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After completing this week's readings, including The Growing Importance of Cost Accounting for
Hospitals, describe the ways in which healthcare financial managers use financial resources and cost
classifications to allocate indirect costs to direct costs when determining patient charges. Also, explain
how utilization rates are related to volumes and revenue generation. Support your answer with scholarly
resources.
Healthcare financial managers use financial resources and cost classifications to allocate indirect costs to
direct costs when determining patient charges. By being able to categorize the costs as either direct
which is directly related to patient care or indirect which is not directly tied to patient care, managers
can accurately assign costs to specific services and procedures. This helps with determining the
appropriate charges for patients. Cost allocation in healthcare is all about assigning indirect costs and
some direct costs to the departments that generate charges (Nowicki, 2021). The goal is to make sure
that patients are only paying for the services and products they actually receive. Before choosing the
best method of cost allocation, healthcare organizations need to complete five prerequisite steps
(Nowicki, 2021). One of the methods used is direct apportionment, which moves costs from non-
revenue-generating departments to revenue-generating ones (Nowicki, 2021). Another method is step-
down apportionment, which allocates costs from non-revenue-generating cost centers to other cost
centers, and then to revenue-generating ones (Nowicki, 2021). It is important to consider these methods
to ensure accurate cost allocation.
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Related Questions
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2. How can social media help a hospital manage the patient experience?
3. Briefly explain the difference between short-term and long-term assets.
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5. Explain the two types of disbursements for services.
6. What is the difference between direct and indirect costs? Explain.
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Overview
For this assignment, pick a health care organization of your choice. It could be a hospital, large clinic, or care facility.
Read these articles before you begin the assignment:
The COSO Framework in Emerging Technology Environments: An Effective In-Class Exercise on Internal Control. Journal of Emerging Technologies in Accounting.
COSO Internal Control - Integrated Framework: An Implementation Guide for the Healthcare Provider IndustryLinks to an external site..
Instructions
In which you:
Identify at least three of the five different 2013 framework elements that focus on internal control. Make sure that elements connected are related to financial reporting of the organization. Provide your rationale on the reasoning that the selected elements are tied to the financial reporting process in the organization. These are located in Chapter 3 in your textbook.
Design a method in AIS where it can be integrated in the health care industry that will improve the efficiency of its…
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Which of the following will give you the most accurate allocation between a cost's fixed component and variable component?
a. Examination of a students’ registration forms for miscellaneous fees and tuition fees
b. Use of the least squares method to allocate the cost of electricity
c. Dividing the total cost on the water bill among the different departments based on direct labor hours
d. Dividing the total cost of the postpaid plan using the high-low method
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East Alabama Medical Center uses nonfinancial performance measures to track the following objectives:
•
Maintain and improve the quality of clinical services.
•
Improve patient service.
•
Enhance employee recruitment and retention.
(a) Link each of these objectives to one of the four balanced scorecard perspectives.
Objective
Perspective
Maintain and improve the quality of clinical services
FinancialLearning & growthInternal business processesCustomer
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Learning & growthInternal business processesFinancialCustomer
Enhance employee recruitment and retention
Learning & growthCustomerInternal business processesFinancial
(b) Identify where on a balanced scorecard you would most likely find the following metrics:
Metric
Perspective
• Patient satisfaction score
Internal business processesFinancialCustomerLearning & growth
• Number of medication errors
Internal business processesLearning…
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Download the Critical Thinking Portfolio Assignment Part I TemplateDownload Critical Thinking Portfolio Assignment Part I Template
Data Acquisition Instructions:
In Nevada, clark County Health Rankings:
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At the top of the page, click show more for county demographics. Please produce a table for your paper using this information.
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Insurance expenses of all departments.
Personnel department expenses of all departments.
Purchasing department expenses for the operating departments.
Maintenance department expenses of the operating departments.
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For each of the following expenses, select the best allocation basis.
A. Value of insured assets.
B. Square feet of space occupied.
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D. Number of employees in department.
Maintenance department expenses of the operating departments.
Payroll department expenses of all departments.
Purchasing department expenses for the operating departments.
Insurance expenses of all departments.
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Managerial Accounting
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ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
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