The Profitability of a Birthing Center a Cost Finding Analysis of a Not-for-Profit Hospital.
Abstract
Since the implementation of prospective payment methodologies, hospitals have seen their revenues dwindle. Many are offering significant discounts to attract price-sensitive buyers. Hospitals are realizing the importance of quantifying operations and management decisions. Cost finding, through cost accounting techniques, is a method hospitals employ to evaluate the adequacy of reimbursement, product line performance, organizational performance, management effectiveness, and future viability. This paper reports the process and findings of a cost finding analysis at a not-for-profit (NFP) hospital's Birthing Center. Two research questions were explored: (1) What are the marginal costs of providing care in the Maternity product line (PL)? and, (2) Which third party payers provide the highest contributing margin? The scope of this analysis was a five year time-frame. The different categories of costs were discussed, as well as cost finding approaches. The adequacy of full-cost information for use by PL managers, especially for short-term decision mailing, was also explored. The results of this analysis provided information regarding the categories of patients and the types of third party payers that had the highest contributing margin in fiscal year 1996. Recommendations were provided to the leadership of Newport Hospital regarding enhancing marketing efforts, establishing case-mix management practices, improving management information systems, evaluating the hospital's capacity versus current patient demand, and establishing a Business Plan for the Birthing Center.
Document Details
- Document Type
- Technical Report
- Publication Date
- Mar 01, 1997
- Accession Number
- ADA372222
Entities
People
- Thomas C. Hughes
Organizations
- Academy of Health Sciences