The cost accountants' institute has sought costing guidelines for the healthcare sector as well as bringing hospitals in the non-corporate sector under mandatory costing framework.
Currently, maintenance of cost records and cost audit requirement are applicable only for certain classes of companies under the Companies Act, 2013.
The Institute of Cost Accountants of India's suggestions also come at a time when there are concerns in various quarters about pricing ways in the healthcare space.
Limited costing mechanism for hospitals in the corporate sector needs to be expanded and there is a need to make costing principles mandatory for healthcare entities in the non-corporate sector also, institute's President Balwinder Singh told PTI.
According to him, the institute is seeking costing guidelines for the healthcare segment as well as expanding requirement of maintenance of cost records to various entities, including hospitals in the non-corporate sector.
"Since most hospitals are run by trusts, they are not covered under mandatory costing framework.
"So bringing such entities under the framework would help in having a better understanding about costing in the healthcare sector and ensure the services are more affordable," Singh said.
He also said the institute plans to approach the government on bringing more entities, including trusts, that run hospitals under cost audit requirement.
Under the Companies Act, 2013, entities having an annual turnover of at least Rs 35 crore should maintain cost records while cost audit is broadly applicable for two classes of companies based on their yearly turnover.
Subject to certain conditions, cost audit is required for companies having an yearly turnover of at least Rs 50 crore and other categories having a minimum annual turnover of Rs 100 crore.
Those companies that are into "health services, namely functioning as or running hospitals, diagnostic centres, clinical centres or test laboratories" come under the Rs 100 crore segment for the purpose of cost audit.
"Accurate pricing of healthcare services and robust costing mechanism is necessary to ensure affordable services to the patients.
"There are 24 cost accounting standards issued by the institute. Such principles enable an entity to determine available capacity correctly and plan utilisation of resources in a most efficient manner," Singh said.
While the institute already has a guidance note on cost management in the healthcare sector, Singh said there is a need for government guidelines on costing in the sector.
Meanwhile, the institute has also pitched for having a disease coding system to have a clearer picture of treatment costs.
A cost framework is in place for certain medical devices, including stents.
As per the institute, effective procedure costing and cost management can play a large role in changing the dynamics of the healthcare industry.
Accurate costing of procedures and services would lead to competitive pricing and that would make quality healthcare services more affordable.
Some of the essential tools for effective cost analysis include time-based and activity-based costing.
On April 13, the institute wrote to the Indian Council of Medical Research (ICMR), saying it was ready to offer on a voluntary basis cost audit service with regard to costing of the coronavirus tests to be carried out by the government or private pathological laboratories.
The institute, which comes under the corporate affairs ministry, has around 70,000 members.
Disclaimer: No Business Standard Journalist was involved in creation of this content
