The Efficacy of Activity Based Accounting Techniques for Targeted Case Management in Outpatient Settings: A Case Study in Predicting Financial Risk to a Nonprofit Community Health Service Provider Prompted by Public Policy Change
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2016
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Gammon, E., Cotton P.A., (2016). The Efficacy of Activity Based Accounting Techniques for Targeted Case Management in Outpatient Settings: A Case Study in Predicting Financial Risk to a Nonprofit Community Health Service Provider Prompted by Public Policy Change. Journal of Health Care Finance.
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Abstract
This study illustrates how activity based costing (ABC) techniques facilitate the forecast of the financial impact of proposed policy changes. This study was designed to predict the impact of a new reimbursement model on a nonprofit community health service provider in Maryland where a public policy change transitioned nonprofit service reimbursement from capitation to targeted case management. We used ABC accounting techniques to create a workload model using self-report time study data, caseload analysis, and an analysis of the available work hours to project staffing needs. We developed a list of 69 activity codes used by 246 case managers to record 143,326 time entries on work they performed for 11,633 unique clients. Analysis reveals that the proposed reimbursement policy would result in an annual deficit of $8,468,825, therefore posing an unacceptable financial risk for this agency. Identifying such financial risks can help organizations proactively address the financial viability in an era of innovative payment methodologies.