Journal of Management Systems
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We examine a structural deficiency in the healthcare system that hinders implementation of a meaningful cost accounting system, and suggest an alternative organizational arragement that can facilitate introducing cost control mechanisms. We argue that hospitals need structural rearrangement so that cost-driving activities can be traced, and their costs allocated to responsibility centers. We suggest that this structural rearrangement is a precondition for implementing any meaningful activity-based cost management system. We also suggest a basic framework for value analysis of activities for healthcare providers, and discuss how this framework can be used as a vehicle for controlling diagnostic costs.
This article was archived with permission from Association of Management-International Association of Management, all rights reserved. Document also available from Journal of Management Systems.
Lee, W. and Mahenthiran, Sakthi, "Managing Costs through Structural Re-arrangement of Hospitals: An Activity Based Management Perspective" (1994). Scholarship and Professional Work - Business. 56.