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Cost determination: the essential element in medical practice budget development and cost containment programs
The Journal of Medical Practice Management : MPM
|March 5, 1990
Summary
This study outlines a healthcare cost-containment system starting at service delivery. It details a budget framework with cost centers for managing direct and indirect expenses in medical practices.
Area of Science:
- Health Services Research
- Healthcare Management
- Medical Economics
Background:
- Healthcare cost containment is crucial and begins at the point of service delivery.
- Effective cost determination is essential for managing financial resources in healthcare settings.
Purpose of the Study:
- To describe an implementation and delivery system for healthcare cost determination.
- To provide a framework for a cost-containment program within a medical practice.
Main Methods:
- Development of an operating budget.
- Establishment of cost centers for allocating direct and indirect costs.
- Implementation of a systematic approach to cost determination at the service delivery level.
Main Results:
- A structured system for cost determination has been described.
- An operating budget framework with defined cost centers facilitates cost allocation.
- The proposed system provides a foundation for a medical practice's cost-containment program.
Conclusions:
- Implementing a defined cost determination process is key to healthcare cost containment.
- The described system offers a practical approach for medical practices to manage costs.
- Effective allocation of direct and indirect costs through cost centers supports financial sustainability.