Publication: Effect of costing methods on unit cost of hospital medical services
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Issued Date
2007-04-01
Resource Type
ISSN
13653156
13602276
13602276
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2-s2.0-34247344502
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Mahidol University
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SCOPUS
Bibliographic Citation
Tropical Medicine and International Health. Vol.12, No.4 (2007), 554-563
Suggested Citation
Arthorn Riewpaiboon, Saranya Malaroje, Sukalaya Kongsawatt Effect of costing methods on unit cost of hospital medical services. Tropical Medicine and International Health. Vol.12, No.4 (2007), 554-563. doi:10.1111/j.1365-3156.2007.01815.x Retrieved from: https://repository.li.mahidol.ac.th/handle/123456789/24563
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Title
Effect of costing methods on unit cost of hospital medical services
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Abstract
Objective: To explore the variance of unit costs of hospital medical services due to different costing methods employed in the analysis. Methods: Retrospective and descriptive study at Kaengkhoi District Hospital, Saraburi Province, Thailand, in the fiscal year 2002. The process started with a calculation of unit costs of medical services as a base case. After that, the unit costs were re-calculated based on various methods. Finally, the variations of the results obtained from various methods and the base case were computed and compared. Results: The total annualized capital cost of buildings and capital items calculated by the accounting-based approach (averaging the capital purchase prices throughout their useful life) was 13.02% lower than that calculated by the economic-based approach (combination of depreciation cost and interest on undepreciated portion over the useful life). A change of discount rate from 3% to 6% results in a 4.76% increase of the hospital's total annualized capital cost. When the useful life of durable goods was changed from 5 to 10 years, the total annualized capital cost of the hospital decreased by 17.28% from that of the base case. Regarding alternative criteria of indirect cost allocation, unit cost of medical services changed by a range of -6.99% to +4.05%. We explored the effect on unit cost of medical services in one department. Various costing methods, including departmental allocation methods, ranged between -85% and +32% against those of the base case. Based on the variation analysis, the economic-based approach was suitable for capital cost calculation. For the useful life of capital items, appropriate duration should be studied and standardized. Regarding allocation criteria, single-output criteria might be more efficient than the combined-output and complicated ones. For the departmental allocation methods, micro-costing method was the most suitable method at the time of study. Conclusions: These different costing methods should be standardized and developed as guidelines since they could affect implementation of the national health insurance scheme and health financing management. © 2007 Blackwell Publishing Ltd.