Expense costing overview

The design of TrueCost allows for costing based on the most common costing methods used in healthcare. TrueCost allocations can be based on revenue drivers such as the volume of patient charges, drivers such as patient activities and procedures from the Electronic Health Record (EHR), or resource rates and duration based drivers such as procedure times or visit times for time-driven, activity-based costing methods. Additionally, activities can be weighted based on many factors including resource intensity using relative weights such as charge amounts or Relative Value Units (RVU’s).

TrueCost expands on Financials allocations functionality. TrueCost allocates expenses from support departments to patient-servicing departments, and to cost objects within the patient-servicing departments. These cost objects represent patient-level activities, such as procedures and lab tests.

TrueCost has the capability to perform full allocation of expenses and to also perform allocations of only the portion of the expense item that was utilized.

There are two types of TrueCost allocation rules:
  • Expense reclassification: allocate expenses from one finance dimension to another. For example, expenses related to office supplies that are not used for any patient-related activity are allocated from an indirect support department to a direct patient-servicing department.
  • Costing of patient activities: allocate expenses to cost objects within a department. For example, expenses within a patient-servicing department of medical supplies related to many different procedures performed by that department. These patient activities are called cost objects in TrueCost.