Cost Behaviors and Allocation

Abstract

This research paper is based on highlighting the cost behavior complexity within healthcare organizations and it also helps in identifying the classification of costs according to their relationship with volume of services. The paper also informs the readers about the significance of cost allocation in health care organization and how it can be leveraged. For any of the organization cost management and profitability are the two important aspects that need to be managed accordingly. Those organizations, which have the ability to address the challenges related to cost allocation and profitability function, can become successful organizations.

Table of Contents

Introduction4

Discussion4

Complexity of Cost Behaviors in Health Care Organizations4

Importance of Cost Allocation in Health Care Organizations6

Conclusion7

References8

Cost Behaviors and Allocation

Introduction

Cost allocation and behavior is of great importance for an organization as it helps it to manage and maintain all its financial activities accordingly. Health care organizations are of great importance for any country or state. When it comes to states which are completely managing all the costs of the healthcare services of the citizens from the federal government funds, it becomes even more important. United States is providing premium quality healthcare services to all its citizens and ensures a healthy and long life for everyone. So it needs to manage and maintain all the financial activities of the healthcare organizations in such a way that it can provide quality services to larger number of patients. Managing and maintaining a balance among the quality healthcare and financing activities has become a major problem for United States. Providing quality health care services without charging any cost is not an easy task for healthcare organizations and government, but still the government is trying to manage all the healthcare needs of people in an effective way. There are number of cost behavior complexities being faced by the healthcare organizations in United States, although government has tried its level best to manage the costs according to their relationship with the volume of healthcare services.

Discussion

Complexity of Cost Behaviors in Health Care Organizations

As the business grows its needs changes accordingly, so to manage and maintain its position in the market certain strategies and tactics need to be used. The cost behaviors are the changes in patterns of costs (Chisholm, 2007). There are some costs that remain steady without any link to the production quantity; this is known as fixed costs. On the other hand there are some costs that keep ...