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Need discussion response to this post by Henry Ind

Need discussion response to this post by Henry Indirect costs are costs that cannot be trace directly to a department, product or service (such as heating and cooling) as oppose to direct costs which is traceable directly to a department, product or service (such as labor and supplies). A full costs include both direct and indirect costs. Financial managers of healthcare organization do not charge patient for heating and cooling of the patient’s room alternatively the cost of heating or cooling are allocated to a department that generates the patient bills such as radiology or lab. This process of allocating indirect and direct costs to a department that produce charges is called cost allocation, according to Nowicki (2015). Cost allocation is part of Cost Accounting ( analysis of costs), which is one method of categorizing or grouping costs, this guarantees that the patients are reimbursing the healthcare organization the costs of service and supplies they received. The other methods are Classifying costs and Assembling costs, all are different ways of collecting payments from service rendered. Utilization review in healthcare is a program to decrease unnecessary hospital admissions, most healthcare organization are minimizing utilization so they can reduce cost and improve healthcare management. U.S. health care over the next 10 years are converting to value-based care instead of the old model of “fee-for care”, meaning that healthcare organization will be paid based on results rather than volume, improves patient outcomes by follow-up care after discharge and reducing needless readmission are samples of lowering utilization. Also according to Samaris (2013), hospitals and health system are expecting changes in their payers that are likely to decrease revenues. Baby boomers are switching from private insurances to Medicare and Medicaid, which reimburses at lower rates than private or commercial insurances. Providers will be motivated to decrease utilization by increasing care efficiency as they assume more risk and face new quality incentives from both government and commercial payers. According to Brown (2019), BlueCross BlueShield estimated about 20 percent of all claims are based on value-based care. The results document $500 million in savings in 2012 by reducing admissions, reducing readmissions, reducing emergency room visits, reducing high-cost interventions, proactively enabling access to preventive care, and controlling of chronic conditions. Physicians and hospitals are reimbursed on what they call “pre-set, non-fee-for-service” contracts to manage patient care rather than use “medically-unnecessary, costly hospital care. References Brown, B. (2019) Why You Need to Understand Value-Based Reimbursement and How to Survive It. MACRA/Regulatory Measures. Retrieved from:www.healthcatalyst.com/ understanding-value-based-reimbursement Nowicki, M. (2015) Introduction to the financial management of the healthcare organizations (6th ed.). Chicago, IL: Health Administration Press. Samaris, D. (2013) Anticipating utilization trends key to adapting an evolving market. Retrieved from: web.archive.org/web/20131022034521 Reply to Thread

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