2 Hospital Cost Accounting Flow Overview Overhead Centers:Expenses & OffsettingRevenuesService lines PhysiciansPayorsOverhead allocation statisticsPatient Care Departments:Direct and IndirectExpensesService Item standards & volumePatientEncountersDepartment- level costingService ItemsPatient Care Departments without HPM Service Items stop hereTo accomplish this, a number of HPM application programs are used.
3 Glossary of Terms Department = Cost Center Service Item=charge item or CDM item, something you billed a patient forSIM=Service Item Master = CDM (Charge Description Master)Patient Care Departments: provide patient services (AKA Direct Departments)Three Types of Patient Care DepartmentsBilled and in HPM: Billing data is in HPMBilled and NOT in HPM: Patients are billed by a system not feeding HPM (e.g. home health)Unbilled: Patient are not billed for services (e.g. outreach programs)Overhead Departments: support other departments, do not provide services directly to patients (AKA Indirect Departments)Studied Service Items: Have a standardUnstudied Service Items: Do not have a standardPartially Studied Service Items: Some components for a service item have a standard and others do notMiscellaneous service item: a service item for which the price is assigned at the time the charge is assigned to the patient (AKA variable charge item, catch-all charge item)
4 Contents: HPM Costing Applications List Integrate data - import statistics for overhead allocationData set manager - deleting data to recost the datasetsWorksheet - to gather and audit dataEnter components, allocation relationshipGL account to component mappings – chart of accounts editorGL Remap - transform GL dataEdit GL Allocation structure – add new departmentCreate Components – make cost components from GL dataRun GL Allocation - allocate overheadService Item Remap - move service items to new departmentCreate Service Item Volume and Price - activity basis for costingRevise Service Item StandardsService Item Allocation Mapping – which standard to useService Item Allocation – calculate cost per service itemSummarized Component Mapping – rollup cost for encounter reportingEncounter Costing – apply service item cost to patientsImplant costs in data extensionWorksheets for Analysis of cost and margins
5 Data preparation applications: 1, 2, 3 Integrate data - import statistics for overhead allocationData set manager - deleting data before costingWorksheet - to gather and audit dataThis guide will give cursory treatment to these applications, as they are core HPM applications you are already familiar with.
6 1. Integrate data Purposes: Integrate GL data Integrate statistics Use your usual approachIntegrate statisticsSquare footage:__________________Equipment Depreciation: CAstatEQDEPR.txt derived from Excel sheet supplied by fixed asset systemIntegrate cost standardsFor importing supply costs and other standards from outside HPM – more on this laterIntegrate Implant Extension dataMore on this later
7 A Word on Preparing Depreciation Statistics See “Deprec by Dept Roger.xls”Tabs from right to left transform the data – read notes on each tab
8 2. Data Set ManagerUsed to copy datasets and clear datasets as called for in the costing checklistCaution: At no point do we delete an entire dataset. Doing so will remove all references to the dataset in Worksheets, which you would then need to add.Caution: Deleting the service item components will also delete the service item standards. Be sure your standards are backed up periodically in a copy of the dataset, or using the Worksheet “Extract Standards”. This option should not be needed, since starting over with an empty dataset, all service item data is deleted anyway.
