eHEALTH-Feb-2011-[42-43]-Costing System in Hospitals

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Costing System in Hospitals The growing need of hospitals to have an efficient system to control costs and at the same time maintain quality

By Ravi Mani

M

odern day hospitals provide a variety of services to patients under one roof. It is akin to a large service organisation considering the number of personnel involved and the capitalintensive nature of the business be it the civil structures, operation theatres and equipment, diagnostic and therapeutic equipment, resuscitation equipment, gas lines, surgical instruments, consumables, and so on. Moreover, it is a 24x7 operations with people playing a vital role in the well being of the patients in the hospital. There are various complexities that necessitate the hospital management to put in place robust costing systems. However, traditional hospital managements have not given serious thought to the

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same. The corporate world has adopted and benefited from good costing systems, since the early 1930’s. The same holds true of modern day corporate hospitals, who believe in providing cost effective services to patients and ensuring patient loyalty to the healthcare provider. Traditionally, hospitals used bed occupancy as the yardstick of measurement of performance. With the advancements in medical technology, the average length of stay (ALOS) is reducing and hence, bed occupancy is not the main performance measure any longer. The increased utilisation of costly resources, e.g. equipment in operating theatres, ICUs, Cath-Lab, Pathology Lab etc. in addition to doctors’ times are the key to success in hospitals.

> www.ehealthonline.org > February 2011

Importance Until a few years ago, it was practically absurd to think of a marketing function within a hospital. That situation is passĂŠ with almost every hospital worth its salt employing marketing professionals to attract new corporates. Hospitals also employ loyalty cards and discount health cards to attract and retain customers. The advent of health insurance companies has also queered the pitch. With the costs of treatment going up and the privatisation of the insurance industry, the hospitals are forced to give quality service at highly competitive prices as the insurance companies will pay only for the services that are desired and will also monitor the services that are rendered closely. This leads to deductibles, co-payments and all


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