Study On The Application Of Activity-based Costing In Hospital Cost Management

As China's reform and opening-up continue to deepen and her healthcare system is undergoing overall innovation, especially after China entered the WTO, competition in China's medical market has become and will be increasingly intense. Only through updating the ideals and improving the benefits of management, can Chinese hospitals cope with the new challenges. As an advanced cost-management tool, activity-based costing (ABC) can help hospitals reduce cost, optimize work process, improve management benefits and enhance competiveness.The present study aims at combining the ABC theory with the hospital management practice in China. By using integratedly theories and methods in the fields of management, economics, statistics and other studies, this study designs an effective, convenient and practicable system of ABC. It may provide theoretical and practical references for domestic hospitals to use ABC in their cost management.On the basis of field studies, worker interviews and expert consultations, this study accomplished activity identifications and designs in a department, and then established the department's activity models. In order to count the cost of each medical service of the department, two steps were taken. First, empirical method and metrical method were used to determine resource drivers, through which resource costs were distributed to each activity. Second, activitydrivers were determined through the sorts of activities. They were used to distribute activity costs to each medical service.The theory of activity-based cost management (ABM) was also used in this study to control the cost of the department. By analyzing the activities, activity chains and activity drivers, this study presented some suggestions for the cost control in the department. According to the suggestions, three cost control measures were taken and more than ?,500,000 were saved.The study also evaluated the effects of the practice of ABC. The evaluation could be divided into three parts: evaluations of economic benefits, medical quality and worker satisfaction. Statistics showed that the department's medical quality had no obvious changes though the cost was depressed greatly. Most of the workers were satisfied with the study and their cost consciousness was raised.