What does cost per discharge measure in health care finance?

Cost per discharge is a key financial metric in health care that calculates the average cost incurred by a hospital for each patient discharged. This measurement is crucial for hospitals as it helps them understand the efficiency of their operations and resource utilization.

Measured as the total costs associated with hospital services (including direct and indirect expenses) divided by the number of discharges, this metric aids in evaluating the financial health of a facility. By analyzing cost per discharge, hospitals can compare their performance over time or against other institutions, facilitating informed decision-making about budgeting, pricing, and operational improvements.

In the context of health care finance, it's important to distinguish this measure from other metrics related to revenues or income. For example, it differs from total revenue generated, which reflects the income side of operations, rather than the costs involved. Understanding cost per discharge helps organizations manage their budgets more effectively, optimize resource allocation, and ultimately improve patient care while also maintaining financial viability.