COST MANEGMENT ACCOUNTING

Industry Healthcare
Location Chennai, India
Established 1983
No of employees 10,000 +
Annual turnover US$530 million
Market Mumbai plus international patients

Apollo Hospitals was established in 1983 by Dr. Prathap C Reddy, renowned as

the architect of modern healthcare in India. As the nation’s first corporate hospital,
Apollo Hospitals is acclaimed for pioneering the private healthcare revolution in
the country.
Apollo Hospitals has emerged as Asia’s foremost integrated healthcare services
provider and has a robust presence across the healthcare ecosystem, including
Hospitals, Pharmacies, Primary Care & Diagnostic Clinics and several retail health
models. The Group also has Telemedicine facilities across several countries,
Health Insurance Services, Global Projects Consultancy, Medical Colleges,
Medvarsity for E-Learning, Colleges of Nursing and Hospital Management and a
Research Foundation. In addition, ‘ASK Apollo’ - an online consultation portal
and Apollo Home Health provide the care continuum.
The cornerstones of Apollo’s legacy are its unstinting focus on clinical excellence,
affordable costs, modern technology and forward-looking research & academics.
Apollo Hospitals was among the first few hospitals in the world to leverage
technology to facilitate seamless healthcare delivery. The organization embraced
the rapid advancement in medical equipments across the world, and pioneered the
introduction of several cutting edge innovations in India. Recently, South East
Asia’s first Proton Therapy Centre commenced operations at the Apollo Centre in
Chennai.
Since its inception, Apollo Hospitals has been honoured by the trust of over 150
million individuals who came from 140 countries. At the core of Apollo’s patient-
centric culture is TLC (Tender Loving Care), the magic that inspires hope amongst
its patients.
As a responsible corporate citizen, Apollo Hospitals takes the spirit of leadership
well beyond business and has embraced the responsibility of keeping India
healthy. Recognizing that Non-Communicable Diseases (NCDs) are the greatest
threat to the nation, Apollo Hospitals is continuously educating people about
preventive healthcare as the key to wellness. Likewise, envisioned by Dr. Prathap
C Reddy, the “Billion Hearts Beating Foundation” endeavours to keep Indians
heart-healthy
Apollo Vision
Company Vision
Apollo's vision for the next phase of development is to 'Touch a Billion Lives'.
Apollo Mission Statement
Mission Statement
"Our mission is to bring healthcare of International standards within the reach of
every individual. We are committed to the achievement and maintenance of
excellence in education, research and healthcare for the benefit of humanity"
Apollo Hospitals has championed numerous social initiatives - to cite a few which
assist underprivileged children - SACHi (Save a Child's Heart Initiative) which
screens and provides paediatric cardiac care for congenital heart diseases, SAHI
(Society to Aid the Hearing Impaired) and the CURE Foundation focused on
cancer care. To introduce population health into the Indian narrative, the Total
Health Foundation, as envisaged by Dr. Reddy, is piloting a unique model of
healthcare in the Thavanampalle Mandal of Andhra Pradesh. It aims to provide
"holistic healthcare" for the entire community starting from birth, through one's
journey into childhood, adolescence, adulthood and old age.
In a rare honour, the Government of India had issued a commemorative stamp in
recognition of Apollo's widespread contributions, the first for a healthcare
organization. In addition, a stamp was also released to mark the 15th anniversary
of India's 1st successful liver transplant performed at Apollo Hospitals. More
recently Apollo Hospitals was again honoured with a postal stamp for having
successfully performed 20 million health checks and its pioneering efforts in
encouraging preventive healthcare in the country.
Dr. Prathap C Reddy, Founder Chairman of the Apollo Hospitals Group has been
conferred with the prestigious Padma Vibhushan, India's second highest civilian
award.
ORGANISATION STRUCTURE OF APOLLO HOSPITAL
 revenue Generation Stream Chart
out PAtIent revenue In-PAtIent revenue
A) Medical Services A) Medical Services
- Consultation Fee - Doctor’s Fee
- Cardiology Services - Surgeon Fee’s
- Injection & - Neurology Services
Immunization - Surgeon Charges
Charges - Operation Theatre
- Neurology Charges
- Casualty - Anaesthecian Charges
- Day Care - Baby Cradle Charges
- Master Health Check-up - Implants Charges
- Diabetology - ICU Charges
- Ambulatory Care - Room rent charges
- Dialysis - Special Nursing Charges
- ENT Services - Nursing Charges
- Endoscopy B) Medical Support Services
- Colonoscopy & Etc. - Admission &
B) Medical Support Services Documentation
- OP Registration Charges - Lab Services
- Lab Services - Radiology Services
- Radiology Services - Medical Counselling
- Blood Bank services - Medical legal Charges
- Diet Counseling - Blood Bank Charge
- Physiotherapy - Oxygen Charges
- Ambulance Services - Mortuary Charges
- Surgery / Procedure
Charges
- Medical & Surgical
Consum- ables
PhArMACY InCoMe
- Out-Patient (O.P.)
Pharmacy
- In-Patient (I.P) Pharmacy
- Trauma Center Pharmacy
- Rehabilitation Center
Phar- macy
other operational
Income
- Admission
charges
- Outsourced Pharmacy
- Outsourced Lab
- Infrastructure (IFS)
Charges
- Telemedicine
Consultancy
- R&D income on
assignment basis
 overview of Billing Cycle in a hospital

