Chapter 23. Includes Supplements 12 through 13 Accounting Emphasis. Supplement Twelve. The Use of Case-Mix in Assessing Efficiency. Comparing Hospital Charges. Hospital charges are often used as a surrogate for efficiency in comparing hospitals
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Includes Supplements 12 through 13
The Use of Case-Mix in Assessing Efficiency
The Controller of Morgan Community Hospital has provided you with the following information on all of the cases seen at the hospital last year. Case-mix indexes were taken from Medicare.
Multiply the individual case-mix indexes by the number of cases seen.
Now divide Column D by Column C (9,165.11/7,650) = 1.20 (the hospital’s case-mix index).
This data can then be used to calculate the average case-mix adjusted charge as shown below:
$22,030,250/7,650 = $2,879 average charge
$2,879/1.20 = $2,399.16 case mix adjusted charge
Shown below is data on two competing community hospitals. Which hospital is the most cost effective?
The average case-mix adjusted charge for Bellevue Hospital is $4,590/.8788 = $5,223.03.
The average case-mix adjusted charge for Renton Hospital is $5,780/1.235 = $4,608.16.
Renton is more cost effective!
Rolling up Standard Procedure Costs to Determine Product Costs
Wes Douglas’ Approach to Saving Peter Brannan Community Hospital
Both are calculated by creating resource consumption profiles, then rolling up the costs of component primary and intermediate products.