The case study addresses the issue of overhead costs in US hospitals. It involves research to determine the relationship between the overhead costs in hospitals and their level of activities (Kalman et al., 2015) . In the study, the data used about nonfederal acute care hospitals were generated from Medicare. After analyzing the data between 1996 and 2010, it found out that the baseline overhead costs have increased exponentially over this period. However, the study did not find any significant changes concerning overhead costs as a share of total costs. As a result, the results indicate the need for hospitals to address direct patient and overhead expenses.
Reducing overhead costs might have adverse impacts on healthcare. Often, these costs represent indirect care to patient services, such as the average length of stay for patients. Consequently, the quality of care will reduce as well because of minimal resources. One of the steps I will take in the annual budgeting process is to suggest a proper review of the overhead costs in healthcare. My main concern will be about the negative impact of the reductions. I think it is also essential to include overhead growth developing new strategies. From the study, it is evident that these costs play a crucial part in inpatient care. If they are not seriously considered, there would be limited resources that would have helped in the treatment of patients. For instance, reducing the number of days for inpatients may worsen their health conditions when taken out earlier than recommended.
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As a student, this knowledge helps me understand the value of Finance and Accounting in Healthcare. One of the reasons is through an understanding of the various healthcare costs. Often, we are interested in direct costs since their impacts are evident without more in-depth analysis. However, the study has helped me look deeper into some of the accounting issues that must be considered before making a decision. Generally, the study case is an indication of how Finance and Accounting in Healthcare can affect most of the activities in healthcare. A clear understanding of these accounting issues is key to developing quality healthcare in our hospitals.
References
Kalman, N. S., Hammill, B. G., Schulman, K. A., & Shah, B. R. (2015). Hospital Overhead Costs: The Neglected Driver of Health Care Spending? Journal of Healthcare Finance , 2-9.
