I have discussed certain aspects of costing in relation to achieving surplus for a hospital. The presentation gives you an idea in to how to look activities of a hospital and save costs.

1. Health Care Costing and
Profitability
S.Manivannan-
Managing Director –
Parama Health Care P Ltd

2. Why costing ?
• Do you know how much you are earning ?
– Accounting profit vs Real Profit
• Pricing and Profitability
• Nature of Healthcare cost at Project level and
operations level

3. Costing & Profitability
• Understanding fixed costs and variable costs
• Break Even Point
• Revenue vs Collections
• Converting fixed costs in to variable costs

4. Costing & Profitability
• Understanding Capacity Utilisation
– Hospital level
– Department level
– Equipment level

5. Costing & Profitability
• Components of costs having impact on
profitability
– Capital Cost- technology, new vs old
– Materials
– Manpower
– Outsourcing or shared services concept

6. Areas where Costs need to be
controlled
• OT
• ICU & Trauma Care
• Lab

7. Role of IT in costs and revenue
• Billing
• Designing Packages
• Pharmacy – revenue and stock control
• Lab- tariff and materials

8. Operation Theaters.
• Utilization of OT-Key factor scheduling of
surgeries and Idle time.
• Manpower Cost.
• OT Materials.
– Directly Billable
– Not Billable.
• Power consumption.
11/23/2014 Perfecting your process 8

9. Labs
Material consumption.
Control over lab materials: over stocking and
spoilages
Utilization of Kits where ever applicable
Retests done due to various reasons leading to
higher consumption of material & energy.
Equipment Utilization and Maintenance
Maintenance including reagents and power
consumption.
11/23/2014 Perfecting your process 9

10. Wards.
• Ward Stock.
– Medicines
– Consumables.
• Ward Staff Cost.
– This depends on combination of different bed
categories in the same floor.
• Bed Side Procedures.
– Equipment and materials.
11/23/2014 Perfecting your process 10

11. Maintenance Department
• Over Stocking of spares
• Control over outsourced jobs
• Stocking of insurance spares
• Diesel consumption.
• Manpower Cost.
11/23/2014 Perfecting your process 11

12. Ambulance & other vehicle arrangements
• Cost of maintaining ambulances and other
transportation are always not cost effective.
• The better alternative will be to outsource
them.
11/23/2014 Perfecting your process 12

13. Other Activities for cost control
• Consultation packages similar to diabetic
packages.
• Planned discharges for avoiding delay in
discharges
– This helps in higher utilization of beds-Patients
waiting for admission does not arise
– Impact on room rent and food cost
11/23/2014 Perfecting your process 13

14. Activities to be avoided for cost control and
better margins
• Patients awaiting bed assignments
• In Patients waiting in Emergency
departments.
• Patients awaiting discharge summary
• Doctors waiting for lab results
• Lab results waiting to be distributed
11/23/2014 Perfecting your process 14

15. Activities to be avoided for cost control and
better margins
• More travel required for samples and
analysis
• Dictation ready for transcription.
• Discharge summary waiting for doctors’
approval and signature.
11/23/2014 Perfecting your process 15

16. Activities to be avoided for cost control and
better margins
• Patients awaiting discharge summary
• Sharing of equipments if feasible
• Retesting to be avoided
11/23/2014 Perfecting your process 16

17. Summing up……
• Tariff assessment
• Performance monitoring
• Usage of materials
• Capacity utilization

18. Summing UP
• Specific product pricing
• Outsourcing decisions –
– conversion of fixed cost to variable
– saving management time
• Long term strategy – expansion and creating
new business models

19. Thank you !
• S.Manivannan
• smv@paramahealthcare.com
• 9840976340