A Cost Control Model in a Cardiovascular Center

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Leadership and Management

Alicia Nunez
Universidad de Chile

Liliana Neriz
Universidad de Chile

Francisco J. Ramis
Universidad del Bío-Bío

Many hospitals struggle in the cost information ocean. This research shows how the development and implementation of a cost control methodology can positively impact the management and decision-making process of healthcare organizations. The methodology includes the implementation of activity based costing in a Cardiovascular Center in Chile.

What is the cost of services and activities developed in hospitals? How hospitals can improve the quality of their services and control their costs? These questions are essential if hospitals want to provide good services, help in the decision-making process, and, among others, provide quality information for consumers, providers and insurance companies. Therefore, accurate cost information is critical to manage organizations in the healthcare industry. To achieve this objective, the definition of a cost system that allows hospitals to improve the decision-making process, cost control, measure performance, and consistency in the cost information is of primary interest. This study is based in the implementation of an activity-based costing methodology in the Cardiovascular Center at the Hospital of the University of Chile. Previous studies have shown the advantage of implementing activity-based costing in the healthcare industry. These advantages involve the estimation of more accurate costs, and the evaluation of the quality and effectiveness of healthcare organizations through the analysis of their activities. The major implications of this research are the improvement in the distribution of costs, the detail in the cost information that allows cost control and forecasting, and the improvement in the management of the procedures in this organization.