The International journal of health planning and management
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Int J Health Plann Manage · Jan 2001
Application of activity-based costing (ABC) for a Peruvian NGO healthcare provider.
This article describes the application of activity-based costing (ABC) to calculate the unit costs of the services for a health care provider in Peru. While traditional costing allocates overhead and indirect costs in proportion to production volume or to direct costs, ABC assigns costs through activities within an organization. ABC uses personnel interviews to determine principal activities and the distribution of individual's time among these activities. ⋯ A potential constraint to implementing ABC is the availability and organization of cost information. Applying ABC efficiently requires information to be readily available, by cost category and department, since the greatest benefits of ABC come from frequent, systematic application of the methodology in order to monitor efficiency and provide feedback for management. The article concludes with a discussion of the potential applications of ABC in the health sector in developing countries.