Cost Measurement in Laparoscopic Surgery: Results from an Activity-Based Costing Application

Activity Based Costing (ABC) techniques are designed to support advanced cost analysis in different organizations. Centred on organization activities and processes, it provides more accurate cost information on cost objects using appropriate cost drivers and constitutes a powerful costing model to improve efficiency and effectiveness in delivering products and services. ABC can be successfully appl ied also in Health Care organizations, where the patient is the main “object” of the activities performed. In addition, in can be fruitfully used in costing the resource consumption of new medical technology devices or surgery processes to assess their eco nomic impact on health care costs. The purpose of this paper is to describe an Activity based costing model designed to measure and control resources consumption and cost when a new technology is applied in health care processes. An ABC model has been defined in relation to laparoscopic technologies applied to surgical cases, designing a health care “activity hierarchy” based on the processes of a specific local unit organization. The output of the application has been a full cost of laparoscopic surgery to be compared with the correspondent DRG current value. As a further result, the paper shows how the ABC model is able to generate different cost figures referred to activity levels or aggregations able to support decision making especially when the introdu ction of a new surgical technology has to be economically assessed. Propositions are finally made to generate discussion about the effectiveness of the existing cost accounting systems in the health care organizations and on the need for the wider diffusio n of ABC techniques in this service sector.