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Lim, Kim, and Park: Analysis of Cost and Efficiency of a Medical Nursing Unit Using Time-Driven Activity-Based Costing
Original Article
Journal of Korean Academy of Nursing

Journal of Korean Academy of Nursing 2011; 41(4): 500-509.

Published online: 31 August 2011

DOI: https://doi.org/10.4040/jkan.2011.41.4.500

Analysis of Cost and Efficiency of a Medical Nursing Unit Using Time-Driven Activity-Based Costing

Ji Young Lim1, Mi Ja Kim2, Chang Gi Park3

1Associate Professor, Department of Nursing, Inha University, Incheon, Korea.

2Professor, College of Nursing, University of Illinois at Chicago, Chicago, USA.

3Senior Health Economist, College of Nursing, University of Illinois at Chicago, Chicago, USA.

Address reprint requests to: Lim, Ji Young. Department of Nursing, Inha University, 253 Younghyun-dong, Nam-gu, Incheon 402-751, Korea. Tel: +82-32-860-8210, Fax: +82-32-874-5880, lim20712@inha.ac.kr

Received 11 August 2010       Accepted 4 August 2011

© 2011 Korean Society of Nursing Science

Abstract

Purpose

Time-driven activity-based costing was applied to analyze the nursing activity cost and efficiency of a medical unit.

Methods

Data were collected at a medical unit of a general hospital. Nursing activities were measured using a nursing activities inventory and classified as 6 domains using Easley-Storfjell Instrument. Descriptive statistics were used to identify general characteristics of the unit, nursing activities and activity time, and stochastic frontier model was adopted to estimate true activity time.

Results

The average efficiency of the medical unit using theoretical resource capacity was 77%, however the efficiency using practical resource capacity was 96%. According to these results, the portion of non-added value time was estimated 23% and 4% each. The sums of total nursing activity costs were estimated 109,860,977 won in traditional activity-based costing and 84,427,126 won in time-driven activity-based costing. The difference in the two cost calculating methods was 25,433,851 won.

Conclusion

These results indicate that the time-driven activity-based costing provides useful and more realistic information about the efficiency of unit operation compared to traditional activity-based costing. So time-driven activity-based costing is recommended as a performance evaluation framework for nursing departments based on cost management.

Keywords: Costs and cost analysis, Patients' rooms, Efficiency

Figures and Tables

Table 1
Costs Using Traditional Activity-Based Costing
jkan-41-500-i001

*assigned cost/activity quantity.

Table 2
Costs and Efficiency Using Time-Driven Activity-Based Costing
jkan-41-500-i002

*unit time X activity quantity; †cost driver rate X activity quantity.

Notes

This work was supported by Inha University Research Grant.

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