End Of Physician order

Revenue (written Order for
Cycle Requested Services)
Payment Posting Scheduling
Posting of (Services requested are scheduled )
Insurance/
patient payments

Colle
ctionup for
Collection follow Admit/ Registration
patient balance
s not Patient Consent
paid by patient

Patient billing Collection

Bill patient for portion after Insurance Verification
insurance or Bill for full incase of
Verify Coverage Charges
uninsure
d

Patient Care
Appeals All care provided by hospital
Re-consideration of services
not paid/ paid incorrectly

Charges Capturing
Gather All charges documents Ensure
Re-Billing all services rendered are billed
Additional Charges /Late
Fees
Procedure Charges
Other Services not captured by charge
Billing documents are assigned appropiate coding
Generation of Billing
for all facility Discharge
availed Dignostic
Coding documentation
Coding assigned &
for all services All Consent form
signed by
patient
HPSPOTAL COSTING SYSYTEM

HOSPITAL EXPENDITURE

operational expenditure non-operational

expenditure

Medical
Service
Administrative
Medical
CAPEX
othersSupport
deptt.
department
Service deptt.
expenses
Pharmacy Exp.
General Lab
Doctor’s FeesExp
Surgeon’s
ReferralFees Lab.
Finance
Staff
Patient
Salary
Clinical
Help Exp
Desk
Charges
Copyright
Legal
Other
Expenses
StoresExp&
Radiology
Advertisement
maintenances
Trademark
Operation Exp&
Pathology
Sales
Food Surgical Exp
&promotion
Exp
theatreBeverage
Blood Bank
Transportation
Insurance
Equipment
House
ImplantsKeepingExp
Ambulance
Medical
Medical
ExpensesExpRecord
Tools
Services
Audit
Exp
Nursing Fees
Medical Exp
Travelling
Mortuary
Furniture
Expenses ExpR
Exp
Telecommuting
& D Exp CSSD
Equipment
Emergency Exp
Maintenances
(central
Casualty sterile
Exp
-cation
Exp Exp
services
Office Exp
division)
Books
Training Exp & Call
Periodicals
Centre Exp Exp
Rent Charges
Oxygen & Gas
Charges

Power & Fuel

exp

COST ANALYSIS
COST APPROACH

 Variable Cost Approach dr consultation fees +direct

Medicines & consumables +direct labor + variable overhead + Profit Margin =
Price
 Health Care Package Cost Approach
direct Medicines &consumables+ direct labor + variable overhead
 +Apportioned Fixed overhead + Profit Margin = Price

 Total Cost Approach Direct Costs+ Indirect Costs + all

Fixed Cost + Profit Margin = Price

 Activity Based Cost Approach All Direct Costs +Activity

Costs:(Activity(s). * Cost driver
rate) + Profit Margin = Price

X apllo hospital
Income Statement
For the Year Ended December 31, 2019

Revenue from patient

fees ₹ 690,900
Other revenue ₹ 10,000
Total Revenue       ₹ 700,900

Expense:
Program services ₹ 470,000
Utlities ₹ 20,000
Laboratory ₹ 50,000
General and
administrative ₹ 184,000
Total expenses       ₹ 724,000
Surplus (deficit)       -₹ 23,100

XExpenses and Patient Visits for 2019 By Department  

    Expenses
Number
of patient Salaries Other Total
visits
Department
₹
Pediatrics ₹ 5,000.00 ₹ 40,000.00 ₹ 16,000.00 56,000.00 Number of paitent visit
₹ ₹
Family Planning 10,000.00 ₹ 10,000.00 ₹ 30,000.00 40,000.00 Average cost per visit
₹
Adult medicine ₹ 2,100.00 ₹ 60,000.00 ₹ 32,000.00 92,000.00
₹
Nursing ₹ 4,000.00 ₹ 54,000.00 ₹ 12,000.00 66,000.00
₹
Mental Health ₹ 1,400.00 ₹ 30,000.00 ₹ 16,000.00 46,000.00
₹
physioterapy ₹ 1,500.00 ₹ 64,000.00 ₹ 16,000.00 80,000.00
Community ₹
health ₹ 2,500.00 ₹ 10,000.00 ₹ 20,000.00 30,000.00
₹
Dental ₹ 6,400.00 ₹ 40,000.00 ₹ 20,000.00 60,000.00
₹ ₹ ₹ ₹
Subtotal 32,900.00 308,000.00 162,000.00 470,000.00

