Cost-accounting has been considered as critical segment in the hospitals & in the management of health care. The benefit and cost of cost-accounting is challenged, because of operation of hospital’s uniqueness and perceived manager’s inability for demonstrating, how cost of maintaining and implementing systems of cost-accounting are replaced by modern cost-reduction or revenues.

Hospital and health care cost accounting has become more valued because the costs are very much scrutinized today. In Hospital and health care cost accounting, it is very important to know actual costs because of following reasons:

In order to provide bill to the patients having correct figure or amount.
In order to make the management understand the costs & with the help of that it can easily make efficient decision.

An arrangement for capitation payment proves to be efficient means for controlling costs for healthcare as it permits both employer and insurer in predicting healthcare-service costs, more correctly or accurately. When the method of capitation payment is taken into use, the risk of finance of taking care of the patients is shifted to the deliverysystem of medical. If the delivery-system of healthcare is not having system of cost accounting or an ability for developing information relating to cost on every service and payer line, then, in such a case, it is mandatory to search a way for developing those info before taking entry into contract of capitation. A method having 6 steps has been recommended to develop capitation-payment price (rate). Hospital and health care cost accounting is taken into use along with data collected from study of market. The 6 steps which are recommended are as follows:

Determine or find out the base of cost of delivery-system.
Develop the use prices.
Calculate the rates of capitation.
Adjust prices for effect of the incremental-volume.
Negotiating contract.
Monitor the performance of the contract.

By taking in use the method of capitation-payment, the provider of health care makes an assumption that for any given population which is insured, the provider covers all services associated with healthcare up to fixed or decided payment PMPM, i.e. per-member-per-month. That capitation-payment can also cover whole services continuum, including non-acute as well as acute stays at hospital, visits of outpatients, home-health-visits, visits of the primary-care doctors, visits of specialty doctors, and visit of tertiary doctor.

The payment which is acceptable by both the parties should be fair, i.e. from insurer’s view point & from provider’s view point. An insurer is limited to the point at which a consumer affords to make payment for the health-insurance.

US spend maximum part of the country’s income on the healthcare in comparison to other well developed-countries & that ratio is rising day by day. US, today spend a lot of fund on the healthcare instead of food.

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