Airway Management Augusto Torres, MD Department of Anesthesiology MetroHealth Medical Center.
The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is...
Transcript of The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is...
![Page 1: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/1.jpg)
The MetroHealth SystemCost Accounting Overview JOHN SENDERAK
MBA, CMA, CPIM, CFM, CIRM, MA
1
![Page 2: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/2.jpg)
Outline
I. Hospital Cost Reduction Efforts
II. Why Cost Accounting Matters in Healthcare
III. Background of Cost Accounting in the Healthcare Industry
IV. Horizon Performance Manager
V. Cost Accounting Basics
VI. Cost Accounting Process
VII. Additional Resources
VIII. Appendix
2
![Page 3: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/3.jpg)
You Can’t Manage What You Don’t MeasureHospital Cost Reduction Efforts
• CMS reported almost one out of every five dollars in America is spent on health care (close to $3 trillion in 2014).
• IOM estimated $765 billion was lost to waste in inefficiency, redundancy, errors, overutilization and unnecessary
variation in clinical practices in 2009.
• The American Hospital Association contends that one-third of hospitals presently have a negative operating
margin.
• Number one strategic concern for hospital leadership: reducing the total cost of care while maintaining or
improving the quality of care, health outcomes, and patient satisfaction.
“The devil is in the details.”
3
![Page 4: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/4.jpg)
Why Cost Accounting Matters in Health Care
1. To understand true margins.
2. To identify opportunities to reduce cost.
3. To understand total cost of care for both inpatient and outpatient encounters.
4. To bring the financial and clinical data together.
5. To integrate EHR, ERP and EDW systems.
6. To integrate cost management with overall financial management.
7. To understand how to price right.
8. To make the data more actionable via executive and operational dashboards.
9. Service line reporting.
4
![Page 5: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/5.jpg)
Background of Cost Accounting
5
![Page 6: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/6.jpg)
Background of Cost Accounting
Pre-1983•Fee-for-service commercial reimbursement is common.
•CMS reimburses on “cost” basis.
•Calculation uses cost-to-charge ratio (RCC).
Post-1983
•Medicare introduced prospective payment system (“PPS”) in 1983.
•PPS reimbursement unveils incentive for Providers to control and monitor costs.
•Management had to determine costs with the help of costing software systems.
Today + •Providers are using business intelligence solutions to help identify opportunities to better manage costs across their organization.
6
![Page 7: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/7.jpg)
Background of Cost Accounting
Overhead Cost Pools
Patient Care Units
Procedures
Patients
Product Lines, Contracts, etc.
7
Finance, Billing, Accounting, Admissions, etc.
Radiology, Cardiology, Gerontology, ENT, etc.
Cost Buckets
Patients
![Page 8: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/8.jpg)
Horizon Performance Manager
(HPM)
8
![Page 9: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/9.jpg)
Horizon Performance Manager (HPM)
9
HPM
Cost
AccountingABC Tools
FINANCIAL DATA
SOURCES
LAWSON(GL)
KEANE (Financial)
KRONOS (Timekeeping)
LAWSON (Payroll)
CLINICAL
DATA SOURCES
EPIC(Professional &
Technical
Billing)
KEANE(LTC Technical
Billing)
SQL Database
9
![Page 10: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/10.jpg)
Horizon Performance Manager (HPM)10
PERSONS
Patient Providers
OPERATIONAL OUTCOMES
BENCHMARKS
USER-DEFINEDENCOUNTERS
CLINICAL
Diagnoses
Procedures
Resources
Revenue/Expense
Contract Modeling
Dept. Costs
Encounter Cost
Utilization
Severity
Groupings/
Samples
Custom Objects
Data Elements
Resources
Outcomes
Performance
Clinical/Financial
Performance
Indicators
Satisfaction
![Page 11: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/11.jpg)
HPM Data Domains11
Enterprise
EntityFacilityDepartmentFinancial ClassPayorChargesCosts
PatientsPractitioners
Encounters
GL Payroll Cost
Accounting
HPM DATA DOMAINS
General Ledger Dataset
GL Data PayrollCost
Standards
Encounter Dataset Patient
AccountsMedical Records
Order Entry
Other
FINANCIALPERSON
CENTEREDFOUNDATION
![Page 12: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/12.jpg)
Overview: Cost Accounting
Process in HPM
12
Financial Data from GL
Assign Expenses to Cost Components
Allocate to Cost Centers
Service Item Allocation
Summarize at Encounter Level
Summarize at Patient Level
~23,950 GL Accounts
~1,236 Cost Centers
~58 Depts.
