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The cost accounting for most hospitals is totally opaque. How do you assign overhead to each activity? Does the ER make or lose money? How much of a nurse's

by JJMcJ 4y ago

The cost accounting for most hospitals is totally opaque. How do you assign overhead to each activity? Does the ER make or lose money? How much of a nurse's time to give patient a Tylenol? Zero? Five minutes? And how much does that nurse's time actually cost the hospital? Nobody has the slightest idea.

ClumsyPilot 4y ago
> How do you assign overhead to each activity? Every business has to deal with this problem, and hospitals have already done so, because they do somehow come up with the amount to charge you.
- JJMcJ 4y ago
  The possibilities for manipulation? Or simple overcharging.
- toss1 4y ago
  This SHOULD be true, but it is not. Once again, SHOULD =/= IS Just because they quote charges does NOT mean that they have solved the problem or that the charges are accurate. There is absolutely nothing that requires the charges to have any relation with the actual costs, even if they are known, particularly at the item level. Only the total charges must exceed the total costs (less any external support e.g., from govt, philanthropy, grants, etc.), and that is on a basis of multiple years before any serious reckoning happens. IOW, they can and in fact do literally just make it up. Also, charges that are heavily scrutinized may have some relation to costs, but other charges may be "just add a few zeros" to make up for it. If you have some detailed and complete internal accounting data from any major hospital that proves me wrong, please post it. But when I read about congressional testimony that a CEO of a hospital literally cannot get the same data that you claim exists because 'of course it's been solved because every other business solves it', I find it difficult to believe you. I can also state from running a business that the relationship of costs to charges is very loose. Sometimes I will sell things below cost for a number of reasons, and for some customers (e.g., those with high bureaucratic overhead requirements) the charges will be substantially higher. And when those charges are made, I may do detailed studies of what the increased costs are, or I may just say "one data point shows that's going to cost 4% more, but I don't like it, so add 7% - basically a whim. And no one in the world besides me knows the difference (and I forget about it after a few cycles and it becomes the baseline). So, yeah, perhaps stop posting speculation.
  - JJMcJ 4y ago
    Regulated utilities, for example, are under constant scrutiny to be sure that they are allocating costs appropriately, and that any subsidies conform to public policy. Somehow the medical industry has so far largely avoided such oversight. Even within a single enterprise, misallocation of costs can lead to inefficiencies.

by JJMcJ 4y ago

ClumsyPilot 4y ago

> How do you assign overhead to each activity? Every business has to deal with this problem, and hospitals have already done so, because they do somehow come up with the amount to charge you.

JJMcJ 4y ago
The possibilities for manipulation? Or simple overcharging.
toss1 4y ago
This SHOULD be true, but it is not. Once again, SHOULD =/= IS Just because they quote charges does NOT mean that they have solved the problem or that the charges are accurate. There is absolutely nothing that requires the charges to have any relation with the actual costs, even if they are known, particularly at the item level. Only the total charges must exceed the total costs (less any external support e.g., from govt, philanthropy, grants, etc.), and that is on a basis of multiple years before any serious reckoning happens. IOW, they can and in fact do literally just make it up. Also, charges that are heavily scrutinized may have some relation to costs, but other charges may be "just add a few zeros" to make up for it. If you have some detailed and complete internal accounting data from any major hospital that proves me wrong, please post it. But when I read about congressional testimony that a CEO of a hospital literally cannot get the same data that you claim exists because 'of course it's been solved because every other business solves it', I find it difficult to believe you. I can also state from running a business that the relationship of costs to charges is very loose. Sometimes I will sell things below cost for a number of reasons, and for some customers (e.g., those with high bureaucratic overhead requirements) the charges will be substantially higher. And when those charges are made, I may do detailed studies of what the increased costs are, or I may just say "one data point shows that's going to cost 4% more, but I don't like it, so add 7% - basically a whim. And no one in the world besides me knows the difference (and I forget about it after a few cycles and it becomes the baseline). So, yeah, perhaps stop posting speculation.
- JJMcJ 4y ago
  Regulated utilities, for example, are under constant scrutiny to be sure that they are allocating costs appropriately, and that any subsidies conform to public policy. Somehow the medical industry has so far largely avoided such oversight. Even within a single enterprise, misallocation of costs can lead to inefficiencies.