HCA 530 Week 7 DQ 1 Which of the following types of costs would be the most

HCA 530 Week 7 DQ 1

Which of the following types of costs would be the most challenging for a clinical department versus a nonclinical department: total cost, fixed cost, variable cost, average total cost, or marginal cost? Explain your reasoning.

Answer:

Which of the following types of costs would be the most challenging for a clinical department versus a nonclinical department: total cost, fixed cost, variable cost, average total cost, or marginal cost? Explain your reasoning.

THE MOST CHALLENGING COSTS FOR HEALTHCARE MANAGERS: TOTAL COST, FIXED COST, VARIABLE COST, AVERAGE TOTAL COST, MARGINAL COST

The cost of managing a hospital is a significant challenge for healthcare managers. The costs they must consider include total cost, fixed cost, variable cost, average total cost and marginal cost. The challenge with managing these costs depends on the department in question. Because each department has its own unique costs and challenges, there are different types of costs that would be most challenging for clinical versus nonclinical departments.

Total cost

The total cost is the sum of all fixed and variable costs in an organization or department. While it is necessary to consider this type of cost for both clinical and nonclinical departments, it may be more challenging to manage this type of cost in the clinical department because patients’ needs are constantly changing. Clinical departments react to changes that are driven by patients’ needs, which means that certain types of treatments may be needed more than others at different times. This results in changes in the amount of supplies and equipment that a clinical department needs to function effectively. In contrast, nonclinical departments do not have as many variables as clinical

According to “Cost Accounting: A Managerial Emphasis” (HORNGREN, WATSON, & STUCKER, 2013), the most challenging cost for a clinical department versus a nonclinical department would be marginal cost. This is because the marginal cost of a clinical department represents the total change in cost in relation to the change in production units. For example, if a clinical department produced 30 units and incurred a total cost of $1400, then the marginal cost would be $1400/30 or $46.67 per unit. In contrast, if the same clinical department increased its production by 10 units, for a total production of 40 units, then the marginal cost would increase by 10 units or $466.70 per unit. Therefore, as shown above, this type of cost would be the most challenging for a clinical department because it represents the variable costs directly associated with each unit of production that must be incurred by the clinical department.

Many people believe that variable costs would be the most challenging for a clinical department versus a nonclinical department. Variable costs are different for clinical vs. nonclinical departments because these are the costs that change per patient. This means that if a clinical department was to seek reimbursement from insurance companies or grants from government agencies, they would have to consider how much they can charge per procedure. A nonclinical department, on the other hand, might not have to consider this as much since they wouldn’t be charging per procedure and would only need to charge a fixed amount for services rendered.

Question:

HCA 530 Week 7 DQ 1

Which of the following types of costs would be the most challenging for a clinical department versus a nonclinical department: total cost, fixed cost, variable cost, average total cost, or marginal cost? Explain your reasoning.

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