Experts recommend a procedure called activity-based accounting to get the most accurate picture of expenses associated with each procedure performed in your office. Activity-based accounting uses detailed information on all of the costs, activities and other resources associated with a given service. It is more accurate than traditional cost accounting methods because it seeks to trace all costs directly to products and services. Before you can start crunching the numbers you'll need to know how much the practice spends on salaries and benefits for employees, overhead expenses such as rent, utilities, janitorial service, etc. Next, pick your unit of measure.
Consultants say there is no one way to do an activity-based accounting analysis.
You can figure your cost per each CPT code or you can group CPT codes under certain processes. Once you've decided on a unit of measure, you're ready to begin. The cost of each unit will be measured by figuring the staff time involved, the occupancy expense and the supply expense. Let's look at measuring staff time first. The Gary Siegel Organization, a Lincolnwood, Ill.-based opinion research and behavioral accounting firm, uses a survey method to figure out the percentage of employee time allocated to each task.