9 3. WorksheetNumerous worksheets exist in the Costing library, 2008 folder for various purposes throughout the process:Worksheet for figuring out benefits percentageWorksheets for determining implants adjustmentWorksheets for auditingWorksheets for using the costing data in margin and cost analysisWhat we need before we do anything else: Worksheets for determining new departments and accounts and new service items
10 3. Worksheets for New Departments and New Accounts “0000 New Depts”: Generate, open and sort the worksheet to identify the new departments.Make a list of the new departmentsFollow the “New Department Flowchart” (next slide)“0000 New Accts”: Open and sort the report to identify the new accounts from last time.Make a list of the new accountsFollow the “New Account Flowchart” (slide after next)
11 New DeptNew department flow1) Make it a direct department.2) Give it OH allocation statistics and overrides (see OH Allocation editor)3) Create SI volume, prices4) Create service Item standards5) Add to remap “2009 Cost remap 01 Labor Fix/Var”Patient Service?yesChgs inPat Acct?yesNono1)Make it a direct dept if you want it to get overhead.It will have no SI volume, and so “dead-ends”2) Give it OH allocation statistics and overrides3) Add to remap “2009 Cost remap 01 Labor Fix/Var”Overhead?yesAllocation Area Editor:Add to existing overhead area, orCreate new overhead areaAdd OH allocation statistics/overridesEdit remap “2009 Cost Remap 03 Components” to add to overhead componentnoPatient Service means that patient services are provided. Usually this means we bill patients for the services, though sometimes the billing data is not in HPM or the services are not billed for. In this case the department “dead-ends”.Overhead departments support Patient Service Departments.reevaluate
12 New account flow New Account Labor or Benefit? yes 1) Add to remap “2009 Cost remap 01 Labor Fix/Var”2) Edit Worksheet "Benefits as % Salaries"3) Edit remap “2009 Cost Remap 02 BenefitsnoNon-Labor?1) Edit remap “2009 Cost Remap 03 Components” add it to an existing GL componentyesnoRevenue?Part of Offset?yesyesnoAdd to “2009 Cost Remap 04 Revenue”nonoreevaluateignore
14 Relating the costing setup menu to applications list 64578911121314151610, “Service Item Remap” is not on this menu because not all hospitals will use it.
15 4: Component EditorNote: You should not alter this data without consulting RogerRight-click on the table namea) Enter components (do not use)b) Relate direct, indirect and creditc) Select standard to used) Exceptions to standard to usee) Enter summarized componentsf) Map to summarized components (will be covered in point 15)Not about our costing process:Flexed Budget Mapping:CCA Charge Weight Mapping
16 4a: Enter componentsNote: You should not alter this data without consulting RogerThis screen is where components are set up. Once they are set up, no changes should be needed.Changing this information should be considered and planned very carefully so as to not nullify prior costing work.
17 4b: Relate direct, indirect, credit Note: You should not alter this data without consulting RogerThis screen is where a relationship is made so that each direct component has a matching indirect and credit component.Again, once this information is set, it should not be changed without careful consideration and planning.
18 4c: Select standard for components Note: You should not alter this data without consulting RogerThis screen is where each component is assigned to use a standard for allocation to the service item.Again, once this information is set, it should not be changed without careful consideration and planning.
19 A word about studied/unstudied/partially studied Studied means that a service item standard is aSampleableUnstudied means no standard is aSampleable. Price or even allocation are your choicesPartially studied: some procedures have standards, others do notPartially studied: If a service item appears with no standard, the system will use the price of the item to determine a standard:Standards of studied/ charges of studied x price of unstudied = unstudied standardWe are making everything studied to avoid using this.
20 4e: Enter summarized components Note: You should not alter this data without consulting RogerThis screen is where summarized component names are entered. There is room for 40 total, with 5 reserved as system standard. We are using 36.Again, once this information is set, it should not be changed without careful consideration and planning.These will be used later in 15, “Summarized Component Mappings”
21 5. Account to Component Mappings Option in the Chart of Accounts EditorThese are already set up for you and should not need to change unless you add or change a cost componentAny new GL accounts are mapped to an existing GL component using GL remap:“2009 Cost Remap 03 Components”If you feel a need to make changes here, please consult Roger first. The following slides show how these mappings were made.
22 Choosing “Define Account to Component Mappings” brings up Chart of Accounts Editor
23 Select the account to map and move it to the selected accounts list.
25 The screen switches to component assignment mode The screen switches to component assignment mode. Choosing the List button lets you see all aSampleable components to map to.No changes should be needed to these mappings – the real mappings work is being done in remap “2009 Cost Remap 03 Components”
26 A word on why the real component mapping work is done in GL remap Changing account to component mappings in the Chart of Accounts is slow because every database uses the same chart of accountsIf you try to print the account to component mappings in the chart, you can only access 250 accounts at one time, and the format of the output is not user friendlyThe user dialog for adding or changing mappings in the chart editor is not user friendly.Note: The “Missing Account to Component Mappings” audit report on HPM is of no use with this approach – use Worksheet “0003 New Remaps Comparison” to identify any missing mappingsNote: we still use GL Account to Component Mappings – but it is just a formality, a one-to-one from GL components to cost components (e.g. account DVL goes to component DVL)
27 6. GL Remap About Remaps: Moves and transforms data Similar to double entry accounting: one entry to move or credit a value, another to offset or debit the original valueWhen you assign, GL Remap “remembers” the settings for the next time. You should not change the Assign settings, as they will produce wrong results if you do. The assign settings for each remap are in the Excel process checklist.
