¶ … Behaviors Allocation Cost behaviors in health care organizations are complex, and the costs are classified according to the relationship they have with the volume of the care provided. It is, therefore, important to address the cost allocation and how health care organizations can leverage costs to operate more effectively. There are five ways in which health care is funded. These include taxation of a municipality, state, or county, private (voluntary) health insurance, payments made out-of-pocket by patients, socialized health insurance (such as government-run options), and donations that are made to health care charities (Bond & Bond, 1994). Most countries offer a mix of those models for paying health care costs, and what the health care organizations do with that money is dependent on the needs of the organization itself and the patients in need of health care from that organization. In cost allocation, a business unit (a department, for example) is directly responsible for the money it uses and how that money is spent (allocated) within that department, along with any services or resources they...

It can seem very confusing, but in reality it is a simple concept that requires control, responsibility, and accountability, as well as good record-keeping.
That allows the health care organization's departments to see what services they are using and how much they are spending to use those services, as well as what they are really getting for the money they spend on services. Cost recovery is also important, in that it is up to the departments to determine how they could save money or spend less money for the same services while still providing adequate patient care Simmons, 2009). A health care organization is a bit of a conundrum when it comes to cost allocation behaviors, because it cannot simply cut costs or eliminate something to control spending. The lives of many people may be at stake, and a health care organization has an obligation to take care of those people and make sure no harm comes to them based on the cutting of costs or the areas in which a health care organization chooses to spend its money (Bond & Bond, 1994;…