Working with cost models

In Axiom, a cost model is comprised of a series of configuration areas that you can easily modify to process costs as requirements and conditions change. You can create multiple cost models, as needed, to support various real-time or planning scenarios. You can designate one or more cost models as the current cost model for your organization. Most of these configuration areas are made up of individual tables, from which you can create multiple versions. You can swap these table versions in and out of the cost models to meet your needs.

You can create and implement different versions of tables used in the cost model

For example, you may have a version of the departments dimension that includes all departments that you use for your regular cost modeling. However, let's say this year there are three departments undergoing renovation. Instead of changing the entire cost model, you can simply create a new, separate version of the departments dimension to change those department types to indirect. You can then assign that version to the existing cost model to use until the departments have been refurbished and are ready to take patients again. When that happens, you can then reassign your original departments dimension to the cost model and reprocess it.

You can also create multiple cost models to meet your different costing needs, for example creating models for regions, hospitals, or fiscal quarters. In the following example, cost models have been created for each region. Each cost model has its own version of dimensions, direct to encounter, cost method exclusions, and other tables types for each region.

You can create multiple cost models to process costs for planning purposes

What-if cost models

As part of creating or modifying a cost model, you can enable or disable Axiom from summarizing the costs to the encounter level. If you disable summarization, you are in essence creating a what-if version of the model. You can then use the model to construct scenarios in which to compare to your production or "live" models. At any time, you can enable the summarization function—changing the what-if model to a production model—and vice versa.

NOTE: To prevent double costs, Axiom only allows one cost model per entity per period to be summarized to encounter.

The toggle gives you the control to enable or disable the system from summarizing the costs to the encounter level

About the cost model home page

The costing model home page walks you through the entire process of configuring or modifying a cost model from left to right, starting with Manage dimension versions and ending with Define allocations. After you have set up the cost model, you can process it fully or select different options within the process to run.

You can access the costing process guide from the Enterprise Decision Support home page by clicking the Modify a model or Create a model card under the Cost accounting section.

Dimension versions, manual statistics, and adjustments

• Manage dimension versions - Create versions of the cost categories, accounts, and departments dimensions, which includes data records used by Axiom when processing the cost model. You can also configure variability exceptions for each dimension.
• Manage manual statistic accounts - Define values by department for existing statistic accounts in addition to adding statistic accounts for departments.
• Make one-time adjustments - Modify account balances for a given department by changing one-time adjustments.

Methods

• Define direct to encounter - Create "pseudo" cost items to add to departments for costing those items or services normally not charged to the patient.
• Define method exclusions - Set up exclusions so certain cost items are not included as part of cost processing.
• Define markup groups definitions - Configure markups of cost items by cost item type or by pricing tier.

Reclasses and allocations

• Maintain RVUs - Add or edit the RVUs assigned to cost items within a department and entity.
• Define reclasses - Set up reclassification rules to specify moving dollars from one general ledger location to another during the costing process.
• Define allocations - Set up allocation rules and run order to move overhead expenses from support departments to revenue-producing departments during the costing process.

Processes

• Run automated cost process or Run advanced cost process - Run the entire costing process from beginning to end, or select only specific parts of the process to run.

The cost model home page breaks out the different configuration elements in an easy-to-follow format

Cost method types

Axiom Executive Decision Support allows you to use different cost methods methodologies.

• Relative Value Units (RVU) method - This method is the most commonly used methodology used to calculate cost at the cost item level. RVU allocations allow you to comparatively evaluate cost items in a department so that you can allocate cost according to the resources that you use (labor, supply, capital, and so on).
• Direct to Encounter (D2E) method - This method allows you to directly cost departments that do not generate patient revenue but incur expenses in response to patient activity. D2E allows you to spread costs that were historically allocated as indirect overhead to specific encounters that utilize the services of that particular department.
• Microcost method - This method is applied to cost items for selected cost categories where the vendor acquisition cost per unit is used as the unit cost. This costing method is used in situations where a supply item has a known cost that can be assigned, such as when using a single vendor and a contract price is negotiated for an extended period of time.
• Transaction Cost method - This method uses the exact acquisition cost for the encounter transaction. Typically used for high-cost drugs and devices, this method applies a unique cost to each encounter. This is true even when multiple encounters use the same cost item.