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Activity-based costing in radiology. Application in a pediatric radiological unit.
J Laurila1, I Suramo, M Brommels
1Department of Radiology, Oulu University Hospital, Finland.
Acta Radiologica (Stockholm, Sweden : 1987)
|March 31, 2000
Summary
Activity-based costing (ABC) provides a detailed financial picture for radiology departments, significantly reducing overhead costs and improving management. This method enhances resource utilization and process improvement for radiological procedures.
Area of Science:
- Healthcare Management
- Radiology
- Cost Accounting
Background:
- Accurate resource utilization data is crucial for effective radiology department management and pricing.
- Conventional costing methods often lack the detail needed for precise financial analysis in healthcare settings.
Purpose of the Study:
- To assess resource utilization in a radiology department for improved pricing and management.
- To compare the effectiveness of activity-based costing (ABC) with conventional costing methods.
Main Methods:
- Designed and tested an activity-based costing (ABC) system.
- Compared ABC with conventional costing using data from 7,452 radiological procedures.
- Integrated financial, personnel, and radiology information systems for cost data collection.
Main Results:
- ABC significantly reduced overhead cost allocation, from 57% to 16% of total costs.
- Unit costs for radiological procedures showed variability, ranging from -42% to +82%.
- Overhead cost allocation was substantially decreased with ABC implementation.
Conclusions:
- Activity-based costing (ABC) offers more detailed and precise cost information for radiology departments.
- The use of ABC drastically reduces unspecified allocated overhead costs.
- ABC enhances departmental management by identifying specific activities for process improvement.