DOH Clinical Costing for Healthcare and Homecare Providers
The Department of Health requires a costing model from every licensed clinic, lab, physiotherapy center and homecare provider in Abu Dhabi. It must show the full cost of each service you deliver, the method used to allocate that cost, and the price you charge against it.
Weak models are why license applications sit unapproved. Rarely fraud. Usually arithmetic that cannot be traced back to the financial statements.
Understanding DOH Clinical Costing
What is Clinical Costing?
Clinical costing calculates the full cost of delivering one unit of one service. One consultation. One CBC. One home visit.
Purpose:
Determine true cost per serviceSet sustainable pricingDemonstrate financial viabilitySupport DOH licensing and approvalsEnable informed business decisionsComponents:
Direct costs (staff, consumables, equipment specific to service)Indirect costs (overhead, admin, utilities, rent allocated across services)Staff time allocationConsumable usage per serviceEquipment depreciation and maintenanceDOH Requirement:
All licensed healthcare facilities in Abu DhabiSubmitted during licensing processUpdated when adding services or changing structureReviewed during DOH inspectionsWhy DOH Mandates Clinical Costing
DOH uses clinical costing to:
Ensure financial sustainability:
Providers charge enough to cover costsPrevents unsustainable pricingProtects patient accessVerify service viability:
Services priced appropriatelyProfitability demonstratedLong-term operations assuredMonitor pricing practices:
Prices align with costsNo excessive markupsFair pricing to patientsSupport regulatory decisions:
Licensing approvalsService additionsFacility expansionsWithout proper costing, DOH may delay or deny license approvals.
Industry Context: Healthcare Providers Affected
Who Must Submit Clinical Costing
Clinics:
General practice clinicsSpecialty clinics (dental, dermatology, orthopedic, etc.)PolyclinicsDay surgery centersDiagnostic Services:
Pathology labsRadiology centersImaging centersBlood draw stationsTherapy Centers:
Physiotherapy clinicsOccupational therapySpeech therapySports medicineHomecare Providers:
Home nursingHome physiotherapyMedical equipment rentalDoctor home visitsPharmacies with Clinical Services:
Vaccination servicesHealth screeningsConsultationsEach of these carries staff time, consumables, equipment and a share of overhead. The share is where most models fall apart.
Common Clinical Costing Problems
Errors Healthcare Providers Make
Wrong cost allocation:
All overhead lumped togetherNot allocated by serviceArbitrary allocation percentagesNo methodology documentedMissing consumable tracking:
No records of items used per serviceEstimates instead of actualsCannot justify cost claimsInconsistent usage assumptionsIncorrect staff hour mapping:
Doctor time not tracked by serviceNurse and assistant time ignoredAdmin time not allocatedOn-call time miscalculatedWeak overhead allocation:
Rent allocated equally without regard to space usedUtilities not allocated properlyAdmin salaries not distributedMarketing costs ignoredNo reconciliation:
Costing model doesn't match financial statementsClaimed costs don't align with expensesCannot prove costs incurredDOH challenges pricingWhat Weak Costing Costs You
Consequences of Incorrect Costing
The cost of a bad model is measured in delayed revenue, not in fines.
DOH Delays:
License applications delayedService additions blockedFacility expansions on holdRevenue opportunities missedWeak Financial Planning:
Underpricing loses moneyOverpricing loses patientsCannot identify profitable servicesPoor investment decisionsAudit Failures:
DOH inspection findingsRequired resubmissionsAdditional documentation demandedCredibility questionedOperational Issues:
Staff time misallocatedConsumables wastedEquipment underutilizedProfitability unclearA model that reconciles to your trial balance answers most DOH questions before they are asked.
Deep Breakdown: Clinical Costing Components
1. Cost Categories
Costs split four ways. Everything in your P&L belongs in one of these.
Direct Costs:
Staff time directly providing service (doctor, nurse, therapist)Consumables used during service (syringes, bandages, medications, etc.)Equipment specific to service (if dedicated)Indirect Costs:
Admin staff salariesRent and utilitiesGeneral equipment depreciationMarketing and advertisingInsuranceLicensing feesIT systemsCleaning and maintenanceSemi-Variable Costs:
Items that vary with volume but not directlyExample: Receptionist salary (fixed but serves all patients)Fixed Costs:
Costs that don't change with service volumeRent, insurance, equipment depreciation2. Service Mapping
Costing must map to specific services offered:
Consultations:
General practitioner consultationSpecialist consultationFollow-up consultationTelemedicine consultationProcedures:
Minor proceduresMajor proceduresDiagnostic proceduresTherapeutic proceduresLab Tests:
Blood tests (itemized by test type)Urine analysisImaging (X-ray, ultrasound, MRI, CT scan)Specialized testsPhysiotherapy:
Assessment sessionTreatment sessionGroup therapyHome visitHomecare Services:
Nursing visitPhysiotherapy visitDoctor home visitMedical equipment rentalEach service requires separate costing.
