Cost Behavior
Cost behavior is the sensitivity of costs to changes in service volume. You can assign
cost behaviors to expense transactions and generate a summary for each allocation
run.
There are two types of cost behavior, fixed costs and variable costs. Fixed costs remain unchanged through the service volume period. Variable costs may change over the course of the service volume period.
You can also specify cost behavior that is related to patient activities, direct, or supporting patient activities, indirect.
When an allocation line is created that allocates costs to cost objects, you can assign a cost behavior to the transactions being allocated. See Creating allocation lines.
These cost behaviors are automatically created for a TrueCost
configuration and can be assigned to transactions in TrueCost allocation
lines:
| Cost Behavior | Description |
|---|---|
| Direct-Variable | Costs that apply to patient activities that may change over the course of the
service volume period. For example, surgeon fees are directly related to a patient
activity and are only incurred if the service is delivered. This cost behavior cannot be deleted. |
| Direct-Fixed | Costs that apply to patient activities that remain unchanged through the service volume period. For example, although nurse wages can be direct-variable, similar to surgeon fees, you can also configure nurse wages to be direct-fixed. Using a direct-fixed model, each nurses' wages can be fixed based on the expected capacity of patients. if one nurse can safely handle five patients, the cost is fixed until the number of patients is exceeded and an additional nurse is needed. |
| Indirect-Variable | Costs that are not directly related to patient activities that may change over the course of the service volume period. For example, taxes are not directly related to patient services and the cost increases if more patient revenue is collected. |
| Indirect-Fixed | Costs that are not directly related to patient activities and remain unchanged through the service volume period. For example, building expenses are not directly related to patient services and the cost remains the same regardless of revenue or other factors. |
| Not Specified | Costs that are not given a cost behavior. This cost behavior cannot be deleted. |
You can create new cost behaviors, if needed.
Cost Behavior Summary
After an allocation run, you can generate a cost behavior summary. This summary provides a total cost for each cost behavior for the transactions in the allocation run. Additionally, the Direct-Variable cost behavior is divided into these sub-categories:- Direct-Variable (Core): The total cost of transactions that were applied directly to the cost objects in the Core ledger during the period covered by the allocation run. These costs were not part of the allocation run because they were applied directly to the cost objects in the core ledger.