Ems System Performance-Based Funding And Reimbursement Model - Finance Committee Draft Advisory Page 34
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34Cost Accounting Terms
For cost-accounting systems, below are definitions for the important terms:
Fixed Cost – A cost that does not change as the number of ambulance transports changes in
the short run, including, labor costs, vehicles, medical equipment, facilities, management
and administrative support functions.
Full Cost – The total direct, indirect, and shared costs of ambulance service.
Direct Cost – A cost that can be traced specifically to ambulance transports, including costs
for items or services that are provided by or shared with a parent hospital, government
agency, corporation, or other operating division. Direct costs include operations labor,
vehicles and fleet maintenance, medical supplies and equipment, and medical
communications center equipment.
Indirect Cost – A cost that cannot be traced specifically to ambulance transports, including
costs for items or services that are provided by or shared with a parent hospital, government
agency, corporation, or other operating division. Indirect costs include administrative labor;
building and facilities; and administrative support functions such as accounting, legal,
billing, payroll, purchasing, human resources, marketing, public education, quality
improvement, training and education, risk management, information technology, taxes,
interest, performance penalties, performance security, medical director fees, accreditation,
and other administrative and operations costs.
Marginal Cost – The direct cost of producing one additional ambulance transport.
Shared Cost – A cost that is provided by or shared among one or more operating divisions
or departments of a hospital-based, government-based, or multi-jurisdictional provider.
Shared direct costs include items or services such as loaned vehicles, loaned medical
equipment, shared fleet maintenance services, and shared medical communications center
services. Shared indirect costs include items or services such as shared facilities, shared
management functions, and shared administrative support functions.
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