From centralized DRG costing to decentralized TDABC-assessing the feasibility of hospital cost accounting for decision-making in Denmark

Abstract

Background The objective is to examine hospital cost accounts to understand the foundation upon which healthcare decisions are based. More specifically, the aim is to add insights to accounting practices and their applicability towards a newly establish value-based agenda with a focus on patient-level cost data. Methods We apply a cost accounting framework developed to position and understand hospital cost practices in relation to government requirements. Allocated cost account data from 2015 from all Danish hospitals were collected and analyzed. These cost accounts lay the foundation for diagnosis related group (DRG) rate setting. We further compare the data’s limitations and potential in a value-based healthcare (VBHC) agenda with the aim of implementing time-driven activity based costing (TDABC). Results We find exceedingly aggregated department-level data that are not tied to patient information. We investigate these data and find large data skewness in the current system, mainly due to structural variances within hospitals. We further demonstrate the current costs data’s lack of suitability for VBHC but with suggestions of how cost data can become applicable for such an approach, which will increase cost data transparency and, thus, provide a better foundation for both local and national decision-making. Conclusions The findings raise concerns about the cost accounts’ ability to provide valid information in healthcare decision-making due to a lack of transparency and obvious variances that distort budgets and production-value estimates. The standardization of costs stemming from hospitals with large organizational differences has significant implications on the fairness of resource allocation and decision-making at large. Thus, for hospitals to become more cost efficient, a substantially more detailed clinically bottom-led cost account system is essential to provide better information for prioritization in health.

Energy Strategy for Sustainable Development of Rural Areas Based on the Analysis of Sustainable Digital Economy

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Assessing Cost and Cost Savings of Teleconsultation in Long-Term Care Facilities: A Time-Driven Activity-Based Costing Analysis within a Value-Based Healthcare Framework

“…TDABC has been applied to several care and services pathways in various areas of healthcare. For example, it has been used in studies on care pathways in surgery, oncology, cardiology, mental health, rehabilitation, and teleconsultation [9][10][11][12][13] . These studies have shown that TDABC can be an effective activity-costing method throughout the care pathway, providing valuable information to manage costs and improve departmental e ciency [9][10][11] .…”

“…Several studies have shown that the TDABC model facilitates the costing of different care pathways or healthcare departments 8,10,11,14 . Some studies have also compared care pathways by analysing costs according to different models.…”

The Role of Human Capital and Stress for Cost Awareness in the Healthcare System: A Survey among German Hospital Physicians

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