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Shin and Ahn: Dental implant cost estimation using the Activity-Based Costing approach
ORIGINAL ARTICLE

J Korean Acad Prosthodont 2013;51(4):292-299.

Published online: NaN October 2013

DOI: https://doi.org/10.4047/jkap.2013.51.4.292

Dental implant cost estimation using the Activity-Based Costing approach

Ho-Sung Shin, MPH, DDS, PhD∗, Eun-Suk Ahn, MSD, RDH

Department of Humanities and Social Dentistry, Dental College, Wonkwang University, Iksan, Korea

∗Corresponding Author: Ho-Sung Shin Department of Humanities and Social Dentistry, College of Dentistry, Wonkwang University, 460 Iksandae-ro, Iksan, Jeonbuk, 570-749, Korea +82 63 850 6995: e-mail, shinhosung@gmail.com

Received 5 September 201316 September 2013       Accepted 27 September 2013

Copyright © 2013 The Korean Academy of Prosthodontics

This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/3.0/) which permits unrestricted non-commercial use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Purpose

There is a growing concern for the cost management of medical institutions. The purpose of this study was to estimate Activity-Based Costing (ABC) for dental implant cost. ABC refers to allocating resources or cost based on the activities of services.

Materials and methods

A dental institution located in the metropolitan area was selected in this study. The tax accounting data of the institution were utilized to confirm total cost, and the institution was asked to make out clinical activities to figure out what activities were carried out. The direct cost and indirect cost for dental implant were separately estimated, and cost driver was analyzed to estimate the indirect cost accurately.

Results

The rates of the direct and indirect cost respectively stood at 35.8 and 49.5 percent. The cost for a dental implant was found to be approximately 1,579 won, and the cost of prosthetic surgery and treatment that included implant surgery accounted for the largest portion of the cost, which was 470 thousand won (30%). And the weight of training and education on dentistry was relatively higher than that of the other kinds of treatment.

Conclusion

In order to ensure accurate and scientific costing for dental implant, not only direct medical procedure but every pre- and post-procedure activity should fully be taken into account. Pre-activities, post-activities, education and training are included in the indirect cost, but all these activities are mandatory and associated with the quality of treatment and the satisfaction level of patients. (J Korean Acad Prosthodont 2013;51:292-9)

Keywords: Dental implant cost, Traditional costing method, Activity based costing, Classification of dental activity, Dental implant

REFERENCES

1.Korean Dental Association for the internal data. Hyundai Marine & Fire Insurance data.
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4.Shin HS., Oh YH., Choi HN. Dental implant cost analysis. Korean Inst Health Soc Aff;2008. p. 19–22.
5.Udpa S. Activity-based costing for hospitals. Health Care Manag Rev. 1996. 21:83–96.
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9.Ahn TS., O DI., Jung HR. A study on the cost separation and conversion factor of the physician office based on activity based costing model. J Manag Account Assoc Korea. 2005. 5:57–85.
10.Kuchta D., Zabek S. Activity-based costing for health care institutions. 8th international conference on enterprise systems. 2011.
11.Suomeksi T. Rationale for adopting activity based costing in hospitals. Janne Jarvinen;2005. p. 45–50.
12.Lee JY., Song HS. A study on the activity - Based costing system for general hospital. J Korean Ind Econ. 2001. 14:245–59.
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Fig. 1.
Comparison of traditional costing and activity based costing method.
jkap-51-292f1.tif
Table 1.
Classification of activity related to dental implant
Activity Activity contents
Patient education Implant (I) Activities of consultation and patient education related to dental implant (more than five minutes)
 & management Non-implant (II) Activities of consultation and patient education related to Non-dental implant (more than five minutes)
Administrative   Purchase & stock management of medicine, dental materials, medical supplies, special drug management,
 management (III)   extra activities related to purchasing instrument and equipment, cleaning up, and patient management
    (non-clinic)
Clinical Care Pre-implant procedures (IV) Prior activities of implant procedures (e. g. instrument preperation, chair-side preparation, patient
    inception, hand wash etc.)
  Implant Procedures (V) Main activities of dental implant procedures
  Post-implant procedures (VI) Post activities of dental implant procedures, including clean operation room (e.g., cleaning up chair &
    instrument, recode & organize chart, prescriptions)
  Non-implant dental procedures (VII) Non-implant clinical activities including prior and post procedural activities
Research and educational activities (VIII) Post-graduation education, Research, Attending seminar & conference, Journal writing, etc.
Non-clinical activities (IX) Activities related to non-clinical revenue
Other clinical service activities (X) Transition activities between clinical procedures such as sterilization, instrument arrangement etc.
Table 2.
Activity analysis of A dental clinic
Activities Work Dentist Dental hygienist Coordinator∗ Total
Time % Time % Time % Time %
Activities related to Activity I 54.3 11.1 11.0 2.0 21.5 3.7 22.2 4.1
 dental implant Activity IV 4.0 0.8 3.9 0.7 22.2 3.8 7.7 1.4
  Activity V 64.7 13.2 134.1 25.0 0.0 0.0 91.7 17.1
  Activity VI 17.3 3.5 9.8 1.8 84.3 14.6 26.9 5.0
  Sub total 140.3 28.7 158.8 29.6 128.0 22.1 148.5 27.8
Common Activities Activity III 37.0 7.6 70.8 13.2 70.2 12.1 63.6 11.9
  Activity VIII 70.7 14.5 28.2 5.3 23.7 4.1 36.1 6.7
  Activity IX 0.0 0.0 5.7 1.1 16.0 2.8 6.7 1.2
  Activity X 20.0 4.1 50.7 9.5 119.7 20.7 58.7 11.0
  Sub total 127.7 26.1 155.5 29.0 229.6 39.7 165.1 30.9
Non implant activities Activity II 12.7 2.6 15.2 2.8 45.7 7.9 21.0 3.9
  Activity VII 208.0 42.6 207.1 38.6 174.6 30.2 200.5 37.5
  Sub total 220.7 45.2 222.4 41.4 220.3 38.1 221.6 41.4
Total 488.7 100.0 536.6 100.0 577.9 100.0 535.2 100.0
Time 8.1   8.9   9.6   8.9  