₹
Administration ₹ 76,000.00 ₹ 4,000.00 80,000.00
₹
Rent ₹ 72,000.00 72,000.00
₹
Utilities ₹ 20,000.00 20,000.00
₹
Laboratory Work ₹ 32,000.00 ₹ 18,000.00 50,000.00
₹
Cleaning ₹ 12,000.00 12,000.00
₹
Recordkeeping ₹ 14,000.00 ₹ 6,000.00 20,000.00
₹ ₹ ₹
Total 430,000.00 294,000.00 724,000.00
XFloor Space and Laboratory Usage, By Department
Laboratory
Floor Space (sq. ft.) Usage (hrs.
lyr.)
Department
Pediatrics 1,000.00 1,000.00
gynocology 1,300.00 200.00
general medicine 1,800.00 2,400.00
Nursing 300.00 100.00
pschiatry 1,000.00
physioterapy 500.00
Community medicine health 1,100.00 100.00
Dental 1,000.00 200.00
Administration 500.00
Recordkeeping 300.00
Laboratory 1,200.00  
Total 10,000.00 4,000.00
 Apollo hospital Step Down Method
Basis of ommunity
Gynacolo general pychiatry Record- Laboratory
appropriation/ Pediatrics Nursing ohysioterapy medicine Dental Administration Rent Utilities Cleaning
gy medicine Health keeping Work
Reappropriation health
General Information
Floor Space (in sq. ft ) 1000 1300 1800 300 1000 500 1100 1000 300 1200 500 10000
Laboratory Usage (Hrs/Year) 1000 200 2400 100 100 200 4000
Number of Patient visits 5000 10000 2100 4000 1400 1500 2500 6400

Direct Costs
Salaries 40,000.00 10,000.00 60,000.00 54,000.00 30,000.00 64,000.00 10,000.00 40,000.00 14,000.00 32,000.00 76,000.00
Other Costs 16,000.00 30,000.00 32,000.00 12,000.00 16,000.00 16,000.00 20,000.00 20,000.00 6,000.00 18,000.00 4,000.00 72,000.00 20,000.00 12,000.00
Total Costs after allocation 56,000.00 40,000.00 92,000.00 66,000.00 46,000.00 80,000.00 30,000.00 60,000.00 20,000.00 50,000.00 80,000.00 72,000.00 20,000.00 12,000.00

Appropriation of Cost
Rent Floor Space 7,200.00 9,360.00 12,960.00 2,160.00 7,200.00 3,600.00 7,920.00 7,200.00 2,160.00 8,640.00 3,600.00 -72,000.00
Utlities Floor Space 2,000.00 2,600.00 3,600.00 600.00 2,000.00 1,000.00 2,200.00 2,000.00 600.00 2,400.00 1,000.00 -20,000.00
Cleaning Floor Space 1,200.00 1,560.00 2,160.00 360.00 1,200.00 600.00 1,320.00 1,200.00 360.00 1,440.00 600.00 -12,000.00
Total Cost after Appropriation 66,400.00 53,520.00 110,720.00 69,120.00 56,400.00 85,200.00 41,440.00 70,400.00 23,120.00 62,480.00 85,200.00 0.00 0.00 0.00

Reappropriation of Cost
Administration Salary 9,627.12 2,406.78 14,440.68 12,996.61 7,220.34 15,403.39 2,406.78 9,627.12 3,369.49 7,701.69 -85,200.00
Laboratory Usage 17,545.42 3,509.08 42,109.02 1,754.54 0.00 0.00 1,754.54 3,509.08 0.00 -70,181.69
Recordkeeping No. of Patients 4,025.76 8,051.52 1,690.82 3,220.61 1,127.21 1,207.73 2,012.88 5,152.97 -26,489.49
Nursing Working Note 1 9,000.00 9,000.00 18,000.00 -36,000.00 0.00 0.00 0.00 0.00
physioterapy bpt 2,666.67 2,666.67 2,666.67 2,666.67 2,666.67 -16,000.00 2,666.67 0.00
physioterapy 2mpt 4,000.00 4,000.00 4,000.00 4,000.00 4,000.00 -24,000.00 4,000.00 0.00

Total Costs 113,264.97 83,154.05 193,627.18 57,758.43 71,414.22 61,811.12 54,280.87 88,689.17 0.00 0.00 0.00

Cost Per visit (Total Cost/ No. of Patient) 22.65 8.32 92.20 14.44 51.01 41.21 21.71 13.86