Accounting Systems in Hospital Systems - Term Paper Example

Budget Implementation for Hospital Doctors Contents Contents 0 1.Introduction 1 2.Meaning of Successful Performance for Doctors, Hospital, Government and Patients 1 3.Level of Assumed Collapse of Accounting Systems via Utilization of Conventional Accounting Recital Measurement and Monitoring Systems 4 4.Feasibility of Intangible Multidimensional Performance Evaluation in Hospital Systems 6 5.Conclusion 8 6.Bibliography 9 1. Introduction The realization of fiscal budgets for medical consultants employed in hospital is a subject which has received most of the attention of healthcare researchers in several nations. (HARRISON, Michael I., 2004) The main aim of governments to restructure healthcare systems and hospital budgets is to develop an inexpensive, approachable and reliable system that can provide common people with superior healthcare. (HARRISON, Michael I., 2004) This paper hereby highlights different issues like meaning of successful performance for doctors, hospital, patients & government, level of assumed collapse of accounting systems via utilization of conventional accounting recital measurement and monitoring systems, and lastly, it illustrates feasibility of intangible multidimensional performance evaluation in hospital systems. 2. Meaning of Successful Performance for Doctors, Hospital, Government and Patients Incentives, regardless of their classification as monetary or non-monetary are known to leave a noteworthy impact on performance in accordance with hospital policies and goals. Implementation of a salary reward system, motivate physicians associated with hospital to regularly improvize their performance and recital on job. (PUBLISHING, Oecd, 2009) According to Gino A. Nalli, 2007 a salary reward system is more or less can be described as a physician who exhibits more capability to cure or diagnose patients as compared to another colleague; will receive additional financial or non-financial perks along with their salary. (NALLI, Gino A., 2007) However, this reward system varies on monthly performance basis. Whereas, successful performance for a patient is absolutely associated with non-fiscal benefits which are usually in form of successful and early recovery from ailments and disorders owing to the timely diagnose and accurate medications. (PUBLISHING, Oecd, 2009) Several researches have indicated that successful performance of both, physicians and patients are interrelated. The author Gino A. Nalli, 2007 also highlighted that the successful performance for hospital means increased funding to be received from various health care purchasers. (NALLI, Gino A., 2007) The successful performance of hospitals is evaluated by considering certain analysis like patient satisfaction indicator, patient safety, financial recital, clinical and staff’s level of professionalism. (SHANKS, Nancy H., 2007) A successful performance by a hospital endows with benefits like soaring levels of benefits for the doctors and other staff that are identified as having superior performance scores. Several researches conducted in the related field points towards connection between reduced costs and superior performance levels. It is feasible for hospitals maintaining superior levels of performance as a whole, to significantly reduce their operation costs. (SHANKS, Nancy H., 2007) A hospital with established performance levels are provided with bonus points, which are further redeemed to get refund of guarantee amount or even receive a bonus amount for instance, if a hospital manages to achieve equivalent levels in any three categories then the participating hospital would get to refund 20 % of guarantee amount and is entitled to receive forty percent of bonus amount i.e. if the guarantee and bonus amounts are fifty thousand dollar each then the hospital will get ten thousand dollars. (NALLI, Gino A., 2007) According to Gino A. Nalli, 2007 the main motive of government to exercise PBF (performance based funding) for healthcare providers is to provide an adequate, safe and cost effective health system for citizens. The constitutional act of GPRA emphasizes on implementing a budget based on performance levels to encourage hospitals with inferior equipments and professionals, to take necessary measures for the improvisation of performance. (NALLI, Gino A., 2007) It is evident that, in order to gain fiscal benefits from government, the healthcare providers primarily invest on latest technologies and education which further results in augmented performance levels, patient trust, reduced healthcare costs and patient satisfaction for instance, the inefficiencies of healthcare operations in United States of America had led towards dramatic rise in the costs over past years. (NALLI, Gino