28 6: Remap Example – First Remap Each row is a rule.Input accounts are converted to the output account.The first rule first moves all data from the input dataset into the output set.Assign lets you choose an input and output dataset.
29 6: Remap NotesRemember to look at and use the notes feature to document changes. Click on this icon to access notes.
30 6: Remap AssignThe input and output datasets are always different in this process.Processing options for each are listed in the Excel checklist.You should not change these options – they will be retained for future assign jobs.
31 Remaps in the Sample Process CA Remap 00 moves all exc b/dCA Remap 01 fixed variable laborCA Remap 02 allocate benefitsCA Remap 03 make gl componentsCA Remap 04 RevenueCA Remap 05 StatisticsCA Remap 06 Dept MovesSee “Sample Cost Development Checklist.xls” for full instructions on the options used when running each one.
32 7: Edit Allocation Structure You will use this if you are adding a new department or refining your overhead allocation structure or statistics.
34 Existing structure can be changed, reordered Existing structure can be changed, reordered. MUST HIT ACCEPT AFTER CHANGES! Then save.
35 1st option: Automated stats have some limited use, mainly Total Expense. (We are not populating the others options shown.)
36 Data selection of statistics for an overhead area. 2nd option: use data selection to reference statistics you have built into the dataset. See next slide for format of stats input file.
37 Allocation Structure and Statistics 3rd Option: Overrides gives you a convenient way to put a statistic in for each department in one place. Can be used with automated or selection.
38 Recap on Statistics: Automated mainly for total expense Selection for statistics that you have put in the datasetOverride by itself, with zeros for all departments except the ones you want to give a numberOverride with ZEROSTAT let’s you plug in only numbers you wantOverride with other selected stats lets you exclude some departments by entering zero in the override
39 Sample Statistics Input File This is the standard GL periodic data format for integration.GLREAL~department code~filler~account code~filler~data type~entity~filler~filler~filler~pd1 value~pd2 value and so on
40 8: Create Component Data Choose datasetChoose time periodReverse signs makes positive revenue into negative expenseLimit processing to 100% makes sure that overlapping rules do not duplicate costShould require 2 to 3 minutes. You can detach or stay attached.This step must be done after the allocation structure is complete, with all departments accounted for, or it will fail.
41 Create Component Audit Logs Note the location and name, open file with WordPad
42 9: GL Allocation For more detail see “Sample HPM Cost Allocation.ppt” Choose datasetChoose timeframeRun it for all componentsStore statisticsStore credit valuesUse single stepdownTakes a minimum of 16 minutes, so detach.When you look at job record later in job viewer, right click on job to see log files.For more detail see “Sample HPM Cost Allocation.ppt”
43 A Word On GL Allocation Options Single vs Simultaneous: Single is the standard Medicare cost report method. Simultaneous is required by the Canadian government for its hospitals. It passes more overhead between overhead areas before passing it to patient care areas.Store credit and statistic values so that audit worksheets can be used later to illustrate how the allocation worked.If you are costing part of the year, you MUST control the time frame in running GL Allocation and in audit worksheets or you will not get the intended results.
44 GL Allocation Audit Log File 1 Note the location and name, open file with WordPad.First file is smaller, contains useful summary data.
45 GL Allocation Audit Log File 2 Note the location and name, open file with WordPad.Second file is larger, contains detail about allocation – at the end, it indicates if it failed and clues as to why.
