Time-driven activity-based costing in an outpatient clinic environment: Development, relevance and managerial impact

Demeere, Nathalie; Stouthuysen, Kristof; Roodhooft, Filip

doi:10.1016/j.healthpol.2009.05.003

Cited by 167 publications

(149 citation statements)

References 18 publications

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“…For its simplicity and advantages over the traditional ABC, TDABC has found wide application in health care organizations. Therefore, Demeere et al (2009) through a case study showed how to perform TDABC of five patient in clinic's departments and provide evidence of the benefits of such an analysis. They pointed out the advantages of TDABC in terms of two parameters necessary for determining the costs: the unit cost of supplying capacity and the time required to perform a transaction or an activity, as well as concerning possibility to provide many opportunities to design cost models in an environment with complex activities as in health care organizations and provide accurate and relevant information to health care managers and physicians which assisted them in operational improvements, making a profitability analysis per department and deciding on future investments.…”

Section: Applying the Improved Model Of Activity-based Costing In Heamentioning

confidence: 99%

Activity-Based Costing in Health Care Organizations

Antić

Sekulić

2017

FU Econ Org

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Abstract. The concept of Activity-Based Costing (ABC) provides informational support to the performance of key management activities in different organizations. Focused on activities and processes within the organization, this concept, using appropriate cost drivers, provides more accurate information on activity costs and costs objects. The paper analyzes the specificities of applying the traditional and improved model of activity-based costing in health organizations.Key words: health care organizations, costing, activities, cost drivers INTRODUCTIONAs organizations that exist and work in order to provide the general well-being of society as a whole, certain groups of people and individuals, nonprofit organizations do not have in their focus achieving their own profit or high wages of their individual employees. The primary purpose of establishment and functioning of the nonprofit organizations is contented in providing the goods and services that a society asks for but profit organizations cannot or do not provide. This fact makes the nonprofits significant factor of functioning for many national economies. Nonprofit organizations are, in principle, relatively easy to "identify" if it starts from the fact that these organizations, in order to cover their costs, perform a wide range of operations and activities on a nonprofit base, that are aimed at providing certain services to the wider community. These are public (collective) goods, such as health care, education, social protection, transport infrastructure, culture and arts, which are of common interest and are needed for the particular community to function normally. Due to specific effects achieved through the provision of health care and protection, nonprofit organizations in health care sector deserve a special attention. Consequently, the business goals of these organizations are not profit-oriented, but have non-economic nature and their human character is dominant -to provide services that will meet the needs of preserving the health of people in a given community. Therefore, social responsibility in carrying out the objectives is largely expressed in health and other nonprofit organizations.The dominance of non-economic objectives, that are not easy to follow, as well as to monitor the effects of their realization, make the process of identification, control and improvement the measures of effective functioning of these organizations fairly complex. Thus, the objective function of a health care organization depends on the board of directors, type of services, respective financing, level of competition, and the current financial condition of the organization (Hughes & Luksetich, 2010, p. 121) Various objectives have been formulated in models, including social welfare, quality and quantity maximization, budget, inputs, equity, and even profit. The objective should be consistent with the competitive and legal environment and flexible enough to deal with changing business conditions.Considering that health care organizations should primarily achieve re...

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Section: Applying the Improved Model Of Activity-based Costing In Heamentioning

confidence: 99%

Activity-Based Costing in Health Care Organizations

Antić

Sekulić

2017

FU Econ Org

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“…5). 4,10,[12][13][14][15] This costing model enabled variability assessment among health care providers' delivery of care throughout an entire episode of care. At the activity level, it enabled the identification of duplications of steps, unnecessary steps, rework loops, sources of delays, and role ambiguity (in which 2 types of personnel could perform 1 step but with different cost capacities), which are all high-yield opportunities.…”

Section: Level I: Integration Of Processes and Costsmentioning

confidence: 99%

Time-driven activity-based costing: a driver for provider engagement in costing activities and redesign initiatives

McLaughlin¹,

Burke

Setlur

et al. 2014

FOC

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Object. To date, health care providers have devoted significant efforts to improve performance regarding patient safety and quality of care. To address the lagging involvement of health care providers in the cost component of the value equation, UCLA Health piloted the implementation of time-driven activity-based costing (TDABC). Here, the authors describe the implementation experiment, share lessons learned across the care continuum, and report how TDABC has actively engaged health care providers in costing activities and care redesign.Methods. After the selection of pilots in neurosurgery and urology and the creation of the TDABC team, multidisciplinary process mapping sessions, capacity-cost calculations, and model integration were coordinated and offered to engage care providers at each phase.Results. Reviewing the maps for the entire episode of care, varying types of personnel involved in the delivery of care were noted: 63 for the neurosurgery pilot and 61 for the urology pilot. The average cost capacities for care coordinators, nurses, residents, and faculty were $0.70 (range $0.63-$0.75), $1.55 (range $1.28-$2.04), $0.58 (range $0.56-$0.62), and $3.54 (range $2.29-$4.52), across both pilots. After calculating the costs for material, equipment, and space, the TDABC model enabled the linking of a specific step of the care cycle (who performed the step and its duration) and its associated costs. Both pilots identified important opportunities to redesign care delivery in a costconscious fashion.Conclusions. The experimentation and implementation phases of the TDABC model have succeeded in engaging health care providers in process assessment and costing activities. The TDABC model proved to be a catalyzing agent for cost-conscious care redesign.

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“…Practitioners (e.g., Demeere, Stouthuysen, and Roodhooft 2009;Öker and Adigüzel 2010), however, have complained that ABC is not suitable for complex activities 1 and is too costly to update in dynamic environments. Anderson (2004, 2007) developed time-driven activity-based costing (TDABC) to try and solve these problems.…”

Section: Introductionmentioning

confidence: 99%

A Comparison of Activity-Based Costing and Time-Driven Activity-Based Costing

Hoozée

Hansen

2017

Journal of Management Accounting Research

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Anderson (2004, 2007) developed time-driven activity-based costing (TDABC) to provide a costing system that is easier to update than activity-based costing (ABC). The relationship between ABC and TDABC, however, has not been systematically investigated. We compare the accuracy of the two systems in two complementary ways: analytically and via a numerical experiment. Our analytical comparison generates formulas that describe how each system maps resources to activities and finally to products. We demonstrate that ABC aggregates resource-to-activity information by activities, while TDABC aggregates by resources. Our numerical experiment shows that TDABC performs better than ABC when resources are more traceable to activities. ABC performs better than TDABC when activities are more traceable to products or when both resources and activities are more traceable to activities and products, respectively. If each type of traceability is equally likely, then ABC may be the more robust approach. Finally, we examine the ease of updating the systems and find that TDABC data collection costs will be prohibitive if the firm must collect information about each product's use of subtasks.

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Time-driven activity-based costing in an outpatient clinic environment: Development, relevance and managerial impact

Cited by 167 publications

References 18 publications

Activity-Based Costing in Health Care Organizations

Activity-Based Costing in Health Care Organizations

Time-driven activity-based costing: a driver for provider engagement in costing activities and redesign initiatives

A Comparison of Activity-Based Costing and Time-Driven Activity-Based Costing

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