Counting the costs of accreditation in acute care: an activity-based costing approach

Abstract

ObjectivesTo assess the costs of hospital accreditation in Australia.DesignMixed methods design incorporating: stakeholder analysis; survey design and implementation; activity-based costs analysis; and expert panel review.SettingAcute care hospitals accredited by the Australian Council for Health Care Standards.ParticipantsSix acute public hospitals across four States.ResultsAccreditation costs varied from 0.03% to 0.60% of total hospital operating costs per year, averaged across the 4-year accreditation cycle. Relatively higher costs were associated with the surveys years and with smaller facilities. At a national level these costs translate to $A36.83 million, equivalent to 0.1% of acute public hospital recurrent expenditure in the 2012 fiscal year.ConclusionsThis is the first time accreditation costs have been independently evaluated across a wide range of hospitals and highlights the additional cost burden for smaller facilities. A better understanding of the costs allows policymakers to assess alternative accreditation and other quality improvement strategies, and understand their impact across a range of facilities. This methodology can be adapted to assess international accreditation programmes.

Accreditation in a differentiated duopoly

“…However, the same firms also reported on annual cost savings due to improved internal process equal to an average of $200,000, suggesting an average payback period equal to 1.5 years. 9 For acute care Australian hospitals, Mumford et al (2015) find that the annual average financial expenditures over an accreditation cycle varied from 0.03% to 0.6% of the hospitals' total operating costs. 10 The main discussions in these referred articles are related to whether advertising in oligopolies is welfare improving or not and eventually different political means that could be practiced in order to promote overall market efficiency.…”

“…Recently, accreditation has become a requirement for reimbursement by public programs (Medicare and Medicaid) or become required by law (mandatory accreditation). Both France and Australia have moved to a process of mandatory accreditation for public hospitals (Mumford et al, ). The EU requires that companies that produce regulated products, such as medical devices, must adhere to ISO 9000 standards (Marquardt, ).…”

“…For acute care Australian hospitals, Mumford et al () find that the annual average financial expenditures over an accreditation cycle varied from 0.03% to 0.6% of the hospitals' total operating costs.…”

Accreditation as a management tool: a national survey of hospital managers’ perceptions and use of a mandatory accreditation program in Denmark

“…Indeed, the cost of accreditation programs has been raised as a consistent concern in previous healthcare accreditation research, [7,11] with some questioning whether the high costs associated with accreditation is an appropriate use of time and resources. Mitigating this, Mumford et al (2015) found that accreditation in Australia costs between 0.03 and 0.60% of total hospital operating budgets, averaged over a four-year cycle [28].…”

Accreditation in regulated markets

“…EU requires that companies that produce‐regulated products, such as medical devices, must adhere to ISO 9000 standards (Marquardt, 1992). Mandatory programs for hospitals are introduced in Croatia, France, Denmark, Italy, Scotland, and Australia (Mumford et al, 2015; Shaw, 2004). In addition, accreditation is often a requirement for public (federal) reimbursement.…”