Business Processes in the Function of Cost Management in Healthcare Institutions (original) (raw)
Related papers
Development of an activity based costing model for a government hospital
Uncertain Supply Chain Management, 3(1), 2015, 27-42.
Activity based costing (ABC) is a new age accounting system developed to overcome the limitations of traditional costing system, which in today’s technologically advanced world has lost its ability to provide accurate and useful cost information often required in taking various managerial decisions, like setting of selling price, ascertaining profitability of products as well as customers, taking a make or buy decision, eliminating the non-beneficial activities, and rewarding the employees. In this paper, an ABC model is developed for a government hospital in the state of Bihar in India to quantify its various public health related services. Although, there are limited published research papers related to application of ABC model in a specific department or method of a healthcare system, none of them has investigated its scope for organization-wide implementation. The results obtained from the developed ABC model in the public hospital would provide more comprehensive and accurate cost information, and radically contribute to the hospital administration in effective planning, controlling and decision making. This paper also elucidates about various obstructions and difficulties encountered during the implementation phase of ABC model in an Indian healthcare setting.
A New Costing Model in Hospital Management
The Health Care Manager, 2013
Traditional cost systems cause cost distortions because they cannot meet the requirements of today's businesses. Therefore, a new and more effective cost system is needed. Consequently, time-driven activity-based costing system has emerged. The unit cost of supplying capacity and the time needed to perform an activity are the only 2 factors considered by the system. Furthermore, this system determines unused capacity by considering practical capacity. The purpose of this article is to emphasize the efficiency of the time-driven activity-based costing system and to display how it can be applied in a health care institution. A case study was conducted in a private hospital in Cyprus. Interviews and direct observations were used to collect the data. The case study revealed that the cost of unused capacity is allocated to both open and laparoscopic (closed) surgeries. Thus, by using the time-driven activity-based costing system, managers should eliminate the cost of unused capacity so as to obtain better results. Based on the results of the study, hospital management is better able to understand the costs of different surgeries. In addition, managers can easily notice the cost of unused capacity and decide how many employees to be dismissed or directed to other productive areas.
Specifics of the Activity-Based Costing applications in Hospital Management
2013
This paper analyses the specifics of the application of Activity-Based Costing method in hospital management. Primary objective of the paper is to outline the methodology of the ABC application in hospitals. First part of the paper analyzes the ways of ABC implementation in published foreign studies. Second part describes the individual steps in ABC application and discusses the differences in the application procedures between the manufacturing and hospital organization.
Cost accounting in teaching hospitals: an application in a surgery unit
International Journal of Healthcare Technology and Management, 2009
The Italian Healthcare National System is involved in a deep process of change aimed at diffusing managerial techniques used in the private sector to public administrations. In this context, an extensive literature on healthcare planning and control systems (PCSs) is growing. PCSs are characterised by a complex architecture made up of three elements: the process infrastructure, the organisational infrastructure and the technical infrastructure. In this paper, we focus on the technical infrastructure and, in particular, on the logic of cost accounting in teaching hospitals. The paper presents a case study on the allocation of surgery unit costs on final cost centres that use its services. The proposed application is part of a wider project involving the Azienda Ospedaliera Universitaria Federico II (AOU Federico II) and the Department of Business and Managerial Engineering at University of Naples Federico II. The project aims at implementing a cost accounting system in AOU Federico II. In addition to the allocation model, the paper offers some observations derived from the case study and on the importance of integration among the infrastructures of PCS.
Activity-Based Costing System to Measure and Reduce Costs in Hospitals - A Case Study
Tij S Research Journal of Social Science Management Rjssm, 2011
Background: The rapid increase in healthcare costs has resulted in healthcare providers facing increased pressures to provide services to their patients in a more effective and efficient manner. So the healthcare organizations need to adopt contemporary management techniques to meet these challenges, such as activity-based costing (ABC), as contemporary system. Objectives: This paper aims to design and implement an ABC to measurement the cost of medical services (tests) in the private hospitals sector, then reduce it s' costs in Super specialty hospital (SSH). The respective methodology involves: Two stages-eight steps, stage1: costs analysis and activities this involves: step1-identify and analysis costs, and step2: analysis of activities. Stage2: Allocation costs to the activities and services this involves: step3-Determining the relation between costs with activities in the Cost-Activity-Dependence Matrix CADM, step4-Determine the consumption percentage in (CADM) between cost and activity, step5-Calculating Activities s' Costs, step6-Determining the relation between costs with Services in the Activity-Services-Dependence Matrix ASDM,step7-Determine the percentage of the effort in the Activity-Services-Dependence Matrix (ASDM) between activity and service and step8-Calculating Service s' Cost. The findings: Obtained cost per unit of medical service (tests), and it has been found there are great differences between our results with it have calculated by traditional costing system (TCS). Information is collected from registers, purchase orders, payroll, account books, hospital bills, and registers, along with informal interviews with hospital staff. The research has used actual data from a super specialty hospital (SSH).