A., 2007) 3. Level of Assumed Collapse of Accounting Systems via Utilization of Conventional Accounting Recital Measurement and Monitoring Systems According to the research work by Ayşe Necef Yereli, 2009 the conventional costing approach in hospitals, which emphasizes on delivered services during the estimation of costing process, presumes that these services devour the resources whereas, the performance based accounting system, concentrates on performances and it is assumed that performances devour resources and services devour the performances. (YERELI, Ayşe Necef, 2009) The major disparity amid the duo approaches lies in the allocation of common operating costs. As hospitals offer service, the performance based accounting approach expresses a dual-phase course of action in terms of the allocation of indirect costs. (GREEN, Andrew, 2007) In initial phase, as in the traditional approach of accounting performance measurement, overheads are determined with the cost pool representing the performance in rendering of services relatively than cost departments. (YERELI, Ayşe Necef, 2009) In other terminology, the issue of allocating expenditure into sections i.e., the initial allotment in the conventional approach, is substituted by issue of allocating the costs into cost pools. (YERELI, Ayşe Necef, 2009) Therefore, where the conventional accounting measurement approach assembles all overhead operating expenses of sections in single cost pool, the performance based costing approach utilizes over one cost pool for every aspect affecting the utilization of the resources. (YERELI, Ayşe Necef, 2009) In its secondary phase, costs are disseminated from cost pools to services in the service creation process in turn with the actions performed to provide services. In traditional accounting performance measurement approach, when indirect costs are disseminated amid the cost objects only single cost object for instance, the figure of patients and staff or unswerving labor hours is utilized which further leads to the distribution of common expenses onto supplies, analogous to the amounts, varying in accordance with the yield volume. (GREEN, Andrew, 2007) On the other hand, using the modern performance-based accounting approach aids in assessing the cost of services provided to patients appropriately by utilizing over one sharing key for instance, patient care duration, treatment duration, the quantity of pathological or any other tests for every cost collection, consequently eradicates this negative condition. (CAMERON, Andrew E., 2006) It is evident that exercising a conventional performance measurement and monitoring system can lead to failure of hospitals accounting systems, due to the reasons like patient care and surgery procedures in healthcare services can not be revealed methodically in the traditional performance measurement and monitoring system (YERELI, Ayşe Necef, 2009) , criterions opted to evaluate fiscal performance in hospitals and clinics generally lead towards attainment of false outcomes. For example, revenue center reports have become irrelevant and consequently yearly success in no way can be evaluated properly. Alternatively, due to the estimation of inventory strategies and alleged overhead costs onto the outlay of finished supplies are executed on the base of volume, and therefore no apparent result can be attained on the performance of hospitals, and it is not feasible for various departments to precisely evaluate the expenses of resources they utilize, which further leads to idealistic charge rates. (CAMERON, Andrew E., 2006) In relation with above discussed limitations of traditional performance measurement and monitoring system, it is essential for a hospital keen to attain and maintain certain performance levels to exercise modern P4P (payment for performance) system to precisely recognize the flaws in accounting system. (MAYNARD, Alan, 2008) 4. Feasibility of Intangible Multidimensional Performance Evaluation in Hospital Systems According to WHR “World Health Report”, a healthcare system is developed with an intention to fulfill three objectives that are realizing superior health for inhabitants, guaranteeing that healthcare services are approachable to common citizens, and ensuring reasonable payment structures. (VEILLARD, J., 2005) In accordance with J. Veillard, 2005 due to the core role of hospitals in attaining these above mentioned objectives, the organization, structure and deliverance of healthcare services noticeably impact performances of overall health system. (VEILLARD, J., 2005) The main motive behind restructuring of healthcare industry is to augment accountability, cost efficacy, sustainability, patient contentment, and quality upgrading strategies. The WHR, further states that