Managing reclasses

In the cost accounting process, you can apply dollars incurred by one department to other departments using the reclasses and/or allocations. For example, applying costs for inpatient transportation, building maintenance, or marketing to a clinical department.

To reflect these transactions, Axiom uses a single account for allocations and a single account for reclasses to offset costs in source departments and write costs to receiving departments. Each of these accounts includes a flag that indicates the department and version.

Reclassification is the process of moving dollars from one general ledger location to another. Unlike overhead allocations that let you move only overhead expenses, you can use reclasses to move expenses, statistics, revenue, deductions, and other dollar types from one department or account to another. For example, you can take non-patient revenue, and reclass it as a negative expense from one department to another, or reclass statistics from one statistical account to another.

Let's say you have a cafeteria in your hospital. You can run a revenue reclass to offset the expenses of the cafeteria with its revenue, and then run an allocation to redistribute any remaining dollars across different In Patient departments.

There are three types of reclass definitions you can create:

  • Payroll - Reclass payroll dollars from one department to another.
  • Account - Reclass dollars from specified accounts to spread across accounts in the same or other departments.
  • Department - Reclass dollars from specified departments to spread across other departments.

Axiom determines the spread amount by performing the following calculations and applying a reclass rate to each applicable department or account:

  • Sum the total number of statistical accounts.
  • Divide the total source dollars from the accounts (the departments you are moving dollars from) by the total statistics to determine a rate per statistic.
  • Multiply the rate by the total number of statistics for each department.

In the following example, a hospital reclasses $93,365 of expenses from Radiology to spread them across separate Radiology departments. The system determines the M1 reclass rate by dividing $93,365 by the key statistic of 12,400. This calculates to a reclass rate of $7.53. The system then multiplies $7.53 by the key stat for each department. The Radiology Diagnostics department receives expenses with a total of $26,762.