The Journey to Time-Driven Costing

April 22, 2019


Synchronizing Data Sources for Healthcare Activity Based Cost Accounting

While advanced cost accounting and activity-based costing are on the rise in healthcare, most organizations have managed with simple, manual workflows and estimations. Many calculate costs using ratios or averages rather than actual data, a practice that has come to represent but not fully depict the reality of the hospital’s operations. With traditional labor costing, data from charges and labor have remained somewhat disjointed, passed through different systems that never entirely match up.

But in recent years, organizations have begun adopting healthcare activity based cost accounting and to look for ways to synchronize this data to achieve costing based upon true data rather than estimations. Partially influenced by legislature and regulations like the 2009 Health Information Technology for Economic and Clinical Health (HITECH) Act which supported the “meaningful use” of interoperable electronic health records, hospitals and healthcare organizations have invested in systems that now allow them to mine data from across their departments and teams. To drive activity based cost accounting that uses real, accurate data, healthcare providers are beginning to see the value in synchronizing these systems, to build a cost accounting approach that grounds decisions in real data instead of estimations.

In this guide, we will outline the pitfalls that have accompanied traditional cost accounting and detail the path forward to a Time-Driven Cost Accounting approach that leverages preexisting data sources to automate and elevate cost accounting, for costing based on true data.


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