Contrasting RCC, RVU, and ABC for managed care decisions

To obtain cost data needed to improve managed care decisions and negotiate profitable capitation contracts, most healthcare provider organizations use one of three costing methods the ratio of costs to charges method, the relative value unit method, or the activity based costing method. Although the ratio-of-costs to charges is used by a majority of provider organizations, a case study that applied these three methods in a renal dialysis clinic found that the activity based costing method provided the most accurate cost data. By using this costing methods, healthcare financial managers can obtain the data needed to make optimal decisions regarding resource allocation and cost containment, thus assuming the long term financial viability of their organizations.