Contrasting RCC, RVU, and ABC for managed care decisions. A case study compares three widely used costing methods and finds one superior.
To obtain cost data needed to improve managed care decisions and negotiate profitable capitation contracts, most healthcare provider organizations use one of three costing methods: the ratio-of-costs-to-charges method, the relative value unit method, or the activity-based costing method. Although the ratio-of-costs to charges is used by a majority of provider organizations, a case study that applied these three methods in a renal dialysis clinic found that the activity-based costing method provided the most accurate cost data. By using this costing method, healthcare financial managers can obtain the data needed to make optimal decisions regarding resource allocation and cost containment, thus assuring the longterm financial viability of their organizations.
West
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College of Business, Iowa State University, Ames, USA.
Balas
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EA
West
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D002204:Capitation Fee; D003361:Cost Allocation / Q000379:methods*; D003625:Data Collection; D003659:Decision Making, Organizational; D005375:Financial Audit / Q000379:methods; D005377:Financial Management, Hospital / Q000379:methods*; D006436:Hemodialysis Units, Hospital / Q000191:economics; D017722:Hospital Charges; D017721:Hospital Costs; D008329:Managed Care Programs / Q000191:economics*; D018803:Models, Economic; D015895:Relative Value Scales; D014481:United States