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Activity-Based Costing for Value-Focused Healthcare

“Activity-based costing is an imperative for health systems seeking to ensure the profitability of their enterprises under value-focused hearth care.”

Today’s healthcare providers are under pressure from the government and commercial health to deliver value. It’s easy to forget that the healthcare industry is still a business that is revenue focused, but the goal now is to transform healthcare into a “fee-for-value” world. As a consumer, wouldn’t it be great to go to the doctor and feel that you are getting what you paid for? The purpose of this transformation is to create incentives for healthcare providers to deliver high-quality services at the lowest possible cost. Essentially, healthcare providers should be viewing their patients as customers who deserve excellent customer service. Healthcare CFOs should become strategic advisers for their organization and encourage senior finance leaders to provide decision support information using management accounting practices like activity-based costing. Balance between managing patient care to earn loyalty and controlling the costs of that care to ensure the long-term sustainability will ultimately lead to higher patient profitability.

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