Background: The objective is to examine hospital cost accounts in order to understand the foundation upon which large-scale health care 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 analysed. Results: We find exceedingly aggregated department-level data that are not tied to patient information. We further observe variations in integrated cost centre definitions and allocation methods, as well as a melding of both overhead and indirect costs with direct costs at the department level. Additionally, we find large structural variances within hospitals. Conclusions: The findings raise concern about the cost accounts’ ability to provide valid information in health care decision-making due to a lack of transparency. Additionally, standardisation of costs stemming from hospitals with large organisational 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 cost account system is essential.

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.