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Extending simulation modeling to activity-based costing for clinical procedures.

N D Glick1, C C Blackmore, W N Zelman

  • 1Department of Management Services, University of North Carolina Health Care System, Chapel Hill 27514, USA.

Journal of Medical Systems
|July 15, 2000
PubMed
Summary
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This study introduces simulation modeling as a novel method for activity-based costing (ABC) in emergency departments. This approach accurately measures costs for cervical-spine injury patients, offering better data for reimbursement negotiations.

Area of Science:

  • Health economics
  • Healthcare management
  • Operations research

Background:

  • Traditional activity-based costing (ABC) methods struggle with process variations in healthcare settings.
  • Accurate cost measurement is crucial for emergency departments, especially for patients requiring radiological imaging for conditions like cervical-spine injury.

Purpose of the Study:

  • To develop and validate a simulation model for activity-based costing (ABC) in an emergency department (ED) setting.
  • To assess the feasibility of using simulation for cost analysis in healthcare, specifically for patients with potential cervical-spine injuries.

Main Methods:

  • Development of a simulation model tailored for ED patient flow and resource utilization.
  • Application of the simulation model to calculate costs associated with radiological imaging for suspected cervical-spine injuries.

Related Experiment Videos

  • Comparison of simulation-based costing with traditional ABC methods.

    • Main Results:

    • Simulation modeling proved to be an accurate and viable method for conducting activity-based costing (ABC).
    • The simulation approach provided more comprehensive cost information than conventional analyses.
    • The model demonstrated flexibility and generalizability to other healthcare settings by adjusting input parameters.

    Conclusions:

    • Simulation modeling offers a robust alternative for activity-based costing (ABC) in dynamic healthcare environments like emergency departments.
    • The detailed cost insights derived from simulation empower management for improved financial planning and contract negotiations.
    • This methodology enhances the ability to account for process variability in healthcare cost analysis.