Linking cost control measures to health care services by using activity-based information.

Area of Science:

• Health Services Management
• Healthcare Economics
• Accounting Information Systems

Background:

• Canadian healthcare institutions face pressure to control expenditures and improve productivity.
• Accurate management information systems are crucial for controlling hospital operating costs, which are largely controllable.
• The new Canadian Management Information System (MIS) Guidelines aim to improve cost measurement and program evaluation.

Purpose of the Study:

• To examine the relationship between cost deviations (variances) and their underlying cost drivers in Canadian healthcare.
• To identify potential sources of cost variability within patient treatment groups.
• To assess the impact of management information systems on cost control.

Main Methods:

• Analysis of cost deviations and their relationship with cost drivers.
• Examination of the compatibility between Diagnosis-Related Group (DRG) methodology and traditional cost accounting models.
• Review of the implications of the Canadian Management Information System (MIS) Guidelines.

Main Results:

• Cost systems are essential for providing necessary management information in healthcare.
• The MIS Guidelines offer accurate cost measurement for patient treatment and aid in evaluating program changes.
• Potential benefits include improved funding through benchmarking and higher reporting standards for resource use.

Conclusions:

• Incompatibility between DRG methodology and traditional cost accounting models is a significant factor contributing to cost variability.
• Implementing MIS guidelines can help healthcare institutions gain better control over expenditures.
• Further research is needed to fully understand and mitigate cost variability in diagnostic groupings.