Some of our clients need to cost their services and have the correct accounting when charging the service to a patient.
In order to apply a Laboratory Service we need to use a disposable product that we don't charge to the patient and will be charged to the Cost of the Goods Sale (COGS).
Configure the cost for the service and change the accounting on asset inventory from a category or the specific service you want to track the COGS.
Setup and Process
1.- Disposable Product
Search Key: 12K03
Name: KINYOUN SOLUTION
1a.- Disposable Product Cost
Search Key: 12K03
Name: KINYOUN SOLUTION
Actual Cost: 300
2.- Laboratory Service
Search Key: 7903000
Name: AMNIOTIC FLUID CULTURE
2a.- Laboratory Service Cost
Search Key: 12K03
Name: KINYOUN SOLUTION
Actual Cost: 30 / *Assuming that product can be used 10 times
2b.- Laboratory Service Accounting
2b.- Laboratory Service Accounting by Category
3.- Internal Use Inventory
Search Key: 12K03
Name: KINYOUN SOLUTION
Quantity: 1
Charge: Laboratory Consumables
3a.- Internal Use Inventory - Accounting
Account | Debit | Credit |
Inventory |
| 300 |
Cost of Services Provided | 300 |
|
3b.- Internal Use Inventory - Report
Service Unit: MEDICAL STORE
Product Code:12K03
Product: KINYOUN SOLUTION
Charge: Laboratory Consumables
Quantity: 1
4.- Charge to patient of Lab Service
Patient: JUAN GARZA / MR1000017
Product Code:7903000
Product: AMNIOTIC FLUID CULTURE
Price: 282
4a.- Charge to patient - Accounting
Account | Debit | Credit |
Cost of the Sold | 30 |
|
Cost of Services Provided |
| 30 |
4b.- Charge to patient - Report
Patient: JUAN GARZA / MR1000017
Product Code:7903000
Product: AMNIOTIC FLUID CULTURE
Price: 282
Cost: 30
NOTES:
The standard cost for each service is calculated on: A) Labor B) Direct material C) Indirect Cost.
The standard cost for each service has to be calculated by the Customer, based on their own equipment for each service. Example: The standard cost of a MRI study with contrast for the spine in Hospital A will be different from Hospital B because the cost of the equipment (depreciation), the life expectancy of the asset (one could last 50% more than the other) and the direct expenses (more people, more contrast, more energy, etc) can vary for each equipment.
At ECS software, we register the standard cost for each service provided as showed before (as described at 4. Patient’s Charges)
Besides, we register the actual cost of the disposables that each dept is using to provide their own services ( as described at 3. Internal Inventory Usage)
We balanced the financial cost between the standard cost for each service (every time we provide a service to each patient) vs the real cost of the supplies to run the Department that provides the service at the account “Cost of Services Provided” (see accounting at #3 and #4).
For this example we assume that:
each litter of KINYOUN SOLUTION that the Lab request will provide 100 studies of Amniotic Fluid Culture
If the Lab dept only makes 50 studies with 1 liter of the solution, the Hospital will be losing money because of inefficiencies of Lab Dept; ECS accounting system will register it.
If the Lab dept makes 100 studies with 1 liter of the solution, the Hospital is break even at Cost level. ECS accounting system will register it.
If the Lab dept can make more than 100 studies with 1 liter of the solution, the Hospital is saving money because efficiencies of the Lab Dept. ECS accounting system will register it.