Question

1. What is the distinction between a direct and indirect cost in healthcare? 2. Create an excel spreadsheet that shows both Direct and Indirect costs incurred in an existing Outpatient Dialysis Center at the start of operations and in six months 3. What do you think would be a reasonable methodology for allocating costs

Answer 1

1) The distinction between the direct and indorect cost in health care:

Direct cost :

Direct costs are easily identified and assigned to products and services.

The example includes the physician , procedure specific staff services , supplies used to deliver services and easily assignable service related equipment costs.

These direct cost are traceble to specific production or service.

Indirect costs :

Indirect costs are not directly assigned for specific production or service.

As the expenses incurred from the cessation or reduction of work productivity as a result mortality morbidity associated with a given disease.

Indirect costs typically consists of work loss , work replacement , reduced productivity from illness and disease.

Indirect costs are necessary for production , but they are not traceble to specific production.