Efficiency in Healthcare: How Much Are You Spending on Each Patient?

Determining your cost per patient can be vital in lowering your healthcare facility costs.  After all, how can you figure out where you’re spending too much if you don’t know how much you’re spending?

A cost analysis can help you determine which services you may be undercharging for as well as which services you’re overcharging for.

Fortunately, conducting a cost analysis of your services or improving efficiency in healthcare doesn’t have to be overly complicated. Here’s what you’ll need to figure out:

1. Define the service.

What are you counting as one unit of service? Examples of units are exams, check-ups, dental cleanings, etc. In order to properly calculate cost per patient per service, you have to delineate exactly what the service encompasses in order to determine everything else.

2. Figure out how long each service takes and determine labor costs.

Time is money, especially in the healthcare industry. When determining the cost of providing a specific service, you have to take into account the salaries of your physicians, nurses, assistants, office managers and more. If this aspect of the service is costing too much, consider ways to improve efficiency in healthcare so that these services take up less time and/or labor.

3. Calculate resource costs.

Medical services often require consumables like disposable gloves, needles, paper products, linens, water and electricity. Those costs can really add up. Some ways to lower your resource costs include buying energy-saving equipment, hiring a qualified medical linen service to launder your uniforms and linens outside of your building, looking for cheaper or more cost-effective products and being more mindful of product usage.

4. Analyze your indirect costs.

It might be tempting to leave out less-direct costs like rent and insurance, but all of those factor into the cost of your services. Even the amount of space that you’re dedicating to one service over another has an impact, because it might be leaving less room for other profitable services.

Putting it all together.

This example chart can help you determine the cost per service in each of these areas, then it’s time to put it all together and reflect. But throughout all of your analysis, don’t forget about what really matters – helping your patients get and stay healthy. Don’t cut corners if it means that your patients will suffer, because then it doesn’t matter how low your cost per service is – no one will want to return to your healthcare facility.

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