Using cost accounting in a medical group practice. An application using the resource-based relative value scale

Area of Science:

• Health economics
• Medical practice management
• Healthcare finance

Background:

• Increasing prevalence of managed care necessitates financial assessment tools for healthcare practices.
• Traditional cost studies of physician activity can be resource-intensive and complex.
• Accurate financial evaluation is crucial for determining the adequacy of negotiated rates and fee schedules.

Purpose of the Study:

• To present a method for approximating the cost of physician activities.
• To offer a practical alternative to comprehensive cost studies.
• To support financial decision-making in managed care settings.

Main Methods:

• Utilizing the Resource-Based Relative Value Scale (RBRVS) to identify the cost of relative values.
• Developing an approximation method based on RBRVS data.
• Applying the method for comparative analysis and financial planning.

Main Results:

• Demonstration of a feasible method to approximate physician activity costs.
• Identification of RBRVS as a viable tool for cost approximation.
• Potential for simplified financial analysis in healthcare practices.

Conclusions:

• The proposed method offers a more accessible approach to understanding physician activity costs.
• RBRVS-based cost approximation can aid in evaluating managed care contracts.
• This methodology supports fee schedule development and capitation payment allocation.