Activity-Based Costing Software for Enhanced Accounting Processes in Healthcare

Activity-based costing (ABC) is said to be a working model for managing any business’s resources. In a nutshell, the strategy analyzes the resources that are necessary for each process, product, or customer. The analysis includes the parameters of the demanded costs of required procedures and the time that is spent to perform the procedure. In healthcare, the ABC analytics allows for efficient cost management and improved performance in such areas as patient satisfaction, hospital readmissions, dealing with complications, etc. The model leads to achieving sustainable results.

One of the directions that healthcare organizations strive to improve is the general ledger (GL) accounting closing. It is an important procedure preceding the cost accounting closing. The GL accounting closing process is a regular task where accounts are organized to create financial statements. It summarizes the money earned and spent by a health system into an income statement, showing whether there was a profit or loss during that time. The cost accounting uses the information from the GL and other data to assign revenues and expenses to specific patients and their activities.

The lack of relevant analytics tools leads to much time and manual effort spent on data gathering and analysis, which hampers the efficiency of accounting closing processes. Accounting specialists have to ensure that GL revenues and costs are accurately linked with the clinical data from the electronic medical record (EMR). To perform that, experts need databases in combination with adequate software to perform complex assignment rules and handle the data.

Here is where healthtech companies like the Belitsoft healthcare software development company step up. They empower medical enterprises with data management and analytics tools such as activity-based costing software for healthtech providers. 

Navigating Financial Challenges in Healthcare Organizations 

Large healthcare delivery systems usually include tens of hospitals, deal with thousands of inpatient admissions and millions of outpatient visits, and provide employment to thousands of physicians. Such huge organizations handle big volumes of data, which is why accounting closing procedures might take a lot of time and require a lot of staff resources. Providers are interested in improved financial performance without worsening patient care and experience. Therefore, financial, clinical, and operational executives need prompt delivery of cost metrics related to patient activities. Here is a list of challenges that they have to tackle:

• Low adoption and insufficient success of current legacy solutions due to their complexity and burdensome maintenance.
• Lack of fast routine intelligence to comply with changing reimbursement models.
• Inadequate technical infrastructure and databases that are used to support the cost management system.
• Absence of advanced checks of data integrity and validation to make sure that all GL revenues and costs are correctly linked to clinical data from the EMR and other supplementary sources.
• Complexity of assignment and allocation rules in combination with huge volumes of data and limited timeframes to attribute costs at a meaningful level. 
• Spending too much time processing the data instead of verification and analysis.
• Delays in providing reliable business information necessary for making day-to-day operational choices and long-term strategic plans.

Features of the ABC Analytics Software that Deal with the Challenges

Activity-based costing analytics enhances the accounting closing processes and leads to saved resources within the organization. The software performs the following tasks:

• Cooperating with a database to deal with complex assignment rules and handle large volumes of data.
• Daily updating the database instead of once a month.
• Daily tracking of each source system and contributions to the costing process to enhance data integrity.
• Addressing the data integrity issues any time during the month rather than only at the end of the month.
• Structuring the data into data source marts instead of many databases and spreadsheets to simplify data management and reduce the necessity of manual intervention.
• Shortening data processing times and accelerating the summarization of reports about the cost indicators of the patient-activity level.
• Simultaneous data handling about multiple periods, possible due to flexible application architecture.

Benefits of the ABC Analytics Software for Healthcare Systems

Healthcare organizations that have already tried implementing the ABC analytics software into their workflows report significant improvements in the accounting closing processes. Analytics-driven cost management fine-tunes the procedures due to fast access to actionable information and enhanced possibilities for problem-solving. Organizations report improvements as follows:

• Healthcare accounting staff halve the time necessary to perform month-end close.
• Experts review the monthly preliminary results in one business day, which allows for additional time for analysis and confirmation.
• Healthcare executives can start examining the financial data a few days sooner.
• Less personnel is required to fulfill the monthly close due to improved efficiency and automation.
• Decreased number of manual interactions results in fewer chances of mistakes occurring.
• Accounting experts process two years of data in the same timeframe that the legacy system required to process a single month.
• Healthcare providers can develop a new and effective governance structure based on data.
• Deploying the app’s analytics logic in automated data validation processes leads to simplified maintenance.
• Based on regular feedback from financial and operational stakeholders, the system fixes data quality issues faster each month.

Organizations cut the period of complex cost processing to just a few days, which improves the level of routine activities and makes it an updated benchmark to remain competitive and viable.

How Else Can Healthcare Organizations Apply ABC Analytics to Improve Performance?

Implementing ABC analytics in surgical services demonstrates improvements in both clinical and financial performance. Current tendencies show a decline in surgical volume and an increase in costs. Medical providers need data regarding the efficiency of utilizing their operating room resources and the correlation between the costs and the time spent on each surgery. Analytics help calculate labor costs per hour in the operating room. It allows for understanding the dependency between the expenses and surgical time or the costs and the number of operations. Medical executives use these insights to deliver high-quality patient care with fewer resources.

Data analytics can also improve practices for high-risk pregnancies. For example, women experiencing such conditions as high blood sugar pose risks not only for themselves but also for the future babies. It doubles the health hazards and increases the costs for the organizations. The ABC analytics allows for implementing specialized care plans for populations at risk. It allows for timely identification of the hazardous conditions and taking measures to improve maternal and neonatal outcomes. Such measures lead to cutting costs and improving clinical processes.

To sum-up, activity-based analytics assist medical institutions in their efforts to guarantee excellent patient care at lower costs. They help medical organizations to generate insights on possible financial and operational improvements. Healthtech experts are able to examine the systems, come up with modernization ideas, and perform digital transformations that will bring healthcare systems better performance results.

Engaging with a Healthcare Software Development Company

Healthtech firms like the Belitsoft software development company assist healthcare organizations and data analytics companies in creating and customizing data analytics applications and platforms. Data operating systems and integrated analytics platforms allow healthcare organizations to analyze their current performance results, identify gaps, and bridge those gaps to gain improved performance results.

Integrated data platforms gather, store, handle, and analyze large data volumes from such sources as electronic medical records (EMRs), clinic management systems, laboratory systems, billing systems, etc. Those platforms provide the following functionality:

• Workflow automation (cleansing, standardization, and normalization).
• Setting up scalable data warehouses.
• Implementing analytical tools for designing dashboards, reports, and data visualizations.
• High level of data security and compliance with healthcare regulations such as HIPAA.
• Integration of machine learning and AI into analytics.

Healthcare software development companies can also develop specialized analytical applications like Activity-Based Costing Software for: 

• Estimating actual labor and supply expenses.
• Distributing costs to various medical procedures and practices. 
• Implementing a flexible cost assessment system. 
• Integrating data from multiple sources (EHRs, staff information, payroll data, general ledger, patient billing systems, supply chain, pharmacy, etc.). 
• Allocating direct expenses for drugs, supplies, and labor to patients according to their factual usage. 
• Calculating and assigning residual costs, including minutes spent in the operating room, time scheduled for a specific procedure, or duration on the MRI machine.

For those searching for competent advice in data analytics, data infrastructure, data platforms, HL7 interfaces, workflow engineering, and development within the cloud (AWS, Azure, Google Cloud), hybrid, or on-premises environments, a healthcare software development company like Belitsoft can become useful.