Manage indirect practice expense the way you practice medicine: With information

PURPOSE: Surgeons are increasingly faced with the pressures of maintaining the highest quality of patient care, while at the same time maintaining fin ancial viability. The purpose of this project was to provide a framework fo r analyzing practice costs for colorectal surgeons using an activity-based cost accounting model. METHODS: A survey of 11 practices that were diverse in terms of geography, managed care penetration, academic vs. private pract ice style, and case distribution was performed. In activity-based costing t he assignment of typical costs such as staff salaries are assigned to the a ppropriate business process. The business processes employed in this study were service patients in the office, perform in-office procedures, schedule cases in facilities, service patients in the hospital, insurance authoriza tion, maintain medical records, billing, collections, resolve billing dispu tes, interaction with third parties, maintain professional education, susta in and manage the practice, maintain the facility, teaching and research, a nd performing drug studies. The final step is to assign the cost associated with all appropriate business processes to the appropriate cost object. Th e cost objects in this study were defined as a charge office visit, no-char ge office visit, charge hospital visit, in-office procedures, in-facility p rocedures, and performing drug studies. The data were then analyzed to allo w a comparison of four similar practices within the study group. RESULTS: T he data demonstrated that the cost of seeing a charge office visit ranged f rom $55 to $105. Similarly, the cost of seeing a no-charge office visit dur ing the global period ranged from $43 to $100. The study analyzed possible explanations for the wide variability in these costs. CONCLUSIONS: It is es sential that physicians clearly understand the sources of expenses generate d by the operation of their practices. A clear comprehension of costs will lead colorectal surgeons to make appropriate decisions regarding such impor tant issues as office staffing ratios, office square footage, and instrumen tation acquisitions.