46 GL Allocation Audit Worksheets Several examples are on the slides that follow.
47 Audit Worksheet “0005 GL Allocation Results” shows direct, allocated and credit values, proof of balancing
48 Audit Worksheet “0006 Audit Ovh Ratios Patient Care Areas” shows overhead burden by patient care area.
49 Audit Worksheet “0008 Allocation By Source Area” illustrates the step down from each overhead area to each area
50 10: Service Item RemapNursery has charges, but no GL cost (it’s all booked in Labor and Delivery)Must move Nursery charges to Labor and Delivery to match with cost.After every encounter data update, must run the SI Remap to move the Nursery charges to Labor and Delivery for each database updated.After this is done, for costing must create SI volume and price from the encounter datasets.The next four slides show how SI Remap works.
51 Finding Service Item Remap on the “Editors” Menu
52 Open the SI Remap called “Remap Nursery to Labor and Delivery”
53 Use the File/Apply option to apply the SI Remap to your datasets.
54 Choose the datasets you have updated and select “Encounter Data.” Run detached as processing takes a minimum of 10 minutes per dataset. Do this after each update.
55 11: Create Service Item Volume and Price Price and volume, along with standards, are used to develop cost per service itemWe load our price and volume from the patient datasets.
56 11: Create Service Item Volume and Price Develop from encounter datasetsChoose 2 datasets to pick up all activity posted in a time period.Use average price calculationInsert/Update recordsUse date of service and choose time frame to match the GL dataConvert all patient types to “Other”Mark new as “studied”.
57 A Word about “Create Service Item Volume and Price” Options Why two encounter datasets?Charge activity for FY2008 can be found in the 2007 encounter data; patients admitted in 2007 but staying in hospital into 2008 have charges in 2008.Patient Types in Costing:HPM ws designed to allow different standards for the same service item, depending on the patient type it was provided forThe additional level of detail is usually more than a hospital starting is cost accounting is prepared to useTherefore, we default all patient types in costing to “Other” so that single patient type is used for all patients.Price Calculation:Choice is average YTD or periodic. Periodic calculates each month individually. YTD works better because it smoothes out spikes in volume and price increasesAll versus Accumulated Units:In nursing units that distinguish accumulated units versus other units, would allow you to use only the accumulated unit service item volume (usually patient days and observation hours). We use all units in the department which also picks up many chargeable supplies
58 12. Revising Standards Several options: a) Built in tool for revising standards: okay for cost acountant, but not for managersb) Worksheet: good for managers and cost accountant, but must pre-integrate values so fields can be edittedc) Integrate using standard file layout: for cost accountant only, useful for:Move standards from one dataset to anotherPre-integrate default values for use in model WorksheetIntegrate standards developed elsewhereBottom Line: Likely to be a combination of all these methods
59 12a. Using the Service Item Standards Editor Choose dept and patient type “Other” to see standards
60 12b. Using Worksheet to Revise Standards Copy existing standards datasetCreate new volume and price from new time periodRun a worksheet to find new service itemsRun MS/Access tool to create new service item standards for new service itemsStandards should be set to .001 to indicate the new service items (see next slide on importing standards)Generate model worksheet for entry by managersUse distribution list to distribute to managersFollowing slides illustrate distribution and consolidation
62 Then choose the menu option Applications/Teamware/Distribute
63 Next choose the distribution list you want to use.
64 From the menu choose Options From the menu choose Options. You may then choose to distribute, consolidate or use the distribution list editor. Here we choose Consolidate…
65 …The distribution list is displayed, where you can see the status of when users sent their results back (“submitted”). You may view the worksheet and either hit “consolidate” or “refuse”. Consolidate puts the results back into the master worksheet. Refuse sends the worksheet back to the manager for further work.
66 As you consolidate worksheets the “Date Consolidated” column fills in.
67 Once the worksheet is sufficiently consolidated, you may commit its contents back to the original dataset with the menu option Data/Commit.
