Examining the effect of PPS on cost accounting systems

The effects of the implementation of the prospective payment system (PPS) on the hospital's accounting systems are examined. Results show that hospitals were positively affected by the PPS implementation. Ninety seven percent of hospitals experienced sophisticated changes in their cost accounting systems while 94% instituted cost and volume containment programs which enhanced efficiency and effectiveness of healthcare services. In addition, it was determined that the most commonly used and comprhensive standard cost systems in hospitals include microcosting, relative-value units, patient-acuity costing and cost-to-charge ratios.