Evaluation of contemporary costing methods; Activity based costing and quality costing in hospital management: an application

xxiiSUMMARYTechnological developments and increase in competition forced health careorganizations to enhance the variety, quality and technology of health care services. Theseefforts resulted with the problem of finding and efficiently using scarce resources. In parallelwith these developments, health care sector was obliged to adopt new managementphilosophies focusing on current and future needs of the society. These changes werereflected in cost accounting applications, additionally concepts like the knowledge of moreaccurate cost estimation or increasing quality while decreasing costs had become popular.Hospitals, one of the most resource consuming component of health care sector looked forways in order to stay competitive in an environment where the share of indirect costsincreased in the cost structure. One of them was to set up a cost accounting method whereresource consumptions were reflected in a more accurate way than traditional accountingmethods.In this context, the aim of this thesis study is to evaluate the development of activitybased costing and quality costing and also utilize them in an application for hospitals. Theapplication part of this thesis was put into practice in Akdeniz University Medical FacultyHospital with 630 bed capacity.The pilot department was selected as urology by the top management of the hospital.The data collection was made by interviews, observations, time and motion studies, and datacollected from patient records and administrative departments of the hospital. In urologydepartment, acivity maps, activity analysis were conducted for building an activity basedcosting system. When the results were evaluated, a gap between prices and costs wereoccured especially in surgical operations. Also the room prices did not reflect the indirectcosts consumed for patient care given in the hospital.The activities causing quality costs were also detected from activity analysis and thecosts were reported seperately. The relationship between quality cost categories were alsointerpreted in the results of the study. Failure costs were found to be lower than preventionand appraisal costs.xxiiiThe application of activity based costing is a very practical model and could beadopted by every health care providing department with a short training given to one of thestaff. Meanwhile, the quality costing application should be constucted for the hospital ingeneral and added to the quality system as a procedure and results should be compared andreported annually.Keywords: Activity Based Costing, Quality Costing, Hospital Cost Accounting