68 12c. Integrate Standards From Other Sources Uses:Pre-load standards for entry (you cannot edit null/empty values using worksheet – must load a value first)Load standards developed elsewhereLoad chargeable supply or pharmacy supply cost by service itemMoving all standards from one dataset to anotherMethod:Text file in correct format or Export from HPM Worksheet (see below)Import to Access Tool: “Yardley HPM Standards Formatter”Export text fileIntegrate file to desired dataset
69 To extract standards from a dataset Build, open and export this worksheet to a tab delimited text file.
70 “Yardley HPM Standards Formatter” Built using Microsoft Access databaseImport this file or any other in the same file format to table “Importfile”The queries in the database will format the data for integration to HPMImportant: Any values (zero or greater) supplied in this file will overwrite values already in the target dataset. Null values in this file will not replace the values in the target dataset.The most recent integration file was called “CAsistds txt”, found in the source directory
71 You will clear and then load the Importfile table with your data, then go to the queries tab..
72 Run the last query and your data will be formatted Run the last query and your data will be formatted. Export this data to a file on the HPM Source directory, then integrate it (see next slide).
73 Data integrator process for standards Choose process definition “CA RVU Import and make sure the target dataset is correct. Check the audit to ensure success.
74 13. Service Item Allocation Mapping Lets you choose the standard that will be used for each componentIt is possible to make exceptions by department which are called overridesWe illustrate how in the following slides
75 Service Item Allocation Mapping lets you pick which standard is use to allocate each component,
76 In this case, DVL is being allocated with the standard we have loaded for DVL. Other labor components will also use DVL.
77 In this example, it looks like the default way of allocating DVS is using price of each service item, but DVS also has an override…
78 By choosing Options and “Service Item Allocation Overrides” you come to the overrides screen…
79 …and here, for DVS we can see that the DVS standard is specified for use in specific department. All others would then use price.This is the only override we are using for now.
80 14. Service Item Allocation Use these options each time you run SI allocation
81 A Word on SI Allocation Options We store YTD and periodic values, though our main purpose is YTD values (we may want to try our periodic values at some point for some reason, and it costs nothing extra to include it here).You MUST remember to use the date cut off for the last month in your GL dataset.The report may be helpful in identifying a problem in the process – we don’t generally look at the report unless there is a problemThis job only takes a few minutes to run
82 15: Map to summarized components Note: You can change this data after careful considerationSummarized components are used in encounter reporting. We are using 37 of 40 aSampleable groupings.
83 Worksheet to audit summarized component mappings These mappings should rarely changeIf you change these mappings, encounter cost worksheets will be affected and will need to be rerunYou should run this audit worksheet to cross-foot every component and groupingSee next slide
84 “0047 Encounter Component Costs” Examine this worksheet to be sure the components are falling into the summary groups you intended.
85 16. Encounter Costing Choose your encounter and unit cost datasets Usually you are costing the whole dataset, so no encounter selection needed.Unit cost source is YTDOpen Period Cost Source is YTD allocated valuesLast closed period is last GL period that was costedMUST detach as it will take 25 minutes at the least and tie up the datasetsNote: the option “Include out of date encounters only” should be set and saved before subsequent encounter updates (see next page)
86 More on Encounter Costing The option “Include out of date encounters only” should be set (checked off) and parameters saved before subsequent encounter updates (see next page)This will cause each encounter that is added or changed to be costed during the integration process.Options “Actual Payment as Cost” and “Add Supply Cost” depend on having this data in the encounter record. This does not occur in our data, so the options are unused.Open period cost source: If GL and costing are complete through September, and the encounter data has patients through October, October is an open period. To cost these cases we use YTD allocated values.
87 17. Implant Costs in Data Extension Background: Miscellaneous service item ( ) was used for approximately 2.6 million of over 6 million in implant costs in 2008, with a range per item of 0 to $14,000Using this data as is, HPM would develop an average cost and apply it to all patients, grossly overstating and understating individual patients.
88 17. Implant Costs in Data Extension - continued There are several approaches to handling this:Custom interface program from McKesson to break out ranges of charge valuesMakes new charge codes to replace old codeWould have to reload history for these patientsHave to process with each subsequent updateChange charge capture in STAR to include better detailWill not correct prior historyStrongly recommend for going forwardInclude invoice cost or a reasonable approximation for each patientMost control for Sample using a data extensionEasy and aSampleableYou MUST include this field when reporting encounter costMust remove this cost from implant to be allocated using a remapThis is the approach we have adopted for now
89 Using an Encounter Data Extension Setting up the extensionTo Stage or Not to StageIntegrating staged dataMerging staged dataUsing the data in Worksheet
90 Setting Up The Extension Data Integration/Data Model ExtensibilityChoose staged or not staged (see next slide for more)Choose field names and data typesSystem returns the format that the file for integration must haveMUST got to security next and enable modify access for your account and view access for other accounts for the extension
91 Setting up the data extension (1) Your extension is already set up, you do not need to make a new one or modify the existing. This just shows how it was done.
