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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.”

In today’s healthcare landscape, providers face mounting pressure from both government and commercial health entities to deliver high-value care. While it’s important to remember that healthcare is still a business with a revenue focus, the aim now is to transition to a “fee-for-value” model. For patients, this shift means that they can expect to receive the quality care they paid for when visiting a doctor or urgent care in Coney Island, for example. By creating incentives that reward healthcare providers for delivering excellent care at an affordable cost, the healthcare industry hopes to improve overall health outcomes while also containing costs. This transformation is not without its challenges, but it presents an opportunity to create a healthcare system that truly prioritizes patients’ needs and delivers high-value care to all.

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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