Healthcare

Think you can’t afford to invest in a cost-accounting system? The truth is, you can’t afford not to. As Medicare and other payers increasingly tie payments to value, understanding and reducing your cost structure will become an even more urgent priority.

As I help healthcare organizations create effective cost accounting systems, the number one complaint I hear is: “I don’t think this report is accurate” or its second cousin “This just doesn’t look right.” My own father gives me grief because he doesn’t trust accounting systems.

The 1989 movie Field of Dreams is one of my favorite baseball movies. In it, an Iowa farmer hears a mysterious voice tell him, “If you build it, he will come.” The voice is talking about building a baseball field in the middle of an Iowa cornfield to attract the ghosts of the Chicago White Sox players banned from baseball for throwing the 1919 World Series. The ghosts appear, including the farmer’s father, and so do thousands of spectators.

I was talking to a CEO of a healthcare organization recently, and I asked him what plans he had made for incorporating cost accounting into his financial processes. He admitted, a little reluctantly, that he wasn’t making plans at all. “How can I afford to go into that kind of detail?” he asked.

A major change to pension plan reporting takes place in fiscal year 2015 that could become a significant headache for governmental hospitals if they don’t get started now preparing for it. The ramifications of GASB 68 are substantial enough without the stress of waiting too long to prepare. Here’s why: