Cost MethodologyMed-Link uses a unique technique to develop detailed, accurate procedure level costs. Rather than focus the standard setting process at the procedure level, we define an intermediate step, department service units.
Service units represent department level outputs (days of care, acuity levels, tests, dollars of supplies, etc.) that combine in various ways to produce the continuum of patient procedures. This reduces the standard setting burden and, using up to nine service units per department, ensures detailed, highly accurate standards.
Standards for each service unit can be engineered, ratio of cost to charges, historical or budgeted, and can be detailed to whatever level is appropriate. Direct expenses of each department are analyzed for fixed and variable components.
As a result of using this service unit cost methodology, different
approaches to cost accounting can be used by different departments,
including:
Bill of Materials/ Engineered Standards
Multiple Relative Value Units
Single Relative Value Unit
Ratio of Cost to Charges
This flexibility allows the facility to use detailed standards
where available, and other approaches as appropriate. The decision
on the appropriate standards setting option can be made at the
department or procedure level.
Cost AllocationMed-Link provides a number of accurate and flexible cost allocation options to ensure that accurate full costs are developed.
The system has the ability to allocate overhead directly on an account-by-account basis for direct fixed costs. In addition, you can assign transfer units to record variable department interrelationships, such as meals per patient day and laundry pounds per procedure. Finally multiple simultaneous linear equations can be used to cross allocate other overhead departments using multiple statistical tables and user-defined statistical weighting. As a result, Med-Link accurately reports the overhead portion of full-costs at the department, procedure, and patient level.
Once the service units are defined, we work with the facility to input appropriate account, department and procedure level assumptions. The patient billing system establishes the link between procedures and discharges. Once the definitions and assumptions are in place, the cost accounting system can be used for cost analysis at the service unit, procedure, discharge or product level.
Med-Link also can be used for modeling by
entering volumes at the patient or procedure level; the system
will then determine the projected service units and related account
balances, and staffing requirements.
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