92 Setting up the data extension (2) Extensions are set up in the data model where appropriate, this one is in the encounter section.
93 Setting up the data extension (3) When you make an extension template you get to choose if a staging area will be used. If it is, a box pops up to ask how it will link to the patient record. See more on staging on the next slide.
94 To Stage or Not To Stage Two approaches to loading an extension: You have the encounter key aSampleable and can put it on each recordThe encounter key is complex, consisting of multiple elements, including patient nameUsing this method, you can integrate directly to the extensionYou have the patient billing number on each record, but not the whole encounter keyYou first integrate to the staging areaThen you merge the staged data with the datasetWe used #2 because it is easier to obtain the patient billing number in the data you want to load.
95 Setting up the data extension (4) Options here allow you to create a new extension, and once created, to “build” it, essentially publishing it in the data model.
96 Setting up the data extension (5) One of the options on the prior screen is “Layout Report” which tells you exactly how to format the file for the data.
97 Actual file for integration This file uses “Layout Report” specifications from prior screen. The file for 2008 is complete, unless we make a better version with invoice cost. For 2009, we should rebuild this file year-to-date with each update. You must be vigilant to make sure this data is complete as patients are added to the dataset. The next slides depict how the values were arrived at in this file.
98 Preparing the miscellaneous implant patient file (1) Use implant.xls to determine the cost for each patient using the markup of charges tab.
99 Preparing the miscellaneous implant patient file (2) The tab “Simple HPM Load” creates the file format needed in column e.
100 Recap on the implant extension: For 2008, the data has been loaded based on the markup and patient chargesNeed to monitor to make sure future updates to 2008 do not change the millionCould make it more accurate by replacing the values with invoice costsFor 2009, if the charge mechanism is now splitting out several ranges of miscellaneous code, we could use thoseNeed to see when it began and how much it coversShould probably continue to populate the extension with invoice for the most accurate implant cost
101 Add access in securityYou must give yourself and others access to the extension before you do anything else. You will not be able to integrate until you do.
102 Setting up the integration process When you open the process, you can see the target is the staging area for the extension we built.
103 Merge Staging Area Data If you picked “Integrate to the staging area” as an option, you have one more step after integration of the dataYou need to merge the data with one or more datasets.This makes the association to each patient record using the linking field you specified.Following slides depict how this is done
105 Merging Staged Data: Choose staging area and dataset(s) Merging Staged Data: Choose staging area and dataset(s). Okay button will detach automatically.
106 Merging Staged Data: From job menu, right click on job to read logs files
107 Merging Staged Data: From job menu, right click on job to read logs files
108 Merging Staged Data: Locating the data extension in Worksheet Editor
109 Merging Staged Data: Seeing the results in Worksheet
110 Merging Staged Data: Seeing the results in Worksheet – drill to encounter
111 Other Notes on Using The Extended Implant Data If reporting with department drill level, qualify column for the implant extension so that it is limited to the surgery department (6211) so that it does not pop up in others.DO NOT FORGET to build this element into all P&Ls and cost analyses, otherwise you are understating the cost.
112 Using the Data: Worksheets for Cost and Margin Analysis 0050 Encounter Component Costs by Dept0332 Service Line Margins Template Specialty DVIREMEMBER: To get full cost in a worksheet, you MUST include the extended data to pick up the full cost of implants. The extended data is NOT in any of the summarized cost components!
114 0332 Service Line Margins Template Specialty DVI
115 Reconciliation Worksheet More on reconciliation on next slide
116 Reconciliation Worksheet Notes During and after each update, this Excel sheet should be completedIt gives a summary for users of the cost information of what is in the cost dataIt serves as a proof that the cost information relates to the financial statements
117 Questions or Corrections? Roger would like to maintain a current copy of this file with you.If you need changes made, or have made changes, please let him know.Office:Fax: