All medical practices should have a computerized billing system with practice analysis capabilities. The revenues earned can be easily obtained from this system. Any current expenses paid in a subsequent month should be included in the financial statements, and expenses paid for costs incurred in previous months should be removed. The accrual-basis income statement is the foundation of the cost system. The numbers presented by this statement will be assigned to the various procedures performed by the practice during this period.
Cost centers are identifiable units through which a medical practice operates.
Examples include administration, surgery, pathology and laboratory. It's up to each practice to define its own cost centers. A multispecialty practice will usually have more cost centers than a single-specialty practice, and a group practice may also view each physician as a cost center. The determination of cost centers will be dependent on how a particular practice operates. For illustration, let's say the Metropolis Medical Clinic includes Drs.