The importance of activity-based methods in radiology and the technology that now makes this possible

Activity-based methods serve as a dynamic process that has allowed many other industries to reduce and control their costs, increase productivity, and streamline their processes while improving product quality and service. The method could serve the healthcare industry in an equally beneficial way. Activity-based methods encompass both activity based costing (ABC) and activity-based management (ABM). ABC is a cost management approach that links resource consumption to activities that an enterprise performs, and then assigns those activities and their associated costs to customers, products, or product lines. ABM uses the resource assignments derived in ABC so that operation managers can improve their departmental processes and workflows. There are three fundamental problems with traditional cost systems. First, traditional systems fail to reflect the underlying diversity of work taking place within an enterprise. Second, it uses allocations that are, for the most part, arbitrary Single step allocations fail to reflect the real work-the activities being performed and the associate resources actually consumed. Third, they only provide a cost number that, standing alone, does not provide any guidance on how to improve performance by lowering cost or enhancing throughput.