Support/Direct....

Cost Centers are designated as either "Support" or "Direct"

A support cost center is also referred to as a "fixed cost center". Support cost centers are NOT affected by patient volume. Examples of support cost centers are Human Recourses, Information Management and Fiscal. Direct cost centers are defined as those driven by patient volume. Example of direct cost centers are nursing units, radiology, emergency departments etc.

Direct cost centers have specific expenses accounts designation as “fixed” or “variable”. Support Cost centers expense accounts are designated as being "fixed".

• In “direct” cost centers volume varies. Salaries are varied for specific accounts affected by volume to match staff resources due to volume demands. Typically, specific salary expense accounts are tagged to reflect the budgeted volume fluctuations. These accounts include tech's and RN’s which are spread based on a flexible spread criteria. Other salary accounts, such as managers, which are not volume related, are budgeted and spread based on “flat” spread criteria . Using this model the budgeted salaries, by month, will vary based on the budgeted volume for each month. If the volume in January is budgeted 5% higher than in December the salary budget will also be higher.

• In “support” departments each expense account is tagged using the “flat” spread criteria. This is done because the cost centers salary expenses are not affected by the number of patients or volume being produced in the cost center but rather by the payroll cycle. The resulting budgeted salaries are basically “flat” each month.

In both direct and support departments, benefit (non productive) expense accounts are budgeted and spread based on the cost centers actual history.