An application of time-driven activity-based costing in a hospital setting

Bertoni Michele, De Rosa Bruno, Rebelli Alessio, Zanconati Fabrizio

Activity-Based Costing (ABC) has been considered particularly well suited to cost assessment in healthcare. However, ABC systems often tend to overestimate resources used, inviting underestimation of unused capacity. To resolve this problem, a new approach known as Time-Driven Activity Costing (TDABC) has been more recently devised and tested in real settings that include healthcare environments. TDABC improves on the existing ABC framework by eliminating the need to interview and survey personnel in allocating resource costs to activities. Additionally, TDABC uses capacity cost rate to drive departmental resource costs to cost objects in assessing the demand for resource capacity entailed by activities performed. The present study examined the methods and results of cost analysis of selected healthcare activities at the Anatomical and Histological Pathology Unit of the Teaching Hospital in Trieste, Italy (Azienda Sanitaria Universitaria Integrata di Trieste). Experimental application of time-driven ABC techniques for cost calculations using a modular system was used to investigate the variability of complexity levels of the selected activities. The results offer useful insights for healthcare managers and policymakers in terms of cost control and the design of realistic tariff systems.

Key-Word: Analisi contabilità e gestione dei costi, national health care service, managerial control systems, cost accounting, activity-based costing, time-driven ABC

Table 2 – Activities involved in a fine_needle – aspiration cytopathology exam