Activity based costing and an application of hospital

Service industry has been improving quickly recent years in wholeworld. The quick improvement in question has affected to health careindustry as well and health care industry has been turned to having animportant portion within service industry. As parallel movement to thatimprovement in health care sector, the private sector portion within healthcare industry has also been increased. The reason of the intensive privatesector involvement into the health care services which before had beensupplied only by government, has increased competition within health careindustry. Together with that increasing competition, day by day up movementof cost consciousness of government hospitals has made the necessity of thedetermining all the factors causing costs in hospitals and presenting servicecosts accurately; excessively important. Furthermore, on the one handhospital entities? having wider product range and more complex activityformation comparing with most other service institutions; and on the otherhand, critical increase of General Production Expenditures (GPE) - whichmeans indirect expenditures that can not be charged directly on outputs - dueto the effect of the latest technological equipment used; made the distributionof these expenditures on outputs more important. Considering theresearches made on that issue before, it seemed that ABC administrationhas been applied mostly on industrial producer institutions and no studycould not be found on calculating unit costs by applying ABC method for X-Ray departments of hospitals. That is why, application of ABC method, whichis used commonly for industrial producer institutions, to the hospitalinstitutions, which have an important portion in service institutions, mostlyconstitutes our study?s issue.By that study, through presenting the different points of ABC methodfrom traditional costing systems, it has been purposed that more trustableand correct cost information can be obtained. By that study; throughabolishing the present literature lack points for ABC realization of costdetermining effectiveness with application; AND also through understandingof the method?s work flow and administrators? sympathy to the methodguiding the application of the method to hospital institutions; are going to beprovided.In this study, at the first stage, it has been tried to form the theoricalformation of the Activity Based Costing Method. And then, general data aboutchosen hospital institutions as application example and information ondetermining costs for hospital institutions has been indicated. At the finalstage, as an application study, the unit costs of 33 pieces of direct graphs,and 1 piece of IVP graph-taken with supplying contrast material-taken inMay 2004 season in X-Ray department of a private hospital in Ankara; havebeen calculated using both traditional costing and Activity Based CostingMethod, and results have been compared.Consequently, it has been experienced that the application has beenreached its target and as expected, cost data has been provided moreaccurately, detailed and nearer to real condition by using ABC method.