Activity based costing and time driven activity based costing in hospital business: An application in the public hospital

The accuracy, reliability and completeness of the data that businesses will obtain from the accounting are important for business managers to take decisions. Today, traditional cost methods are becoming inadequate and the businesses are seeking to find new methods instead of traditional cost methods due to rapid increase in globalization, the existence of competition and similar reasons. For this reason, in 1980's Activity Based Costing (ABC) method was found and it was began to be implemented in many sectors, especially in the manufacturing sector after 1990's. The most important reason for the emergence of this method is the more realistic distribution of the overhead costs. Despite the benefits of ABC method, due to the difficulty of updating method over time, the high cost of accessing the database, the relativity of the cost distributions and similar reasons activity-based costing method is beginning to fall behind. In this context, as an alternative approach, The Time Driven Activity Based Costing (TDABC) method which emphasizes the time factor and practical capacity has been found in order to overcome the shortcomings of the ABC method. Implementation of this method is faster, simpler, affordable and easier than other methods. Regardless of the type, purpose and structure of the activity, business managers need accurate information about the costs and revenues of the business when taking strategic decisions. Reliable, accurate and true cost information is also important for healthcare institutions. Hospital establishments are complicated because of the excessive work sharing, specialization and similar reasons. In this context, it is necessary to implement a method that will compare the costs of the resources used in the health services and the benefits they bring out, as in other institutions. Therefore, this study attempts to analyse the TDABC method, which provides more accurate information for hospital operations, by comparing it with the ABC method and to provide a detailed examination of costs and cost elements by applying it in the eye health section of Bartın State Hospital which is located in the province of Bartın. For this purpose, in this study a literature review has been done primarily about ABC, hospital business, the properties of hospital services and then the results have been evaluated by applying ABC and TDABC methods to the eye health section of Bartın State Hospital. Key Words: Activity Based Costing; Time Driven Activity Based Costing; Hospital Costing