Application On Cost Accounting Of Public Hospital Based On Activity-based Costing

In this market-oriented economy environment, medical service industry, like other industries, is in fierce competition, resulting from the deepening of market economy development. In China, the dominating public hospitals are facing huge challenges as private hospitals are booming. To help revealing how to maintain dominant in medical service industry, this article analysis the core factor of market competition, the cost management, from every possible angle.In January 2012, the new Hospital Financial System came into operation, showing that the government pays great attention to hospital cost management. Currently, most public hospitals are using conventional costing method which is quite simple in accounting procedure, despite the fact that this will bring about certain problems like the cost allocation is unscientific, and the result is inaccurate. Transformation of traditional cost management method would serve two purposes: firstly, to enhance the operation efficiency, reduce project costs, increase economic benefits and improve competition advantage; secondly, the efficient use of government resources will lead to rational allocation, providing better services for the masses. Therefore, the exploration of cost management mode for public hospitals is a matter of great urgency.Foreign researchers have already applied the ABC(activity based costing method) into hospital industry long time ago, successfully establishing a mature mode and forming both basic and applied theory in practice. This article aims to analysis the feasibility of ABC learning from western practical experience and combining with national conditions, expecting to help build an advanced cost management system in Chinese medical service industry. We will use case study approach and set M Hospital as an example, improving current accounting system. First, we explore the feasibility and necessity of applying ABC in M Hospital, and propose specific procedure. And then we select CT Room as the study object, use both conventional cost method and ABC to check the cost of the room, and analysis the calculation difference. At last, we analyze what impact will be brought using different method.Studies have shown that the ABC has more advantages, helping to improve M Hospital’s cost management situation. Therefore, we consider the ABC as an advanced mode that will finally penetrate into public hospital.