HS440 Unit 5 discussion 1&2

On two different paragraph give your personal opinion to  Kent Acheson and  
Kelly Gonzalez  

Kent Acheson 

Cost Accounting assigns costs to individual items in a process.  For example, a hospital radiology department (x-ray) will assign how much it costs to run the department, including lights, each x-ray technician, x-ray technician manager, radiology supplies, etc.  Then, when any other department in the hospital uses the radiology department a specific cost will be assigned based on some factor, such as the amount of time used, or the number of x-rays ordered.  This is known as a Cost Accounting System.  

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This system usually takes a lot of time and energy to implement, and is the reason why it is not more widely used; notwithstanding the time and energy, the Cost Accounting System is more efficient in assigning costs, and can help determine which departments are losing money.

In week five the information covered regarding cost behaviors, including issues as fixed and variable costs; direct and indirect costs; and total, average, and marginal costs.  Specific tools and techniques widely used for cost analysis, such as break-even (BE) analysis.  Also covered was how organizations allocate costs from some departments to other departments and ultimately to patients and products.  We focused primarily on Activity Based Costing (ABC) and variations of that.  We ventured into metrics and their worth to comparisons within an industry.

Hospitals use metrics to gauge how they are doing comparatively to other like institutions.  Cleverly and Cleverley (2011) introduced a new measure of hospital volume that is more realistic than other metrics commonly used today, healthcare finance leaders can better compare activity and costs- and identify savings potential.  Equivalent patient units is a more reliable measure of a hospital’s patient volume than adjusted discharges or adjusted patient days because it better accounts for both inpatient and outpatient volumes (Cleverley & Cleverley, 2011).  Three elements are required to calculate equivalent patient units:

        equivalent discharges,

        equivalent visits, and

        the payment ratio (Cleverley & Cleverley, 2011). 

All of these elements are available through publicly available data, making it possible for hospitals to immediately adopt this new metric and, thereby, better understand their potential for savings (Cleverley & Cleverley, 2011).


Cleverley, W. O., & Cleverley, J. O.  (2011). A better way to measure volume–and benchmark costs.  hfm (Healthcare Financial Management), 65(3), 78.

Kelly Gonzalez 

             Financial statement analysis can defined as looking over all pertinent financial statements for the use of decision making purposes and to have a better understanding of where a company or organization is at financially.  To help a company grow and do better, financial statements must be analyzed and can be more easily used and understood by managers, shareholders, potential and current investors and other interested parties. 

            In healthcare, financial statement analysis can help a manager decide if investing in new equipment is tangible option for the coming year by comparing the needs of prior years.  Financial statement analysis in healthcare can also be useful in looking at trends when hospital census seems to increase by comparing multiple years. This can be helpful for managers with staffing needs and equipment purchasing. Another use is the prospect or need of opening additional facilities. By having financial statement analysis, the healthcare organization can see where higher amount of patient traffic is, such as at the organization owned urgent care centers. By looking at years past it can see when did the sudden influx take place and maybe seek outside information as to why. Did a new neighborhood get built? Did a competing organization close down? Financial statement analysis in healthcare is very important at all levels of the organization.


Kenton, W. (2018, December 13). Financial Statement Analysis. Retrieved January 10, 2019,             from https://www.investopedia.com/terms/f/financial-statement-analysis.asp