Question

Explain the concepts of relevant costs and marginal costing which is very different from the way most health care costs are computed

Answer 1

The concept of relevant cost in healthcare are described about only the particular treatment decisions which may merely change depending upon the type of treatment. It is ver useful to eliminate extraneous information from a particular decision making process.

Marginal costing are one which are generally used in healthcare sector. It provides a knowledge on the utilization of the multiple resources in patient certainly sometimes unproductive. It also provides insight on unproductive utilization .It provides a capacity constraints .It helps in setting incentives for the employee. It can provide a balance for volume and cost efficiency. Hence most of the healthcare sector compute this type to mange the expenses.