{"id":9995,"date":"2021-03-22T15:22:43","date_gmt":"2021-03-22T19:22:43","guid":{"rendered":"https:\/\/www.sage.com\/en-us\/blog\/?p=9995"},"modified":"2026-02-12T04:49:28","modified_gmt":"2026-02-12T09:49:28","slug":"abcs-for-healthcare-organizations","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-us\/blog\/abcs-for-healthcare-organizations\/","title":{"rendered":"Do you know your ABCs? Activity-based costing for healthcare organizations"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-us\/blog\/category\/accountants\/\" class=\"entry-header__link\">Accountants<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tDo you know your ABCs? Activity-based costing for healthcare organizations\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2021-03-22T15:22:43-04:00\">March 22, 2021<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"Do you know your ABCs? Activity-based costing for healthcare organizations\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-us\/blog\/abcs-for-healthcare-organizations\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-us\/blog\/author\/melissa-odowd\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/09\/Mel-ODowd_Headshot_Square-350x350.jpg\" class=\"entry-author__image\" alt=\"\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/09\/Mel-ODowd_Headshot_Square-350x350.jpg 350w, https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/09\/Mel-ODowd_Headshot_Square-768x768.jpg 768w, https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/09\/Mel-ODowd_Headshot_Square-810x810.jpg 810w, https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/09\/Mel-ODowd_Headshot_Square-1536x1536.jpg 1536w, https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/09\/Mel-ODowd_Headshot_Square.jpg 1994w\" sizes=\"auto, (max-width: 40px) 100vw, 40px\" \/>\t\t\t\t<span class=\"entry-author__name\">Melissa O&#039;Dowd<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n<p>Healthcare finance executives: do you know your ABCs? If not, you don\u2019t understand the true cost of patient care. Most healthcare organizations measure patient care as the costs associated between provider and patient\u2013in the exam room or on the operating table. The true cost of care considers much more including the overhead \u2013 those medical supplies, staff salaries, building and device maintenance, and other capital expenses and miscellaneous operating costs that keep the organization running smoothly. Why is this important?<\/p>\n\n\n\n<p>Healthcare finance executives need the statistical and operational data\u2013in addition to the clinical\u2013to have a much more accurate picture of organizational finances. By factoring in these costs, healthcare finance executives can better determine the actual cost of care using a tried and true approach called activity-based costing, or the ABCs.<\/p>\n\n\n\n<p>So, why is now the time for healthcare finance executives to learn their ABC\u2019s and turn to activity-based costing?<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-three-key-market-dynamics-are-spurring-the-shift\">Three key market dynamics are spurring the shift:<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>ACOs and similar value-based arrangements.<\/strong> Healthcare organizations entering these new models are finding themselves in new territory \u2013 taking on one or two-sided risk. Healthcare finance executives with entities in these arrangements must work to stay on top of costs and manage to budget to avoid the potential for significant losses.<\/li>\n\n\n\n<li><strong>The growing buying power of patients.<\/strong> With the U.S. government taking steps to drastically increase price transparency in healthcare, consumers will soon have the ability to compare prices for specific services across providers in a market. With patients having the ability to \u201cshop around\u201d for what are typically lucrative procedures (such as knee replacements), healthcare organizations may be forced to lower prices to remain competitive, requiring a much more accurate picture of the underlying costs associated with them.<\/li>\n\n\n\n<li><strong>COVID-19\u2019s continued impact on healthcare organizations.<\/strong> As the pandemic persists, many hospitals are operating at a loss, and their financial future is expected to remain grim without assistance from Washington. For this reason, healthcare finance executives will be pressured to scrutinize their cost structures and account for every last penny.<\/li>\n<\/ul>\n\n\n\n<p>With the impacts of value-based care, consumerism and price transparency, and the COVID-19 pandemic poised to continue, the time is now for healthcare finance executives to <a href=\"https:\/\/www.sage.com\/en-gb\/cp\/intacct-demo-google\/\">explore this time-tested accounting methodology<\/a> to effectively manage and understand costs within their organizations.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Take a coffee break with Sage<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p><!-- wp:paragraph --><\/p>\n<p class=\"\">Interactive Demo<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"https:\/\/www.sage.com\/en-us\/sage-business-cloud\/intacct\/coffee-break-demo\/\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\tid=\"cta-id-14172\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tdata-button-location=\"cta_box\"\n\t\t\t\t\t\t\t\t\t\t\t>Learn more<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2023\/02\/character-illustration_support-training_coffee-break-demo_b-1440x810.png\" class=\"single-cta__image\" alt=\"animated-person-sitting-on-giant-coffee-cup\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2023\/02\/character-illustration_support-training_coffee-break-demo_b-1440x810.png 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to our Sage Advice Newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get our latest business advice delivered directly to your inbox.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-ab515c6e-7e90-4c2f-a67e-113872516e8b\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg\" class=\"single-cta__image\" alt=\"Working from home with tea in hand\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Healthcare finance executives: do you know your ABCs? If not, you don\u2019t understand the true cost of patient care. Most healthcare organizations measure patient care as the costs associated between provider and patient\u2013in the exam room or on the operating table. The true cost of care considers much more including the overhead \u2013 those medical [&hellip;]<\/p>\n","protected":false},"author":1442,"featured_media":20147,"menu_order":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[158],"tags":[2,399,420],"business_type":[312],"lilypad":[],"context":[418,429],"industry":[451],"persona":[150],"imagine_tag":[222,435],"coauthors":[845],"class_list":["post-9995","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accountants","tag-accountants","tag-business-continuity","tag-cloud-financial-management","business_type-accountants","industry-healthcare"],"sage_meta":{"region":"en-us","author_name":"Melissa O'Dowd","featured_image":"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2023\/09\/GettyImages-1448765678.jpg","imagine_tags":{"222":"Accountants","435":"Intacct Accountants"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice US","distributor_original_site_url":"https:\/\/www.sage.com\/en-us\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/9995","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/users\/1442"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/comments?post=9995"}],"version-history":[{"count":1,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/9995\/revisions"}],"predecessor-version":[{"id":34967,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/9995\/revisions\/34967"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media\/20147"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media?parent=9995"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/categories?post=9995"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/tags?post=9995"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/business_type?post=9995"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/lilypad?post=9995"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/context?post=9995"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/industry?post=9995"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/persona?post=9995"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/imagine_tag?post=9995"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/coauthors?post=9995"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}