Applying activity-based costing to the nuclear medicine unit

Abstract

Previous studies have shown the feasibility of using activity-based costing (ABC) in hospital environments. However, many of these studies discuss the general applications of ABC in health-care organizations. This research explores the potential application of ABC to the nuclear medicine unit (NMU) at a teaching hospital. The finding indicates that the current cost averages 236.11 US dollars for all procedures, which is quite different from the costs computed by using ABC. The difference is most significant with positron emission tomography scan, 463 US dollars (an increase of 96%), as well as bone scan and thyroid scan, 114 US dollars (a decrease of 52%). The result of ABC analysis demonstrates that the operational time (machine time and direct labour time) and the cost of drugs have the most influence on cost per procedure. Clearly, to reduce the cost per procedure for the NMU, the reduction in operational time and cost of drugs should be analysed. The result also indicates that ABC can be used to improve resource allocation and management. It can be an important aid in making management decisions, particularly for improving pricing practices by making costing more accurate. It also facilitates the identification of underutilized resources and related costs, leading to cost reduction. The ABC system will also help hospitals control costs, improve the quality and efficiency of the care they provide, and manage their resources better.

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

“…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.…”

Applying Activity-Based Costing (ABC) to a Parawood Furniture Factory

“…Numerous authors have discussed the concept of the ABC and how to construct an activity-based cost model, including Johnson and Kaplan (1987), Ostrenga et al (1992), Hicks (1992), Beynon (1992), Cokins (1996), Cooper (1998), andSuthummanon et al (2005). According to Kaplan and Cooper (1998), ABC focuses on four main steps:…”

“…Reliable cost information is a powerful tool in increasing a company's profitability and competitiveness. It can be used to minimize faulty pricing decisions and improve capacity budgeting decisions (Suthummanon et al 2005). Compared to the traditional costing approach, ABC offers information that is more substantial to management.…”

“…The fundamental difference between traditional and ABC costing is that the traditional costing method assumes that the products cause cost, whereas the ABC system assumes that the activities cause cost. According to Turney (1992), Gardner et al (1994), Kaplan and Atkinson (1989), as well as Suthummanon et al (2005), the ABC technique gives a more accurate estimate of the manufacturing and service costs than the traditional costing system. At the same time, it is capable of supporting and monitoring management strategies.…”

Activity-based costing evaluation of a [18F]-fludeoxyglucose positron emission tomography study

“…The majority of the clinical research done with PET in oncology available for economical analyses is therefore based on this radiopharmaceutical. Although some authors used ABC to evaluate the cost structure of a nuclear medicine department [19][20][21] to the best of our knowledge, a comprehensive ABC analysis of a 18 F-FDG-PET procedure has not yet been performed.…”