Application of activity-based costing (ABC) for a Peruvian NGO healthcare provider

The International Journal of Health Planning and Management
H WatersD Santillán

Abstract

This article describes the application of activity-based costing (ABC) to calculate the unit costs of the services for a health care provider in Peru. While traditional costing allocates overhead and indirect costs in proportion to production volume or to direct costs, ABC assigns costs through activities within an organization. ABC uses personnel interviews to determine principal activities and the distribution of individual's time among these activities. Indirect costs are linked to services through time allocation and other tracing methods, and the result is a more accurate estimate of unit costs. The study concludes that applying ABC in a developing country setting is feasible, yielding results that are directly applicable to pricing and management. ABC determines costs for individual clinics, departments and services according to the activities that originate these costs, showing where an organization spends its money. With this information, it is possible to identify services that are generating extra revenue and those operating at a loss, and to calculate cross subsidies across services. ABC also highlights areas in the health care process where efficiency improvements are possible. Conclusions about the ultimate impact ...Continue Reading

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Citations

Dec 7, 2006·Journal of Health Communication·Paul Hutchinson, Jennifer Wheeler
Nov 9, 2011·Journal for Healthcare Quality : Official Publication of the National Association for Healthcare Quality·Abdalla AlrashdanTamador Ababneh
Jan 1, 2011·Health Economics Review·Helge HollmeyerDoris Staab
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Dec 31, 2015·Iranian Journal of Radiology : a Quarterly Journal Published by the Iranian Radiological Society·Mohsen BayatiHassan Joulaei
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Oct 19, 2006·The International Journal of Health Planning and Management·Hamidah HussainNeal Halsey
Aug 21, 2019·The International Journal of Health Planning and Management·Véronique Nabelsi, Véronique Plouffe

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