Process-Based Costing

Abstract

Understanding how quality improvement affects costs is important. Unfortunately, low-cost, reliable ways of measuring direct costs are scarce. This article builds on the principles of process improvement to develop a costing strategy that meets both criteria. Process-based costing has 4 steps: developing a flowchart, estimating resource use, valuing resources, and calculating direct costs. To illustrate the technique, this article uses it to cost the care planning process in 3 long-term care facilities. We conclude that process-based costing is easy to implement; generates reliable, valid data; and allows nursing managers to assess the costs of new or modified processes.

On estimating the distribution of data envelopment analysis efficiency scores: an application to nursing homes’ care planning process

“…Efficiency reflects the achievement of the highest quality of care planning at the lowest cost, and cost depends on the amount of time allocated to care planning [17]. None of the standard nursing home databases collect information about costs, so we surveyed 107 of 444 nursing homes in two US Midwestern states, collecting detailed information about the amount of time spent on the care planning process.…”

Costs of a Staff Communication Intervention to Reduce Dementia Behaviors in Nursing Home Care

“…Process-based costing methods were used to determine the cost of the intervention. Data on costs was prospectively collected using established micro-costing methods [15]. Costs for providing the intervention (including set up and administration of the individual sessions) were computed and tracked across each NH.…”

Distance learning strategies for weight management utilizing social media: A comparison of phone conference call versus social media platform. Rationale and design for a randomized study

“…Fixed costs are independent of the number of individuals participating while variable costs are directly associated with the number of participants enrolled [47]. Costs depend on the resources used and the prices of those resources, and valid cost analyses are based on a clear understanding of the actual process being evaluated [48,49]. To assure a complete accounting of the resources used in the phone conference call and OSN groups, a process flow chart will be created and validated by consensus of the investigators [50].…”