Health Care Organizations: How They Work and What They Do

Cost analysis in healthcare organizations forms a critical part of the provision of healthcare. Profits analysis and cost containment involve designing a costing method. While developing the method, the desired needs and outcomes need to be assessed. Besides, there exist challenges and opportunities experienced with a departmental costing and service line cost methods

While intending to assess the needs and outcomes, it would be necessary to do a quick assessment of the effectiveness of the current costing system. It would facilitate the evaluation of the adequacy of the costing system and if there is a need for further development ( Raef, Gary, Doug, Kip, Monte, & Larry, 2019). It is also necessary to analyze the strategy of the healthcare organization since the goal of managerial costing is to facilitate the achievement of the strategic objectives of the organization. The environmental scan helps with looking into the context within which the organization operates and provides a piece of background information to see the needs and possible outcomes (Gurowka, Lawson, 2007). Additionally, it check whether the change is necessary and feasible before its implementation.

Challenges and opportunities exist concerning a departmental costing method. A broad policy environment may either be supportive or not. A supportive one presents a chance as it facilitates the implementation of cost accounting into the healthcare sector of the organization (Kihuba, Gheorghe, Bozzani, English, & Griffiths, 2016). On the other hand, a non-supportive policy environment poses a challenge. Additionally, there may be a lack of support from top management, while the healthcare organization's staff may also not be cooperative. Lack of cooperation by the team may be due to resistance in cases in which a new costing method needs to be introduced or the current one updated.

References

Gurowka, J., Lawson, R., (2007). Selecting the right costing tool for your business needs. 18 – 10.1002/jcaf.20288. Journal of Corporate Accounting & Finance

Kihuba, E., Gheorghe, A., Bozzani, F., English, M., & Griffiths, U. K. (2016). Opportunities and challenges for implementing cost accounting systems in the Kenyan health system. Global health action, 9(1), 30621.

Pravan, K. Difficulties Faced in Installing a Costing System. Retrieved from: http://www.yourarticlelibrary.com/cost-accounting/costing-cost-accounting/difficulties-faced-in-installing-a-costing-system/62132 

Raef L., Gary C., Doug H., Kip K., Monte S., & Larry W. (2019). Institute of Management Accountants. Developing an Effective Managerial Costing Model. Retrieved from: https://www.imanet.org/-/media/cc56aede8a94455999f90d5c0411cd5d.ashx