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Describe fee-for service and activity based costing (ABC)

1. Consider a health care organization with which you are familiar and discuss how do provider incentives differ when the provider moves from a fee-for-service to a capitated environment?

2. Discuss briefly the activity-based costing (ABC) and explain how ABC can differ from traditional costing approaches? Consider a health care organization with which you are familiar with and it uses ABC model.

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1. Consider a health care organization with which you are familiar and discuss how do providers incentives differ when the provider moves from a fee-for-service to a capitated environment?

A health care organization I'm most familiar with is chiropractic groups. There can be incentives for both fee-for-service and a capitated environment based on the financial needs of the pediatric group. During these difficult economic times, many physicians are depending on bank loans or Government Small Business Loans (SBL) to get by. As a result, many physicians are faced with defaulting on their very high balance of student loans. According to Hall (2012), some states can take away a physician's licenses to work should the physician default on student loans. Understanding that a physician could possibly lose their licenses should a default on student loans occur, the physician may have to decide if a fee-for-service or capitated payment environment is more feasible to better run ...

Solution Summary

The following problems helps with accounting problems. Concepts covered includes incentives to health care organization, activity-based costing and traditional costing.

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