Attention Hospital CEOs and CFOs
If your hospital is part of the 70% of hospitals in America that use RCC to cost your services, you’re going to want to know about this. ELY Analytics has developed a decision support companion that allows it to accurately calculate costs (using Activity-Based Cost Accounting (ABC)) and create a flex budget report, all with a 9-minute turn-around-time!
Ratio of Cost-to-Charges (RCC) “guestimates” what an individual encounter (or even a service line) costs. In these days of super thin (if not negative) margins, don’t continue winging it. When you sit down at the negotiating table with the insurance company, you know that they have a team of professionals, including PhDs, whose sole job is to calculate their costs. You can’t afford to be ill-prepared by not knowing your true costs.
Activity-based costing uses labor and supply RVUs (not to be confused with CPT wRVUs) to calculate the actual unit costs (direct and indirect), enabling you to calculate your contribution margin and bottom line. Flex budget reporting allows an accurate assessment of the financial performance of a direct department, taking into consideration volume and mix.
Although the software is amazing and fast, it still requires frontline managers to work with financial analysts to set up the RVUs and the indirect cost allocation structure. This close working relationship benefits your institution by involving the managers more closely with the financial side of their operations.
With the help of this software, I can provide you with a flex budget report and a charge code table (complete with costs allocated) within 24 hours of receiving your complete data.
Here’s how everything works: After the initial set up, two extracts are provided monthly, one from the general ledger, and one from the billing system. The two are imported into the software and the calculations are made.
When it’s time to analyze the costs of a patient population, you qualify on that population in your DSS and export the net revenue and all the charge codes and volumes associated with those encounters. Then you simply “bump” the DSS output against the charge code table output from the software to sum up the costs of that patient population.
Please reach out to me if you are interested in switching to ABC. Don’t continue guessing what your costs are.
Sahel (Sal) Shwayhat, Principal / Owner.
ELYanalytics@Outlook.com, 860-580-5177