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Software to Manage Costs and Performance

Healthcare

US Regional Hospitals

Management of a rural hospital was approached by an HMO asking the hospital for a negotiated, lower cost per patient for maternity patients in return for being the hospital of choice for all of its maternity cases. After considering the offer the management of the hospital found itself in a predicament. They could not determine if it would benefit or if would lose money on every such patient at the negotiated rate.

Data, but no information

The hospital had a large amount of data, but not the right information to guide its strategic direction and operational issues. It had records of budget and actual expenditures by department and the gross revenue for every procedure for every patient. Management could not, however, determine the profitability of any department or of its six clinics located in communities in the area.

Aquired insight

The CostPerform model cuts through the myriad of financial and patient data to provide Hospital Management with timely information to determine:

  • That all but one of its remote clinics cost more to operate than it generated in revenue;
  • Certain specialties previously believed to be significant profit centers were only marginally profitable;
  • Profitability was significantly impacted by a few payers - reimbursement rates were not adequate to cover costs;
  • That its operating room and related services capacity was substantially in excess of usage.

Profitability

The findings of the CostPerform model led to changes in accounting methods to book discounts to specific patients and procedures to sharpen the profitability information available to better assess HMO requests for special pricing. The information is being used to evaluate whether to focus on specific service lines for growth or to refer some DRGs to other medical facilities. The hospital will continue the use of CostPerform in evaluating the next year’s performance to understand relative service line profitability trends over time and to evaluate the effects of changes in incoming patient problems and changes in staffing.

Dutch hospitals

Most Dutch hospitals use CostPerform to calculate the unit and total costs of their procedures and Diagnosis Related Groups (DRGs). The models used by the hospitals are large, containing 20-80.000 activities, resources, and DRG’s, and 100-400.000 allocations. Hospitals use information from CostPerform to negotiate rates with insurance companies (simulation function) and to feed detailed results into hospital benchmark databases.

Clients

  • Hospital St Rafael, Colombia
  • University Medical center Amsterdam, The Netherlands
  • Academic Hospital Leiden, The Netherlands
  • Academic Hospital Groningen, The Netherlands
  • Academic Hospital Utrecht, The Netherlands
  • Espria care group, The Netherlands
  • Dutch Salvation Army
  • >100 other Health care organizations