Journal of health care finance
Due to the instable global economic conditions, rising healthcare costs, competitive environment, a long term program for the betterment of the health system (health transformation program) in Turkey and increase in the population, better knowledge on cost components, accurate cost calculation for activities, identification of non-value-added activities, and recognition of the activities consuming bigger resources are much more important in today's economy. Therefore, activity-based costing (ABC) is an answer to all concerns. It provides private, government, and university hospitals with reliable cost information and it helps managers identify costly, unprofitable services and improve the pricing policy. The aim of the paper is to prove the excellence of ABC approach in the health sector by implementing activity-based costing in a private hospital in Istanbul, Turkey and by comparing superior ABC results with those of traditional costing. This paper is the first study on ABC having detailed analysis of literature survey and in depth case study of the implementation of ABC in a service firm. In simpler terms, previous papers did not analyze the "various aspects" of the ABC on one paper, which is the main contribution of the paper. Finally, it raises the attention of the practitioners, government, and academics to the superiority of the ABC method for the "health sector". A1 (patient acceptance and discharge process): Upon interviewing the manager of the Gynecology Department, it was noted that 12,350 patients had been admitted in the Gynecology Department in a year.
Application of the Activity-Based Costing Method for Unit-Cost Calculation in a Hospital
Background: Choosing an appropriate accounting system for hospital has always been a challenge for hospital managers. Traditional cost system (TCS) causes cost distortions in hospital. Activity-based costing (ABC) method is a new and more effective cost system. Objective: This study aimed to compare ABC with TCS method in calculating the unit cost of medical services and to assess its applicability in Kashani Hospital, Shahrekord City, Iran. Methods: This cross-sectional study was performed on accounting data of Kashani Hospital in 2013. Data on accounting reports of 2012 and other relevant sources at the end of 2012 were included. To apply ABC method, the hospital was divided into several cost centers and five cost categories were defined: wage, equipment, space, material, and overhead costs. Then activity centers were defined. ABC method was performed into two phases. First, the total costs of cost centers were assigned to activities by using related cost factors. Then the costs of activities were divided to cost objects by using cost drivers. After determining the cost of objects, the cost price of medical services was calculated and compared with those obtained from TCS. Results: The Kashani Hospital had 81 physicians, 306 nurses, and 328 beds with the mean occupancy rate of 67.4% during 2012. Unit cost of medical services, cost price of occupancy bed per day, and cost per outpatient service were calculated. The total unit costs by ABC and TCS were respectively 187.95 and 137.70 USD, showing 50.34 USD more unit cost by ABC method. ABC method represented more accurate information on the major cost components. Conclusion: By utilizing ABC, hospital managers have a valuable accounting system that provides a true insight into the organizational costs of their department.
Activity Based Cost System Applied in Surgical Center of a Brazilian Large Hospital
2020
Brazilian hospitals manage costs using the traditional absorption cost method. This practice generates distortions in calculation of indirect costs, and produces accounting reports unable to contribute to control and management of hospital resources. The present study aimed to report the implementation of the Activity Based Costing Method (ABC Method) in the surgical center of a large Brazilian hospital, identifying the relevant steps, activities and indicators. It is an applied, descriptive and qualitative research, with technical procedures of case study. The results show the main activities and cost drivers, and suggest that the tracking of expenses makes it possible to monitor various levels of resource consumption and activities to effectively achieve the goals of the surgical center. The results also revealed benefits and difficulties of implementing ABC method in the surgical center. This work can contribute as a reference for future improvements in management of hospital costs.
Management Science, 2017
The purpose of this paper is to highlight similarities and differences between one Croatian and one Italian public hospital regarding the implementation of cost accounting and full costing method in their accounting systems. Moving from the theoretical background, it is evident that cost accounting methods introduced in healthcare sector bring benefits to the whole society through an increased efficiency of the healthcare services provided. It primarily ensures better governing of hospital's resources allowing more transparency in spending public funds. The main topic is that with the introduction of cost accounting system for internal purposes in public hospitals, the management would be able to govern them in a more efficient and effective way while reducing costs. The research for this paper was conducted through the interview of accounting officers in one Croatian and one Italian public hospital. The main results show that there are differences in legislation background regarding how they record costs, but also how they allocate costs to the cost objects and in how they use cost information in their decision-making process. In order to successfully manage public hospitals, it is crucial that true, timely and valid information are obtained as a base for the decision-making process. The cost accounting methodology is therefore essential to the management of public hospitals. It must provide information on the type and amount of resources spent, and thus enable the preconditions for control, management and potential reduction of costs.
Cost Accounting in Public Hospitals in Poland
Journal of Health Management, 2017
The aim of this article is to assess the cost accounting solutions that are used currently in Polish hospitals. The evaluation covered three main areas that require cost data-management, external reporting and pricing of health services (performed by a regulatory body). The study concerned the costing model that was obligatory for Polish public hospitals in the years 1998-2011 (top-down micro-costing model) and has not yet been replaced by another solution. Different research methods have been used for each of the areas under research, inter alia surveys, direct interviews and case study methods. Empirical results indicate a limited usefulness of the researched costing model in all of the evaluated areas: management, financial reporting and pricing. First, the costing model is used moderately only for the most important management areas, such as planning, control and operational decision making. Second, it does not include the specifics of diagnosis-related groups (DRGs) (basic pricing object) and therefore does not allow for accurate determination of their costs. Third, due to lack of the complex costing methodology the model is used in an unstructured and incoherent manner.