3. Staff Hours Allocation
Allocate doctor, nurse, and admin time accurately:
Doctor Time:
Consultation duration (including documentation)Procedure timePre and post-procedure timeSupervision time if applicableNurse and Assistant Time:
Preparation timeAssistance during servicePost-service careDocumentationAdmin Time:
Scheduling and reception (allocated by service volume)Billing and insurance processing (allocated by service complexity)Example: General Consultation
Doctor time: 20 minutesNurse prep time: 5 minutesAdmin time: 3 minutes (allocated)Calculation:
Doctor hourly cost: AED 400 (total salary and benefits ÷ 160 hours)Doctor cost per consultation: AED 400 × (20/60) = AED 133Nurse hourly cost: AED 75Nurse cost per consultation: AED 75 × (5/60) = AED 6.25Admin hourly cost: AED 50Admin cost per consultation: AED 50 × (3/60) = AED 2.50Total staff cost: AED 141.754. Consumables
Track consumables used per service:
Direct Consumables:
Gloves, syringes, bandages, swabsMedications administeredDisposable equipmentSterilization suppliesIndirect Consumables:
Office supplies (forms, paper)Cleaning supplies (allocated)Tracking Method:
Standard consumption per service typeActual usage loggedRegular audits to verifyCosting updated as usage changesExample: Blood Draw
Gloves: AED 0.50Syringe: AED 1.00Needle: AED 0.75Swab: AED 0.25Bandage: AED 0.50Tube: AED 2.00Total consumables: AED 5.005. Overhead Allocation
Allocate rent, admin, utilities, and depreciation:
Rent Allocation:
By space occupiedConsultation rooms, waiting area, admin areaAllocated to services using roomsUtilities:
Electricity, water, internetAllocated by space or service volumeCan use percentage allocationDepreciation:
Equipment depreciation per serviceBased on usage or time allocatedGeneral equipment depreciated across servicesAdmin and Marketing:
Total admin costs allocated by service volumeMarketing allocated by service revenue or patient countExample Allocation:
Total monthly overhead: AED 50,000
Rent: AED 30,000Utilities: AED 5,000Admin salaries: AED 10,000Marketing: AED 3,000Insurance: AED 2,000Total monthly consultations: 1,000
Overhead per consultation: AED 50,000 ÷ 1,000 = AED 50
Practical Examples by Service Type
General Practice Clinic
Service: General Consultation
Cost Calculation:
Direct Costs:
Doctor time (20 min): AED 133Nurse time (5 min): AED 6Consumables (gloves, thermometer cover): AED 2Indirect Costs:
Rent allocation: AED 20Utilities: AED 5Admin: AED 10Depreciation (exam table, BP monitor): AED 5Marketing: AED 3Insurance: AED 2Total Cost per Consultation: AED 186
Pricing: AED 250 (34% markup on cost)
Homecare Provider
Service: Home Physiotherapy Visit
Cost Calculation:
Direct Costs:
Physiotherapist time (60 min session + 30 min travel): AED 150Consumables (treatment materials): AED 10Fuel and vehicle wear: AED 15Indirect Costs:
Scheduling and admin: AED 15Equipment depreciation (portable devices): AED 5Insurance: AED 8Marketing: AED 5Office overhead allocation: AED 12Total Cost per Visit: AED 220
Pricing: AED 300 (36% markup on cost)
Diagnostic Lab
Service: Complete Blood Count (CBC)
Cost Calculation:
Direct Costs:
Phlebotomist time (10 min): AED 10Lab tech time (processing): AED 15Consumables (tubes, reagents): AED 8Indirect Costs:
Equipment depreciation (hematology analyzer): AED 12Rent (lab space): AED 5Utilities: AED 3Admin: AED 5Quality control and calibration: AED 4Waste disposal: AED 2Total Cost per Test: AED 64
Pricing: AED 85 (33% markup on cost)
How Ratio Supports DOH Costing
What We Build
Cost Model Development:
Build complete costing model from scratchMap all services offeredAllocate direct and indirect costsDocument methodologyStaff Hour Mapping:
Calculate time per service by roleInclude all steps (prep, service, documentation)Factor in admin and support timeValidate with actual operationsConsumable Tracking:
List consumables per serviceQuantify usage amountsPrice current costsSet up tracking systemOverhead Allocation:
Allocate rent by space usageDistribute utilities fairlyApportion admin costsCalculate depreciation properlyDOH Submission Preparation:
Format costing model per DOH requirementsPrepare supporting schedulesInclude all required documentationSubmit on behalf of clientOngoing Updates:
Update model when services changeRevise as costs changeMaintain compliance continuouslyResubmit when requiredImplementation Checklist
Building Your DOH Costing Model
Step 1: Map Services (Week 1)
[ ] List all clinical services offered[ ] Group similar services[ ] Define each service scope clearly[ ] Confirm with DOH service codesStep 2: Track Consumables (Week 1-2)
[ ] List consumables used per service[ ] Quantify amounts[ ] Get current prices[ ] Calculate total consumable cost per serviceStep 3: Allocate Overhead (Week 2)
[ ] Calculate total monthly overhead[ ] Determine allocation method (space, volume, revenue)[ ] Allocate to each service[ ] Document methodologyStep 4: Calculate Staff Time (Week 2-3)
[ ] Track actual service delivery time[ ] Include preparation and documentation[ ] Calculate hourly cost per role[ ] Multiply time by costStep 5: Build Costing Model (Week 3)
[ ] Compile all costs per service[ ] Calculate total cost[ ] Add margin for pricing[ ] Review for reasonablenessStep 6: Prepare DOH Submission (Week 4)
[ ] Format per DOH template[ ] Attach supporting documents[ ] Include methodology explanation[ ] Submit to DOHConclusion
A costing model is a licensing document and a pricing tool at the same time. Build it once, properly, and it does both jobs.
Success requires:
Detailed service mappingAccurate staff time allocationProper consumable trackingFair overhead distributionProfessional presentationWeak costing creates:
DOH approval delaysFinancial losses from underpricingOperational inefficiencyCompliance risksStart with service mapping. A model built on vague service definitions cannot be fixed later.
Get Expert Support
Ratio builds the costing model and prepares the DOH submission.
Our Clinical Costing Services:
Complete cost model developmentStaff time mapping and validationConsumable tracking systemsOverhead allocation methodologyDOH submission preparation and filingOngoing model maintenanceConnect with Ratio if DOH has queried your submission, or you are adding services and the existing model no longer covers them.