~8 Service Lines
~59,522 Service Items
![Page 13: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/13.jpg)
Costing Basics
13
![Page 14: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/14.jpg)
Costing Basics 14
OVERHEAD
COST POOLS
PATIENT CARE
DIRECT COST
TOTAL PATIENT CARE COST
PATIENT CARE
DIRECT COST
PATIENT CARE
INDIRECT COST
Step-down allocation
of overhead costs to
various PCU cost
centers
Before Allocation After Allocation
![Page 15: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/15.jpg)
Costing Basics15
FIXED VARIABLE
DIRECT INDIRECT
Co
st
Typ
e I
Co
st
Typ
e II
SUPPLIES LABOR OTHER
Co
st
Typ
e III
Cost components are general categories of expense and are derived through the aggregation of GL account
data to the level of detail that is desired for costing
Management defines cost components and defines GL account mapping to cost components and any
necessary exceptions
Currently 20 cost components
Each cost component will have all three types, for example a syringe: direct variable supply cost
Discussion
CAPITAL
![Page 16: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/16.jpg)
Costing Basics16
![Page 17: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/17.jpg)
Costing Basics17
![Page 18: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/18.jpg)
18Costing Basics
![Page 19: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/19.jpg)
Costing Process
19
![Page 20: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/20.jpg)
Costing Process20
![Page 21: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/21.jpg)
Costing Process21
![Page 22: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/22.jpg)
Costing Process22
![Page 23: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/23.jpg)
Costing Process23
![Page 24: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/24.jpg)
Costing Process24
![Page 25: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/25.jpg)
Costing Process25
![Page 26: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/26.jpg)
Costing Process26
![Page 27: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/27.jpg)
Costing Process: End Result27
![Page 28: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/28.jpg)
Additional Resources28
![Page 29: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/29.jpg)
HBR29
![Page 30: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/30.jpg)
Any Questions?30
![Page 31: The MetroHealth System - neohfma.org · Pre-1983 •Fee-for-service commercial reimbursement is common. •CMS reimburses on “cost” basis. •Calculation uses cost-to-charge ratio](https://reader034.fdocuments.in/reader034/viewer/2022050216/5f61fe39642cc778cc34145a/html5/thumbnails/31.jpg)
Appendix A:
Sample Cost Components
Component Associations
Direct
Components
Indirect
Components
DFL Direct Fixed Labor IFL Indirect Fixed Labor
DVL Direct Variable Labor IFL Indirect Fixed Labor
DFS Direct Fixed Supplies IFS Indirect Fixed Other
DVS Direct Variable Supplies IFS Indirect Fixed Other
DFO Direct Fixed Other IFO Indirect Fixed Other
DVO Direct Variable Other IFO Indirect Fixed Other
DFE Direct Fixed Equipment PC IFE Indirect Fixed Equipment PC
DFB Direct Fixed Building IFB Indirect Fixed Building
DFP Direct Fixed Physician IFL Indirect Fixed Labor
DFR Direct Fixed Resident IFR Indirect Fixed Resident
DRO Direct Fixed Revenue Offset IFO Indirect Fixed Other
DFLB
Direct Fixed Labor Benefits
PC IFLB
Indirect Fixed Labor Benefits
PC
31