Absolute Cost of Hernia Operation using Activity Based Costing (ABC)

Background: Activity-based cost evaluation is used as a tool for accurateassessment and calculation of the cost of any operation .The goal of this study wasto estimate the absolute cost of an operation on hernia in Shahid Sadughi hospitalof Yazd using Activity Based Costing (ABC) method in 2012.Methods: This applied, descriptive, cross-sectional, and retrospective study wasconducted in 2012. The required data were collected through interview withhospital officials and personnel of related units, observance of surgical wards’activities, studying documents and notebooks in these sections, as well as otherofficial and supportive units. In order to estimate the cost share of othersectors in surgical wards’ services, initially the allocation bases were determined.Afterwards, by applying two-way partitioning method (mathematics), costs wereestimated. Finally, by using Activity-Based Costing (ABC) approach, andapplying the Excell software, the absolute cost of an operation on hernia wascalculated.Results: Studies showed that the absolute cost of an operation on hernia is307.56 $ (1$ = 12050 Rials). The cost of personnel is 165 $ which is 53.69 %,and the cost of medications and consumed products is 96 $ which is 31.2 % ofthe total absolute cost of a hernia operation.Conclusion: Based on the findings, the absolute cost of services can be reduced byimproving performance, especially by reforming operations of human resourcesmanagement and standardizing consumption.

Keywords:

Absolute Cost , ABC Method , Hospital , Operation on Hernia