system takes into account the characteristics of each patient and the pathology they present.

In the USA they are used to determine the reimbursement of hospital benefits, while in Europe they are used mainly for management. However, in Latin America their use is quite limited, since they are not used to determine prices. However, they can make some contribution to the management, especially in the case in which, since there is no module for any pathology, it is intended to create it. From the analysis of patients who respond to the corresponding pathological classification, representative costs can be determined that can serve as a basis for setting prices.

5. MARGINAL ANALYSIS APPLIED TO HOSPITAL MANAGEMENT

We will analyze a calculation case for the use of installed capacity, using the patient-day indicator as a measurement variable for activity.

To do this, we will simulate the situation of a medium complexity hospital, with 120 beds.

The results, according to the financial statements, at the end of the XX period were:

INCOME 137,000,000
COSTS (134,500,000)
HR (70,000,000)
MEDICAL FEES (25,000,000)
MAT. PHARMACY (16,000,000)
SERV. VARIOUS (4,000,000)
CLEANING (4,000,000)
TAXES (4,000,000)
VIGIL. (3,000,000)
MAINTENANCE (3,000,000)
GS. GRALES. (3,000,000)
AMORTIZ. (1,500,000)
CONS. ENERGETIC (700,000)
COMMUNIC. (300,000)
2,500,000

In other words, a result of 1.8% on income was obtained.

There is a need to increase these results.

First, the average occupancy was 57% (25,000 patients / day), from which it can be deduced that there is room for growth. However, the Management believes that a very important effort must be made to achieve a significant improvement, since it is observed that idleness is significant and therefore a great job of promotion must be done.

However, if we classify costs according to their variability and consider the patient day as the unit of measure of activity, the point of view can change significantly.

INCOME 137,000,000
VARIABLE COSTS (49,000,000)
MEDICAL FEES (25,000,000)
MAT. PHARMACY (16,000,000)
SERV. VARIOUS (4,000,000)
TAXES (4,000,000)
CONT. MARGINAL 88,000,000
FIXED COSTS (85,500,000)
HR (70,000,000)
CLEANING (4,000,000)
VIGIL. (3,000,000)
MAINTENANCE (3,000,000)
GS. GRALES. (3,000,000)
AMORTIZ. (1,500,000)
CONS. ENERGETIC (700,000)
COMMUNIC. (300,000)
2,500,000
ENG PCTE DAY 5,480
COST VAR PCTE DAY 1,960
CONT MG PCTE DAY 3,520
64%
CAPAC. INST. 43800
OCCUPATION 57%
P EQUIL 24290

That is, the equilibrium point would be reached with 24,290 patients per day, while the activity reached 25,000, 2.9% above the equilibrium value.

At this point, it is necessary to make a clarification about the use of the “patient-day” indicator. This value is the sum of all the beds occupied over a period (in this case, one year). Of course, it is not the only unit of measurement nor does it cover all activities, but its advantage is that it represents hospitalization activity very well, which represents about 70% of hospital activity. Of the same, the number of outpatient and on-call consultations represent activity measures of said activities. Assuming that the "patient-day" is a measure of activity implies accepting that if there is a 20% increase in occupancy, the same percentage should be achieved both in clinics and on call, in terms of the number of consultations.

Given that there is obviously a relationship between these values ​​(the majority of hospitalized patients have previously had scheduled consultations or have been admitted by duty), it is expected that this relationship will remain stable over time.

We will consider three alternatives:

  1. What result would be obtained if 80% activity were reached (with which the increase with respect to the current level would be 40% in terms of number of patients per day) What would be the result if activity grew 10% Idem if activity grow only 5%

Note that the last two are relatively small increments or should not require excessive efforts to achieve them.

Let's see the first case

a) 80% activity level

Day patients 35,040 2920
Increased activity 40% 40%
CONTRIB. ADDITIONAL 35,340,800 2,945,067
INCOME 192.019.200 16,001,600
RESULTS 37,840,800 3,153,400
RES / VTAS twenty% twenty%
INCREM. RTDOS. 1414% 1414%

A 40% increase in activity would allow a 20% result on sales to be achieved. In absolute terms the increase is 1414%.

These are, as can be seen, remarkably significant values. However, it can be argued that it is not easy to achieve an increase in activity by 40%. Therefore, below, we will evaluate the other two alternatives.

b) Increase in activity by 10%

It is about determining the result by increasing the activity by 10% with respect to the current level.

Patients day 10% 2,500 208
Day patients 27,500 2,292
CONTRIB. ADDITIONAL 8,800,000 733,333
INCOME 150,700,000 12,558,333
RESULTS 11,300,000 941,667
RES / VTAS 7.5% 7.5%

The number of additional day patients is 2,500. This number allows an additional $ 8,800,000 to be obtained, thereby achieving a result of 7.5% on sales (352% more in absolute terms).

c) Increase in activity by 5%

Patients day 5% 1,250 104
Day patients 26,250 2,188
CONTRIB. ADDITIONAL 4,400,000 366,667
INCOME 143,850,000 11,987,500
RESULTS 6,900,000 575,000
RES / VTAS 4.8% 4.8%

In this case, the additional 1,250 patient days allow an additional $ 4,400,000 to be obtained, thus achieving a result of 176% above current results.

In short, what we want to highlight is that a small increase in activity allows us to achieve highly significant results. To do this, it is necessary to know the variability of the cost factors and make a simple marginal analysis, with only one variable to measure the activity.

Cost model for hospitals