ACTIVITY-BASED COSTING IN RADIOLOGY. Application in a pediatric radiological unit

Abstract

Purpose: To get an informative and detailed picture of the resource utilization Key words: Radiology, economic in a radiology department in order to support its pricing and management.issues; cost, cost accounting; cost Material and Methods: A system based mainly on the theoretical foundations analysis, organizational management. of activity-based costing (ABC) was designed, tested and compared with conventional costing. The study was performed at the Pediatric Unit of the Depart-Correspondence: Jouni M. J. Laurila, ment of Radiology, Oulu University Hospital. The material consisted of all the Department of Radiology, Porvoo 7,452 radiological procedures done in the unit during the first half of 1994, Hospital, Sairaalantie 1, when both methods of costing where in use. Detailed cost data were obtained FIN-06 200 Porvoo, Finland. from the hospital financial and personnel systems and then related to activity FAX π58 19 54 82 267. data captured in the radiology information system.Results: The allocation of overhead costs was greatly reduced by the intro-Accepted for publication 22 October duction of ABC compared to conventional costing. The overhead cost as a 1999. percentage of total costs dropped to one-fourth of total costs, from 57% to 16%. The change of unit costs of radiological procedures varied from ª42% to π82%.Conclusion: Costing is much more detailed and precise, and the percentage of unspecified allocated overhead costs diminishes drastically when ABC is used. The new information enhances effective departmental management, as the whole process of radiological procedures is identifiable by single activities, amenable to corrective actions and process improvement.

Applying Time Driven Activity-Based Costing to Calculate Cost of Computed Tomography Scan in a Teaching Hospital

“…[17] Laurila and Suramo et al (2000) stated that when switching from the conventional costing methods to new methods all types of costs rose, except there was a drop in overhead costs from 57% to 16%. Because the modern tools are giving accurate methods of calculating overhead costs, [24] we found similar results in our study.…”

ABC and VED Analysis of the Pharmacy Store of a Tertiary Care, Academic Institute of the Northern India to Identify the Categories of Drugs Needing Strict Management Control

“…With the use of ABC, costing was found to be more detailed and precise and overhead costs diminished drastically. 12 Among various inventory control models, Economic Order Quantity (EOQ) has been commonly used which attempts to balance the carrying cost of inventory with the cost of running out of an item. 13 EOQ in conjunction with ABC has been proposed to be effective and efficient.…”

Activity-based costing evaluation of [18F]-fludeoxyglucose production

“…decontamination fee). Moreover, this costing exercise shows policy makers also how the total cost is more and more affected by the QArelated activities [11,12,20,22]. The QC and QA (without the regulation fees) have a growing impact consuming altogether 24% of the total production costs.…”

“…There have still been only a few reports on implementations of ABC in health care [11,12,[19][20][21][22][23]. The current ABC approach provides a better insight in the different cost components of 18 F-FDG production, including the added costs for complying with regulatory requirements.…”

“…A high level of detail, however, unavoidably translates into a higher workload (and cost), not only during the development phase, but also in daily use. Different choices need to be made about the desired complexity to maintain the model practically manageable [11,12,22].…”