How Activity-Based Costing Can Boost Hospital Finances (Becker’s Hospital Review)

In collaboration with Health Catalyst | January 21st, 2021

The COVID-19 pandemic has strained hospital revenue because of reduced patient volumes and expenses related to the virus. To improve their financial picture, organizations must make cost-reduction decisions based on credible patient-level cost and quality data using the most accurate cost management method.

Some cost management methods are obsolete, but activity-based costing can accurately measure and assess clinical costs by providing insights into how resources are used, and by whom, Rob DeMichiei, retired executive vice president and CFO of Pittsburgh-based UPMC, said during a Jan. 20 session at the Becker’s Healthcare CEO + CFO virtual forum, sponsored by Health Catalyst.

Five takeaways from the session:

1. Various forces are driving unpredictable fragmentation of provider revenues, according to Mr. DeMichiei. One of those is COVID-19, which has led to reduced revenue-generating elective procedures and reduced use of the emergency department. The pandemic has also increased telehealth use and is another consideration when assessing future…