What types of costs can be classified under overhead costs?

Overhead costs are those expenses that are not directly tied to the production of goods or services but are necessary for the general operation of an organization. The salaries of executives and support services fall under this category because they are essential for managing and supporting the overall functions of a healthcare organization, yet they do not directly contribute to patient care or service delivery.

These costs often include administrative salaries, utilities, rent, and other general office expenses that keep the organization running smoothly, but are not linked directly to a specific department or service line. This distinguishes them from direct care expenses, which are directly related to patient treatment and care, or medical supplies, which are variable costs incurred as a result of providing medical services. Similarly, while outdoor facility maintenance can be a necessary expense, it typically relates more to facility management rather than the core overhead functions of the healthcare organization.