Problem Statement: Military Health System (MHS) has struggled to effectively use its only managerial cost accounting system to support a variety of external reporting and managerial requirements. Supporting senior TRICARE Management Activity (TMA) data stakeholders, a conceptual framework for evolving the Expense Assignment System (EAS) to better support a comprehensive integrated cost accounting system for the MHS was designed predicated on improving the current system to meet the three fundamental information requirements of any cost accounting system. The model designed and implemented is an adaptation of Kaplan’s Four Stage Cost Model1, which begins with data quality and ends with a fully integrated cost system.
Instead of employing the linear construct used by Kaplan, our model emphasizes that evolution can be non-linear meaning one stage does not have to be completed prior to progressing to the next and that modifications affecting one stage can have profound effects on the other three stages. The greatest benefit of this model is its flexibility in supporting data system enhancements as small as updating an algorithm or as large as implementing multiple costing systems if needed to meet diverse user needs.
1. Finkler, Steven A., Ward, David, and Baker, Judith J. Essentials of Cost Accounting for Health Care Organizations. 3rd Ed. Sudbury, MA: Jones and Bartlett Publishers, Inc., 2007.
Goal Development: Facilitated workgroup discussions involving senior TMA data stakeholders and Service representatives to create a Conceptual Framework for an Integrated Cost System based on industry research, SWOT analysis, and environmental scan.
Operational Plan: Subject Mater Experts from CIRE Business Solutions and Escobar Analytics and Services relied on the Nominal Group technique to identify, rate, and classify key objectives and supporting initiatives consistent with the overarching MHS Quadruple Aim strategic imperatives.
Execution: Successful implementation of the Operational Plan was achieved by employing a balanced scorecard approach to quantify execution progress and transparently report and regularly brief performance metrics and overall execution of the plan to Senior Stakeholders.