What formula is used to calculate the average cost per patient?

To determine the average cost per patient, the appropriate formula involves assessing the total expenses that are variable in nature, as these costs fluctuate based on the number of patients serviced. This means calculating the total variable expenses, which are the costs directly associated with each patient, and dividing that amount by the total number of patients treated during the same period.

Using total variable expenses per month or year acknowledges that these costs change in relation to patient volume, providing a clearer picture of cost efficiency and operational performance in a healthcare setting. This approach accurately captures how much each patient costs the organization, helping to inform budgeting and financial planning.

Other methods of calculating costs, like focusing solely on net collections, fixed expenses, or direct expenses, can obscure the true relationship between costs and patient volume. For example, fixed expenses do not vary with the number of patients, and thus wouldn't provide the relevant average cost per patient effectively.