Quiz 20: Summary and Issues for the Future

Business

Basically revenue cost is use to reimburse the cost and now a day due to the method that health organization is using now a days is happing the impact on reimbursement which reduce the necessity of revenue cost. The revenue center system allows for all the costs including non-revenue center cost to be accumulated in the revenue centers to be reimbursed. In case the payment is not reimbursed. Under cost reimbursement, the revenue centers can be dropped, simplifying the system dramatically and making it more sensible at the same time. Under cost reimbursement, this approach is required. Innovative approach is simply to do away with the revenue center notion and the entire cost allocation process, instead the heath care organization would report cost for a greater number of departments.

Product line is generally help in providing the variant knowledge which can be used to eradicate the extra expense and way to care a patient in a specific manner. Product cost line needs to be examined for the variations in a ways it provides. Variations should be considered both among clinicians practicing within the organization and if possible, among practice pattern for that product line at a wide variety of other organization. Efforts should be there to eliminate wasteful approaches to providing the care to patients within the product line. Important part is to determine the costs on a product line basis.

Support Department is the department that supports or assists the organization's other department by providing them services. There are two important questions which management is concerned about:- 1. Allocating the Fixed cost to Operating Divisions. 2. Method of allocation of Fixed Cost should be similar to variable and fixed cost. Direct Method : only the operating departments are allocated the support department's cost. It is simple to calculate and widely used in practice. We need not compute the services of support department apart from operating divisions Step -Down Method : it takes into account the cost of support department both the operating department as well as other supporting department. Thus, it allocates cost in sequence to both the departments. Approaches of product-line costing is use to work precisely on cost data and revolutionary step on allocation procedure. Health care cost accounting has been shifted to focus more on specific group of patients or product line. One approach of the product cost lines is focusing on evolution of the cost data and other one is more revolutionary. Evolutionary process would be gradually to revamp element of the step down allocations procedure used by health organization to improve the cost estimate the product and revolutionary approach starts from scratch, tracking the cost of resource consumed by each patient.