these reforms exhibit a dedicated pursuit by Australian as well as European nations to achieve efficient and effectual hospital care while maintaining hospital operations at optimum levels for the patients served by them. The multidimensional concept of performance evaluation in hospital systems was launched by world health organization in the year 2003 with an intention to build up and distribute a bendable and all-inclusive framework for assessment of hospitals performance and thus, known as “Performance Evaluation Tool for quality improvement in Hospitals”. (VEILLARD, J., 2005) The principle of the performance evaluation tool for quality improvement in hospitals project is to shore up hospitals in evaluating their recital, questioning their own outcomes, and interpreting them into events for development. (EBRAHIM, Shah, 2005) It is accomplished by providing hospitals with tools for recital evaluation and by facilitating support to and arrangement among partaking hospitals. Performance evaluation is envisaged in this scheme as superiority management tools i.e. a methodical tool to be exercised by hospital administration for the assessment and enhancement of hospital services. (VEILLARD, J., 2005) A perceptual model of recital was complicated to recognize multidimensional and sub-dimensions of recital. Subsequently, WHR for the research purpose acknowledged a list of hundred hospital recital indicators via reviews of various literatures. Indicators were evaluated in opposition to a progression of criterion by a team of expert’s throughout an ostensible group method. (VEILLARD, J., 2005) These ranges of indicators were foundational on evidences congregated throughout the preceding reviews of journals and on surveys executed in over twenty nations. The multi dimensional concept of performance evaluation in hospital systems is developed in accordance with the policies of world health organization relevant to hospital recital and various literatures provided by world health organization related to overall recital of healthcare system. (VEILLARD, J., 2005) According to research findings revealed by WHR, it is learned that the multidimensional concept of hospital performance evaluation emphasizes on internal exercise of indicators and the research also exhibits that the value of this conceptual multidimensional model relies not only on interest of individual hospitals to enhance the methods they utilize for performance assessment but it also trails the objective of structuring dynamics of nationalized as well as worldwide comparison via benchmarking networks in short tenure for nationalized and in medium tenure for worldwide level, respectively. (VEILLARD, J., 2005) 5. Conclusion In accordance with the several researches conducted in the relevant fields, it is revealed that there subsist a number of flaws in traditional performance evaluation systems intended for hospital accounting but implementation of modern performance based evaluation system endows hospitals with enhanced accountability, costing and performance analysis. This paper had highlighted the disparity of meanings for one common term i.e. successful performance, among diversified levels of healthcare system and level of assumed collapse of accounting systems via utilization of conventional accounting recital measurement and monitoring systems. This paper has also highlighted the feasibility of intangible multidimensional performance evaluation in hospital systems. 6. Bibliography CAMERON, Andrew E. 2006. Essentials of health care finance. Jones & Bartlett Publishers. EBRAHIM, Shah. 2005. Handbook of health research methods: investigation, measurement and analysis. McGraw-Hill International. GREEN, Andrew. 2007. An introduction to health planning for developing health systems. Oxford University Press. HARRISON, Michael I. 2004. Implementing change in health systems: market reforms in the United Kingdom, Sweden, and the Netherlands. SAGE. MAYNARD, Alan. 2008. Payment for Performance (P4P):International experience and a cautionary proposal for Estonia. Estonian Health Insurance Fund. NALLI, Gino A. 2007. “Developing A Performance-Based Incentive Program For Hospitals: A Case Study From Maine.” Health Affairs. 26(3), p.817. PUBLISHING, Oecd. 2009. OECD Reviews of Health Systems OECD Reviews of Health Systems: Turkey 2008. OECD Publishing. SHANKS, Nancy H. 2007. Introduction to health care management. Jones & Bartlett Publishers. VEILLARD, J. 2005. “A performance assessment framework for hospitals: the WHO regional office for Europe PATH project.” International Journal for Quality in Health Care 2005. 17(6), pp.487-496. YERELI, Ayşe Necef. 2009. “Activity-based costing and its application in a Turkish university hospital”. AORN journal. 89(3), pp.576-591. Read More