Abstract
Financial modeling, a tool to be systematically applied to the solution of hospital management questions, has only recently been computerized and become readily available. Managers have begun to make use of simulation and other true modeling capabilities even in a relatively stable reimbursement and accounting environment. Meanwhile, a number of pressures have converged to support case mix as an alternative measure of hospital activity. Case mix, in this analysis, is seen as a special sort of multiple-output accounting system, similar to that employed in complex manufacturing operations. Use of case mix for management requires the development of previously unavailable bases of information and an awareness by managers of the utility of the information generated. This new environment can, however, be accommodated within the theory and practice of the financial modeling systems now available to hospitals.