10 Tips for Shifting to Advanced Cost Accounting
December 13, 2018
To reflect the most up-to-date information on hospital cost accounting and advanced cost accounting for healthcare organizations, this blog post was last updated on February 22, 2021.
Advanced cost accounting is the next big thing for healthcare organizations who want to streamline their hospital cost management and accounting services while increasing their bottom line. As a matter of fact, many forward-thinking healthcare organizations have already implemented an advanced cost accounting framework to fuel their organization’s mission. Discover how you can, too.
1. Help your hospital finance team understand the purpose of advanced cost accounting
Supply an easy, general definition of an advanced cost accounting software. Simply put, an advanced hospital cost accounting system integrates cost data from a variety of sources to allocate costs to patient services. A robust advanced cost accounting software platform should effortlessly integrate existing software such as enterprise data warehouse (EDW), enterprise resource planning (ERP), and electronic health records (EHR). The true cost of service takes into account activity-based costing (ABC), relative value unit (RVU), supply costs, pharmacy costs, and time-based costs, among other things. Advanced cost accounting is multidimensional; therefore, it overcomes the one-dimensional limitations of legacy cost accounting.
Cost Accounting and Decision Support Buyers Guide
We’re sharing a comparison of leading platforms to help guide you and your organization through the research process.
Learn the Four Types of Cost Accounting and Decision Support Solutions
Understand Key Questions and Considerations for Making a Decision
Find out how a more advanced decision support and cost accounting platform can benefit your teams and your organization
2. Explain the benefits of cost accounting software in your health system
Many healthcare organizations are in need of advanced cost accounting systems, but they need to know how it can powerfully affect revenue. Some major benefits of advanced cost accounting for healthcare organizations include more accurate risk analysis, clinical decision support, management of department costs, management of commercial contracts costs and many others. Optimizing hospital cost accounting using a top performing healthcare accounting system can help your healthcare organization maximize margins.
3. Communicate that a slow decision support system can’t compete anymore
Today, most traditional cost accounting systems in healthcare include outdated cost accounting methods that are sluggish, cumbersome, and unproductive. By using an advanced cost accounting system and its advanced cost accounting methodologies, hospital accounting staff can more easily and quickly (in minutes rather than days) process a cost analysis.
4. Realize that traditional healthcare cost accounting softwares are outdated and contain inaccuracies
Knowing the correct details that make up the cost of providing services is necessary to calculate true margins. Hospital accounting services and hospital advanced cost accounting methods can improve with the right framework. If you have thin margins, it’s a sure sign that something is amiss in your hospital’s cost accounting allocation processes.
5. Learn why “cost” is the key to increased margins and realized missions
The healthcare industry’s endurance depends on how they manage costs. Take every opportunity to tighten up your organization’s advanced cost accounting efforts and your facility will likely thrive. Once you begin making changes, that momentum is hard to stop.
6. Know that a cloud-based hospital cost accounting system is a good thing
This type of advanced cost accounting platform allows you to streamline processes and integrate your existing software programs that you require. Other types of traditional cost accounting systems in healthcare are limited in scale and ability. In addition, legacy hospital cost accounting software can’t be scaled up or down easily.
7. Know advanced cost accounting systems can be as simplistic or complex as needed
When using an advanced cost accounting system for healthcare cost management, the more meaningful the data you extract, the higher the capability of realizing healthier margins. You can then allocate more revenue into development and expansion, and deliver higher-quality care with the least amount of expense.
8. Phase in your new advanced cost accounting solution
Healthcare organizations that have never utilized a standardized accounting system or hospital cost accounting software should start out slow and pace themselves, but start. No matter what size company, you can increase margins and make wise financial decisions when you track costs with a solution that utilizes technology advancements in speedy delivery of data and is easy to use.
9. Assign a team leader or IT professional to oversee the healthcare cost accounting system implementation
Name a staff member on your team to be involved in managing the shift to a new advanced cost accounting framework. This contact should be the “go to” person between your organization and hospital cost accounting software vendor.
10. Partner with a company and healthcare cost accounting platform you can trust
Aligning your organization with a vendor that realizes the need of cost accounting systems is vital. Get the right software, customization, and support that will enable you make sense out of the data.
Every year, billions of monetary waste occurs in the healthcare industry. The good news is every healthcare facility can do something about it. The major purpose of cost accounting is to deliver the highest quality of care at the least amount of expense. Every dollar counts and in healthcare, it quickly adds up. See how streamlining the cost of service equals higher margins and better patient outcomes. It’s a formula where everyone can win.