Purpose -The purpose of this paper is to describe research which investigated the interdependencies between facility management performance and costs, and primary processes in hospitals. Through the implementation of the German diagnosis related grouping (DRG) system and the resulting cost pressure, the need for optimized use and operation of the spatial resources in hospitals is growing. In the DRG system, the provision of ready to use infrastructure is treated as a fixed cost and is allocated to patient cases by a single cost driver. In reality, very different services are needed to provide ready to use functional space. Design/methodology/approach -A primary activity based cost model for facility management (FM) services in relation to functional space units in the hospital is developed. Using process and cost data of an empiric research study from four German hospitals, a model is developed for a key functional space unit in the hospital, the operation unit. The relevant FM services structured by a product-oriented approach are determined by real data. For these services, process figures are derived and implemented in a basic cost estimation model. The cost estimation model is compared to the cost approach of the DRG system. Findings -In an explorative study, the model provides an approach for a patient focused cost allocation of FM services for the operation unit. Depending on the time spectrum of operations great differences between this approach and the legal cost allocation approached in Germany can be determined. One way for hospitals to face the consequences may be the determination and optimization of relevant FM services according to a primary process portfolio.Research limitations/implications -The activity based cost model should be developed for further space units in the hospital. Thus, a holistic approach to FM and strategic planning of space and FM services could be achieved. Further, the explorative study should be enlarged to a greater database for the development of general key figures for FM in relation to the primary processes. Practical implications -The model can be used by hospitals for strategic planning of the FM costs and services in relation to the capacity and utilization of the operation unit. The impact of changes of the primary performance portfolio on the utilization of corresponding infrastructure can be simulated. Thus, cost data can be made available to support strategic decisions. Originality/value -There is no existing cost model for the hospital considering FM in a holistic way in relation to the primary processes.

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