Healthcare organizations must establish pricing to remain competitive in the
market. What information must healthcare leaders use to set costs for services? Is
pricing relates to reimbursement.
It is important that healthcare leaders have access to crucial information to better serve the healthcare organization’s costs/spending. A study conducted by the Harvard Business Review suggests that healthcare leaders should adapt to the Time Driven Activity Based Costing (TDABC) methodology when setting costs for services. This is used when navigating the cost of resources required to provide care for the patient. This includes resources such as staffing, consultations, technical equipment, medications and testing that can be projected for a patient’s inpatient stay. Doing this would aid healthcare managers to see how many resources are being unused. Harvard Business review concluded that by using TDABC as a tool for pricing, “Accurate costing gives managers a valuable tool for consolidating patient care for low-volume procedures in fewer institutions, which would both reduce the high costs of unused capacity and improve outcomes.” This can be resourceful to healthcare leaders as pricing does impact reimbursement. If there is more transparency to the payers, it might help the reimbursement process while remaining competitive within our healthcare market.