Key Takeaways
- Conducted a comprehensive costing and pricing study across multiple hospitals in Metro Manila.
- Used Activity-Based Costing (ABC) and benchmarking to align prices with actual cost structures.
- Delivered a transparent Cost and Pricing Analysis Model to guide long-term financial decisions.
Background
A group of healthcare institutions operating in Parañaque, Cavite, Pasay, and Makati sought to determine whether their pricing truly reflected the cost of care delivery.
While patient volumes remained strong, profitability across departments varied widely — raising concerns about underpriced services and misaligned resource allocation.
The management needed a clearer understanding of which departments were sustaining the organization — and which were draining financial capacity.
The Challenge
Pricing decisions were historically based on legacy mark-ups rather than systematic cost analysis.
Department heads had no unified framework for viewing direct and indirect costs, making it difficult to identify inefficiencies or justify fee adjustments.
Without a reliable costing system, the hospitals risked:
- Subsidizing certain services unintentionally
- Missing opportunities to improve margins sustainably
- Making investment decisions without accurate profitability data
SSA’s Approach
Saavedra Songalia & Associates (SSA) led a group-wide Costing and Pricing Evaluation designed to bring transparency and structure to healthcare financial management.
Key steps included:
- Cost Center Mapping – Identified major drivers of personnel, utilities, supplies, and depreciation.
- Indirect Cost Allocation – Designed a fair, replicable allocation framework for overheads.
- Unit Cost Computation – Calculated the true cost per procedure, room type, and service category.
- Benchmarking – Compared existing fees with private hospitals in similar markets.
- Pricing Model Design – Developed a Cost and Pricing Analysis Model for continuous review and data-driven decision-making.
Results & Impact
The engagement provided a data-backed foundation for pricing and planning:
- Identified underpriced services and cost-recovery gaps
- Revealed high-margin areas that could be optimized or reinvested
- Delivered department-level profitability reports
- Supported a revised, evidence-based fee schedule
With these insights, management could finally align pricing with real costs — ensuring both competitiveness and sustainability.
Tools & Standards Used
- Activity-Based Costing Templates
- Departmental Financial Statements
- Benchmarking Matrices
- Pricing Sensitivity Analysis
Next Phase
SSA is now assisting the hospitals in institutionalizing a Cost Monitoring Framework — integrating monthly accounting data and patient volume statistics for continuous, evidence-based pricing oversight.
Client Reflection
We finally understand the real cost of our services — and how every peso spent or earned affects our sustainability.
— Administrator, Healthcare Institutions in Parañaque, Cavite, Pasay, and Makati
SSA Perspective
Understanding cost isn’t just about profitability — it’s about stewardship.
When healthcare organizations price services based on true costs, they gain not only financial stability but also the ability to sustain access and mission-driven care.
Let SSA help you uncover your real financial drivers, strengthen your pricing models, and build sustainability through clarity.
