Process-based costing

Area of Science:

• Healthcare Management
• Health Economics
• Quality Improvement

Background:

• Accurate cost measurement is crucial for evaluating quality improvement initiatives.
• Existing methods for measuring direct costs are often expensive or unreliable.
• There is a need for accessible and dependable costing strategies in healthcare.

Purpose of the Study:

• To develop and present a low-cost, reliable costing strategy based on process improvement principles.
• To demonstrate the applicability of this new costing method in long-term care settings.

Main Methods:

• The proposed strategy, process-based costing, involves four key steps: flowchart development, resource use estimation, resource valuation, and direct cost calculation.
• The method was applied to cost the care planning process in three long-term care facilities.

Main Results:

• Process-based costing proved to be easy to implement across the studied facilities.
• The technique generated reliable and valid data for cost assessment.
• Nursing managers can utilize this method to evaluate the costs associated with new or modified processes.

Conclusions:

• Process-based costing offers a practical and effective solution for measuring direct healthcare costs.
• This approach empowers healthcare managers to make informed decisions regarding quality improvement and resource allocation.