Is grouping expenses by diagnosis and procedures better to use for control planning than care setting?

Grouping expenses by diagnosis and procedures is generally considered to be a more accurate and effective method for control planning than care setting. This is because diagnoses and procedures are more specific and directly related to the actual services provided, while care settings can be more general and may not accurately reflect the costs associated with specific patient encounters.

Here are some reasons why grouping expenses by diagnosis and procedures is better for control planning:

Accuracy: Diagnoses and procedures are more precise and specific than care settings, allowing for more accurate cost allocation. By linking expenses to specific diagnoses and procedures, it becomes easier to identify and monitor the cost drivers for different types of patient encounters.

Cost Analysis: Grouping expenses by diagnosis and procedures enables detailed cost analysis, allowing healthcare organizations to identify high-cost cases, variations in costs for similar procedures, and opportunities for cost reduction. By analyzing costs at the diagnosis and procedure level, organizations can make more informed decisions about resource allocation and service provision.

Resource Allocation: Diagnoses and procedures provide a better basis for resource allocation as they directly relate to the services provided. By understanding the cost associated with specific diagnoses and procedures, healthcare organizations can allocate resources more effectively to meet patient needs and manage costs.

Performance Monitoring: Grouping expenses by diagnosis and procedures facilitates performance monitoring and benchmarking. By comparing costs for similar diagnoses and procedures across different units, departments, or hospitals, organizations can identify areas of inefficiency, best practices, and opportunities for improvement.

Contract Negotiations: Diagnoses and procedures are widely recognized and accepted in healthcare reimbursement systems, making them useful for contract negotiations with payers. By understanding the costs associated with specific diagnoses and procedures, organizations can negotiate more effectively for appropriate reimbursement rates.

Overall, grouping expenses by diagnosis and procedures provides healthcare organizations with a more refined and accurate understanding of their cost structure, enabling better control planning, resource allocation, performance monitoring, and contract negotiations. However, it's essential to ensure that the coding and documentation of diagnoses and procedures are accurate and consistent to maximize the effectiveness of this approach.