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Understanding Service Industry Cost Accounting in Healthcare: A Textbook Novel Approach

"Code Blue" by McDermott and Stocks offers a unique blend of textbook and novel formats to delve into service industry accounting, particularly within the healthcare sector. Covering essential economic and accounting concepts, the book emphasizes real-world applications through compelling storytelling. Readers will explore employment opportunities in various fields, including consulting and financial accounting, while gaining insights into the complexities of healthcare cost accounting systems like ABC costing. Comprehensive exercises and character-driven narratives ensure engagement and deeper understanding.

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Understanding Service Industry Cost Accounting in Healthcare: A Textbook Novel Approach

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Presentation Transcript

  1. About the Book Code Blue, McDermott & Stocks Accounting Version

  2. Learning Objectives • Understand the format and purpose of a textbook/novel • Introduction to service industry accounting • Introduction to the healthcare industry • Review of employment opportunities

  3. Introduction to Text • Format is textbook/novel • Novel section (pages 15 - 171) provide background on industry necessary in understanding service industry accounting • Supplement section (pages 172 - 253) provide technical material on design of service industry cost accounting

  4. Introduction to Text • Format is textbook/novel • Learning in context • Material is more interesting and therefore easier to understand when presented in a real-world framework • People understand theory when attached to a story that illustrates the principle

  5. Introduction to Text • Exercises and problems are found on McDermott’s web page.

  6. Introduction to Text • Medical, Economic and Accounting Terms used in Text --page 254 • Abbreviations used in the text--page 262 • Cast of characters--page 13

  7. Why Service Industry Cost Accounting? • In 1954 the number of jobs in service industries passed the number in manufacturing • Services industries presently constitute 75% of the economy

  8. Why Service Industry Cost Accounting? • Price competition is driving many service industries to costing systems • In recent years, hospitals alone have spent in excess of $4 billion designing and implementing cost accounting • Service industry cost accounting is different from the traditional manufacturing cost accounting

  9. Why illustrate with a hospital cost accounting case study? • Hospital cost accounting is relatively new and addresses issues such as quality, ABC costing etc. • Hospital cost accounting is the most comprehensive of the service industry cost accounting systems • Principles learned can be applied to other service industries

  10. Why illustrate with a hospital cost accounting case study? • The health care industry provides many opportunities for accountants • It is currently the largest industry in the U.S. • It is bigger than the second and third industries combined (Education and Defense)

  11. Employment Opportunities • Consulting--one of the fastest growing consulting fields in the country

  12. Employment Opportunities • Financial Accounting--prospective reimbursement has made healthcare one of the most complex areas in revenue recognition • Cost Accounting--developed in the early 1980s with the introduction of prospective reimbursement • New and exciting job opportunities

  13. Hospitals are big business • It is not unusual for a regional medical center to have in excess of • $250 million annual operating budget • 2,000 employees • 60+ revenue and cost centers

  14. The End

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