Beneficiaries cost accounting techniques will be

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Beneficiaries Cost-accounting techniques will be useful to institutional providers, the third party payers and the consumers. The physicians however, will hardly embrace the standardization due to various factors such as ethical dilemmas. Therefore, for the method to be effective, the accountants must get fully acquainted with the ethical concerns that physicians have to face during treatment of patients. Without this, the systems will affect the relationship between doctors and hospitals. The Rationale involved in Standardization First step in standardization is cost determination (cost of product or service). Second, definition of resources/input needed to produce the stated product or services. Third, determine the acceptable standard cost and quantity for the resources required. Determine the products/Cost objects in Health Care
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ACCOUNTING & MEDICINE 3 What are the products in a health care setting? What or who fits in this category, is it the disease, the patient, the inputs e.g. Drugs, X-rays, among others or is it the effect on patient’s health condition? This information had less concern in the 20 th century because cost information was used for documenting expenses for the purpose of taxation and financial reports required mainly during decision making and planning. Products included services and procedures that were payed under an insurance code that was standard. Traditionally, product for physicians included inputs used for treatment such as drugs while for hospitals, the product included number of days patient spends in the hospital. To increase on revenue, the hospital tend to over-utilize resources by increasing cost of procures and tests. This resulted into increased cost of medication. Prospective Payment System (PPS) launched by Medicare countered this problem. Hospital costs were now being paid on a prospective basis, that is, payment using a fixed priced that was previously determined. The amount to be paid was in accordance to Diagnostic Related Group (DRG) patient’s classification.
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