What aspect of a health plan might benefit from ABC principles?

Estimating per member administrative costs is a key area where Activity-Based Costing (ABC) principles can be highly beneficial. ABC focuses on assigning costs to specific activities and processes, providing a more accurate reflection of the true costs associated with those activities. In the context of health plans, using ABC allows organizations to break down the administrative costs per member by analyzing all the activities involved in servicing each member, from enrollment to claims management.

By implementing ABC, health plans can identify high-cost activities and assess their value. This insight enables more strategic decision-making regarding resource allocation, potential cost savings, and operational efficiencies. As health plans strive to optimize their administrative expenses to maintain profitability while delivering quality care, applying ABC to estimate per member administrative costs provides a clearer picture of cost drivers and helps in better budget management.

In contrast, while claim denial processing and revenue cycle management might also involve cost considerations, they do not necessarily align as closely with the specific benefits offered by ABC principles as estimating administrative costs does. Marketing strategies, on the other hand, are typically driven by market trends and consumer behavior rather than a granular analysis of cost activities, making them less relevant to ABC-focused insights.