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Activity-based costing for clinical paths. An example to improve clinical cost & efficiency
Journal of the Society for Health Systems
|January 1, 1996
Summary
Activity-based costing (ABC) helps hospitals accurately determine patient care costs. This method models clinical and financial data to optimize resource allocation and improve efficiency for better patient care and profitability.
Area of Science:
- Healthcare Management
- Health Economics
- Operations Research
Background:
- Hospitals face challenges in accurately determining the cost of medical services and surgical procedures.
- Managed care and capitation necessitate a clear understanding of service profitability.
Purpose of the Study:
- To introduce activity-based costing (ABC) as a tool for accurate patient care cost determination in hospitals.
- To demonstrate a modeling approach for analyzing operational and financial issues in healthcare.
Main Methods:
- Developing a model that integrates clinical and financial data.
- Measuring the efficiency of resource allocation (human, material, capital).
- Analyzing operational aspects like resource allocation, process efficiency, pathway profitability, cycle time, and capacity utilization.
Main Results:
- The proposed modeling approach enables accurate patient care cost calculation.
- It facilitates efficient resource allocation and operational planning.
- The method aids in performance measurement, quality improvement, and understanding clinical pathway profitability.
Conclusions:
- Activity-based costing provides a robust framework for hospitals to understand and manage costs effectively.
- Implementing ABC models can lead to improved operational efficiency, enhanced patient care quality, and increased financial viability.