Healthcare Accounting: Contracts, Costing & Pricing

Healthcare Accounting: Contracts, Costing & Pricing

This course is part of Financial and Managerial Accounting in Healthcare Specialization

Instructor: Ann McGrath

What you'll learn

Evaluate risk‑based contracts and estimate medical claims expense under value‑based care.
Analyze cost behavior, perform CVP analysis, and understand how cost structures affect decisions.
Allocate costs and set sustainable prices using service line profitability and pricing tools.

Skills you'll gain

Tools you'll learn

Healthcare Project Management

Details to know

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Assessments

11 assignments¹

AI Graded see disclaimer

Taught in English

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This course is part of the Financial and Managerial Accounting in Healthcare Specialization

When you enroll in this course, you'll also be enrolled in this Specialization.

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There are 4 modules in this course

Build the skills to evaluate healthcare contracts, model costs, and set sustainable prices. You’ll start with risk‑based (capitated) contracts—how revenue is recorded, how medical claims expense is estimated (RBUC/IBNR), and how to account for loss‑generating arrangements—so you can quantify financial risk and performance under value‑based care.

Next, transition into managerial accounting to classify fixed, variable, and mixed costs; apply cost‑volume‑profit (CVP) analysis; and see how reimbursement type (fee‑for‑service vs. capitation) affects profitability and decision‑making. Then, master departmental costing and cost allocation. Practice the Direct and Step‑Down methods, understand when and why allocation choices matter, and learn how cost pools and cost drivers (e.g., square footage, revenue) shape service line profitability. Finally, apply these tools to pricing strategy. Work through price‑setter vs. price‑taker scenarios, bundled pricing, marginal vs. full‑cost pricing, and sensitivity analysis to establish breakeven and profit‑targeted prices and to negotiate feasible contract terms. By the end, you’ll be able to evaluate contracts, allocate costs fairly, and determine prices that align with financial and strategic goals. Complete the full specialization to become eligible for Credit‑By‑Exam toward university credit.

In this module, we discuss risk contract arrangements, also referred to as capitated contracts. We discuss intended incentives under these arrangements, and the risk borne by providers. We discuss the revenue flow under risk contracts, and how it differs from fee-for-service arrangements. We also cover the estimation processes used to accurately capture medical claims expense under risk contracts. Lastly, we review the accounting for risk contracts that generate losses for the provider.

What's included

8 videos4 readings3 assignments

8 videosTotal 64 minutes

Risk Contracts Part 1.110 minutes
Risk Contracts 1.28 minutes
Risk Contracts Scenario Video Solutions7 minutes
Risk Contracts 2.16 minutes
Capitated Contracts Video Solutions11 minutes
Risk Contracts 2.28 minutes
Risk Contracts 2.39 minutes
Loss Contracts Video Solutions6 minutes

4 readingsTotal 125 minutes

American College of Physicians: Understanding Capitation5 minutes
How Capitation Contracts Benefit Providers, Payers and Patients15 minutes
UnitedHealth Group 2024 Form 10-K60 minutes
CommonSpirit Health Combined Financial Statements 2023 & 202445 minutes

3 assignmentsTotal 90 minutes

Capitated Contract Worksheet30 minutes
Loss Contracts Exercise30 minutes
Module 1 Quiz 30 minutes

In this module, we transition from financial accounting to managerial accounting. We discuss the differences between the two types of accounting, and how managerial accounting supports decision-making within a healthcare organization. We cover the classification of costs according to their relationship with volume, and how we use this information to conduct profit analyses using the Cost-Volume-Profit model. We also discuss how reimbursement contracts (Fee-for-Service and Capitated) impact profit analysis. We also discuss the differences between direct and indirect costs, and why healthcare organizations have to consider both when making decisions. We review cost allocation methodologies, with a primary focus on the Direct and Step-Down methods.

What's included

13 videos5 readings3 assignments

13 videosTotal 93 minutes

Organizational Costing and Profit Analysis 1.19 minutes
Organizational Costing and Profit Analysis 1.26 minutes
Organizational Costing and Profit Analysis 1.35 minutes
Organizational Costing and Profit Analysis 2.17 minutes
Organizational Costing and Profit Analysis 2.28 minutes
Quick Med Consult Video Solutions5 minutes
Organizational Costing and Profit Analysis 3.110 minutes
Departmental Costing and Cost Allocation 1.18 minutes
Departmental Costing and Cost Allocation 1.28 minutes
Routine Care v. Intensive Care Video Solutions11 minutes
Departmental Costing and Cost Allocation 2.13 minutes
Departmental Costing and Cost Allocation 2.24 minutes
Step Down Method Video Solutions10 minutes

5 readingsTotal 150 minutes

Cost Accounting: The Key to Managing Profitability in Healthcare30 minutes
(OPTIONAL) Hospital Average Cost and Profitability Delivering Patient Care10 minutes
Cost Volume Profit (CVP) Analysis10 minutes
Costing Healthcare Services Using Time-Driven Activity-Based Costing90 minutes
Cost Allocations: The Basics10 minutes

3 assignmentsTotal 90 minutes

Routine Care v. Intensive Care Assignment30 minutes
Step Down Method Exercise30 minutes
Module 2 Quiz30 minutes

This module focuses on service line profitability, pricing strategy, and financial decision‑support tools. You will evaluate departmental margins, model bundled pricing strategies, analyze marginal vs. full‑cost pricing, and determine break‑even or profit‑targeted pricing using the CVP framework. You’ll also assess mixed market environments where organizations act as both price setters and price takers, applying sensitivity analysis to determine feasible variable costs, pricing floors, contract negotiation boundaries, and the financial viability of altering utilization rates or adding cost‑management programs.

What's included

9 videos1 reading3 assignments

9 videosTotal 68 minutes

Service Line Costing and Pricing 1.17 minutes
Service Line Costing and Pricing 1.25 minutes
Service Line Costing and Pricing 1.39 minutes
Service Line Costing and Pricing 1.44 minutes
Windsor Clinic Price Per Visit Video Solutions7 minutes
Baxter Orthopedics Cost Setting Video Solutions8 minutes
Service Line Costing and Profitability 1.15 minutes
Service Line Costing and Profitability 1.27 minutes
Memorial Medical Center Capitated Contract Video Solution16 minutes

1 readingTotal 10 minutes

Segmented Income Reporting10 minutes

3 assignmentsTotal 90 minutes

Memorial Medical Center Capitated Contract30 minutes
C-V-P Problem30 minutes
Module 3 Quiz30 minutes

In this final module, you’ll pull together the major ideas from the course and apply them to practical healthcare finance situations. We take a big‑picture look at how risk‑based contracts work, what drives medical claims expenses, and how organizations estimate and manage key financial obligations. You’ll also work with core cost and pricing concepts, like direct and indirect costs, cost behavior, cost allocation, and basic pricing methods, to see how financial information supports real decision‑making. To wrap up the course, you’ll complete a final quiz and a short assignment that give you a chance to demonstrate what you’ve learned and apply it in a realistic healthcare context.