Hospital Costs

Hospital Costs

Responding to Classmate #1

Hello,

Thank you for sharing your post. The U.S. Government Accountability Office (GAO) (n.d) defines cost estimation as “the summation of individual cost elements, using established methods and valid data, to estimate the future costs of a program based on what is known today.” GAO further defines the characteristics of cost estimation as including the availability of valid data, broad participation in preparing estimates, clear identification of tasks, excluded costs, estimates independent reviews, program uncertainties provisions, recognition of inflation, significant program changes revision of estimates, and estimates standardized structures.

As the manager budgets, they need to be aware that many costs can appear during the financial period, and an accurate estimation method can be the deal-breaker. Estimation, however, is not as easy as it sounds. Risks appear, and with that, unexpected costs appear as well. Hence, making cost estimations will take into account the unforeseen risks and calculate a budget that will meet the necessary financial commitment for a successful fiscal period.

References

Government Accountability Office. (n.d.). Cost assessment guide: Best Practices for Estimating and Managing Program Costs–Exposure Draft (Superseded by GAO-09-3SP). https://www.gao.gov/assets/80/76981.pdf

Responding to Classmate #2

Hello,

Thank you for sharing your post. Hospitals, indeed, are an essential part of the healthcare system as they offer service delivery as well as professional training. Hospitals are also the largest source of financing as they utilize large amounts of money for medical equipment and human resources. Further, hospitals provide medical care and receive referral cases for advanced cases. Studies on cost analysis have been on the increase as understanding the cost structure is necessary for improving the quality and efficiency of healthcare services (Callahan 2018).

Cost information is needed for efficiency to be evaluated and from different cost and financial aspects, including accounting and budgeting. The individual departmental costs all add up to the entire organizational costs. It is, therefore, important that a departmental manager be aware of the bigger picture when budgeting for the department and know that the costs of the department impact the overall organizational costs.

References

Callahan, D. (2018). Taming the beloved beast: How medical technology costs are destroying our health care system. Princeton University Press.

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Hospital Costs

Please respond to both classmates’ posts.

Classmate #1 Post

Why is project estimation important? Every business has a budget and wants to know the costs before they are ready to begin a project. A project estimate is your prediction of how much time and money is needed to complete a project. They are several processes to make a cost prediction. The most common way to estimate costs is to make a list of items you need and add up their costs. such as equipment, and labor. Also, an important factor to be considered is Know your team’s expertise Sometimes project managers are too focused on the numbers, and not the people. Good project management process estimation techniques are built on solid relationships. Solid working relationships tend to make the project estimation process easier because the more you know about someone's work and process, the easier it is to create estimates for their work.

Hospital Costs

2- One of the main purposes for allocating costs is to provide information for decision-making. Cost allocation is an important planning tool for reducing costs and increasing profits. It can also help managers for making sure that costs are not accumulated carelessly. Most businesses incur a variety of costs while doing business A direct cost is anything that your business can directly connect to a cost object. Indirect costs are costs incurred in the day-to-day operations of your business. Indirect costs cannot be tied back to one product but are still considered necessary for production to occur or services to be delivered. Overhead costs also known as operating costs are the everyday cost of doing business. Overhead costs are never tied to production, either directly or indirectly, but instead are the costs that your business incurs whether they are producing goods or providing services.

Classmate #2 Post

It is essential that health services manager estimate their costs for the fiscal year because it focuses any shortages that the company may have. It is the manager's responsibility to make sure that the establishment has enough staff and supplies necessary to run a smooth company. An estimate will help to diet accordingly; spending allotted money in the areas as should. In order to make a proper estimation, the manager would need to know how many people are on staff, the materials needed for them to do their jobs on a daily basis. for example, if responsible for the dietary department in a nursing home, the manager would need to know how many residents are in the facility, the different dietics needs. He would also need to have good communication with the staffs in the kitchen. This would help him to better plan on the amount of food and equipment needed  for the year.

2. The purpose of cost allocation is to help with decision making. When managers are aware of the different needs of different department it gives the incentives for managers to allocate the funds appropriately. Cost and utilization are important asset that managers need to accurately allocate costs. Some departments have more needs which means that different amounts will be allocated according to the needs of each departments.