Accounting, valuing and investing in health care: dealing with outdated accounting models

Abstract

Purpose Despite major progress made in improving the health and well-being of millions of people, more efforts are needed for investment in 21st century health care. However, public hospital waiting lists continue to grow. At the same time, there has been increased investment in e-health and digital interventions to enhance population health and reduce hospital admissions. The purpose of this study is to highlight the accounting challenges associated with measuring, investing and accounting for value in this setting. The authors argue that this requires more nuanced performance metrics that effect a shift from a technical practice to one that embraces social and moral values. Design/methodology/approach This research is based on field interviews held with clinicians, accountants and administrators in public hospitals throughout Australia and Europe. The field research and multidisciplinary narratives offer insights and issues relating to value and valuing and managing digital health investment decisions for the post-COVID-19 “value-based health-care” future of accounting in the hospital setting. Findings The authors find that the complex activity-based hospital funding models operate as a black box, with limited clinician understanding and hybridised accounting expertise for informed social, moral and ethical decision-making. While there is malleability of the health economics-derived activity-based hospital funding models, value contestation and conflict are evident in the operationalisation of these models in practice. Activity-based funding (ABF) mechanisms reward patient throughput volumes in hospitals but at the same time stymie investment in digital health. Although classified as strategic investments, there is a limit to strategic planning. Research limitations/implications Accounting in public hospitals has become increasingly visible and contested during the pandemic-driven health-care crisis. Further research is required to examine the hybridising accounting expertise as it is increasingly implicated in the incremental changes to ABF in the emergence of value-based health care and associated digital health investment strategies. Despite operationalising these health economic models in practice, accountants are currently being blamed for dysfunctional health-care decisions. Further education for practicing accountants is required to effect operational change. This includes education on the significant moral and ethical dilemmas that result from accounting for patient mix choices in public hospital service provision. Originality/value This research involved a multidisciplinary team from accounting, digital health, information systems, value-based health care and clinical expertise. Unique insights on the move to digital health care are provided. This study contributes to policy development and the limited value-based health-care literature in accounting.

COVID-19 and accounting as multidimensional technical, social and moral practice: a framework for future research

“…Of the other seven articles, the authors of five of these quoted in full the definition of accounting outlined earlier and elaborated upon in Figure 1 (Powell and McGuigan, 2023; Sidaway et al , 2023; Twyford, 2023; Twyford and Abbas, 2023; Vesty et al , 2023). The broad scope of accounting positions taken by each of these five author teams is now aligned with the Framework outlined in Figure 1.…”

“…Seven of the following eight articles hereafter published specifically deployed this proposed new definition of accounting in undertaking their studies (i.e. Masiero et al , 2023; O’Connell et al , 2023; Powell and McGuigan, 2023; Sidaway et al , 2023; Twyford, 2023; Twyford and Abbas, 2023; Vesty et al , 2023). Three sub-sections now follow.…”

“…They argue, among other points, that a greater focus on the liberal arts, along with student research projects co-designed with industry to help solve wicked problems, such as reducing environmental impact, will contribute to this long overdue form of accounting for understanding and evaluation of social impact. Vesty et al (2023) believe that the accounting profession does not sufficiently “understand the strategic importance [of] as well as the social, ethical and moral role that accounting plays in the health-care sector. In concluding, these authors stated that their findings reveal the relevance of the game-changing definition of accounting […] as technical, social and moral practice and the need for proactive involvement in change, underpinned by the profession’s ethical and moral duties to society.…”

“…Vesty et al (2023) highlight the challenges faced by accounting and accountants in health care, in a context where there is a need for targeted investments to guarantee the health and well-being of the population. These challenges also encompass investment in e-health and digital interventions that strive to enhance population health and reduce hospital admissions.…”

“…The author calls for accounting educators globally to know and teach what accounting does as social practice and what accounting should or should not do, as moral practice, in educating current accounting students and future entrants into the accounting profession. Vesty et al (2023) highlight the challenges faced by accounting and accountants in health care, in a context where there is a need for targeted investments to guarantee the health and well-being of the population. These challenges also encompass investment in e-health and digital interventions that strive to enhance population health and reduce hospital admissions.…”