note: ∗ Coordinator is a non-clinical person served in patient management, inception, scheduling, and administrative work in dental clinic.

Table 3.
Monthly expenses of A dental clinic
Classification Contents %
Direct cost Material cost Labor cost Dentist (owner, employee), dental hygienist (assistant), coordinator 26.0
    Material cost∗ Dental implant (fixture, membrane, abutment etc.) 7.3
    Administration cost Depreciation cost of dental implant 1.3
    Cost of dental technique Cost of dental technique related to dental implant 1.2
Indirect cost Labor cost   Activity hours on other care such as non-dental implant, administration 26.4
  Material cost   Materials and medical supplies 3.8
  Administration cost   Medical equipment repair cost, depreciation cost of common equipment 1.3
      General administrative cost excluding depreciation cost 18.0
  Cost of dental technique   Prosthetic technique work related to non-dental implant 1.3
The secondary sector cost 13.3
Total 100.0

note: ∗ direct material cost of dental implant procedure

Table 4.
Monthly labor expenses of A dental clinic (per person basis) (unit: thousand won)
Contents Number of employees Cost
Dentist Principle dentist 1 16,566∗
  Employed dentist 3 8,136
Dental hygienist (including dental assistant) 13 1,699
Medical technician Dental technician, other medical technician 2 3,393
Others administrators, others 2 1,193

note: ∗ Labor cost of principle dentist is calculated by research finding from Ahn (2007) and labor proportion of employee dentist in A dental clinic.

Table 5.
Monthly materials expenses of A dental clinic (unit: thousand won)
Classification Total sum Proportion (%)
Medicine 10,075 65.60
Treatment material 4,076 26.50
Dental supplies 1,216 7.90
Table 6.
Monthly administrative expense of A dental clinic (unit: thousand won)
Contents Total sum Proportion (%) Allocating criteria
Employee welfare 2,692 4.50 Proportion of activity time
Travel expense 14 0.00 Proportion of activity time
Postage and communication expense 10 0.00 Proportion of activity time
Utilities 585 1.00 Proportion of activity time
Tax 928 1.50 Proportion of Revenue
Insurance 327 0.50 Proportion of activity time
Rental 7,356 12.20 Proportion of activity time
Commission charge 1,655 2.70 Proportion of activity time
Repair 21 0.00 Proportion of activity time
Maintenance of cars 226 0.40 Proportion of activity time
Education and Training 15 0.00 Distribution to activity VIII
Book and printing 554 0.90 Equal distribution
Reception expense 73 0.10 Proportion of activity time
Fuel expense 0 0.00 Equal distribution
Membership fee 0 0.00 Equal distribution
Supplies expense 1,028 1.70 Proportion of activity time
Depreciation cost 3,664 6.10 Proportion of activity time
Advertisement 7,149 11.80 Proportion of activity time
Bad debts written off 0 0.00 Proportion of activity time
Building maintenance expense 966 1.60 Proportion of activity time
Shipping charge 11 0.00 Proportion of activity time
Miscellaneous expenses 42 0.10 Proportion of activity time
Others 33,155 54.80 Proportion of activity time
Total 60,470 100.00  
Table 7.
Activity cost of A dental clinic (unit: thousand won)
Sum of activity expense Implant Non-implant Sum
Patient education & management Implant (I) 4,664.9 - 4,664.9
  Non-implant (II) - 3,619.1 3,619.1
Administrative management (III)   13,445.1 4,481.7 17,926.8
Clinical Care Pre-implant procedures (IV) 2,184.2 - 2,184.2
  Implant procedures (V) 35,163.1 - 35,163.1
  Post-implant procedures (VI) 9,341.8 - 9,341.8
  Non-implant dental procedures (VII) - 34,596.9 34,596.9
Research and educational activities (VIII)   8,324.7 2,774.9 11,099.6
Non-clinical activities (IX)   1,895.9 632.0 2,527.9
Other clinical service activities (X)   12,686.8 4,228.9 16,915.7
Table 8.
Activity based cost of dental implant (unit: thousand won)
Activity cost contents Cost drive Implant total cost per month Implant cost
Patient education & management Implant (I) Number of consultation & patient education 4,665 62.2
Administrative management (III)   Number of total patients 13,445 179.3
Clinical Care Pre-implant procedures (IV) Number of implant patients 2,184 29.1
  Implant procedures (V) Number of implant patients 35,163 468.8
  Post-implant procedures (VI) Number of implant patients 9,342 124.6
Research and educational activities (VIII)   Number of Education & research events 8,325 166.5
Non-clinical activities (IX)   Number of person involved 1,896 379.2
Other clinical service activities (X)   Number of total patients 12,687 169.2
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