Better Medicare Cost Report Data are Needed to Help Hospitals Benchmark Costs and Performance

To evaluate costs and achieve cost control in the face of new technology and demands for efficiency from both managed care and governmental payers, hospitals need to benchmark their costs against those of other comparable hospitals. Since they typically use Medicare Cost Report (MCR) data for this purpose, a variety of cost accounting problems with the MCR may hamper hospitals' understanding of their relative costs and performance. Managers and researchers alike need to investigate the validity, accuracy, and timeliness of the MCR's cost accounting data.