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.Activity-Based Costing; Economic assessment of surgery techniques

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 applied 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 economic 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 introduction 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 diffusion of ABC techniques in this service sector.Activity-Based Costing, Economic assessment of surgery techniques

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

Multiple measures in management accounting systems and contextual variables: an empirical study in the automotive industry

The content of Management Accounting Systems (MAS) is changing in order to better satisfy the information needs of managers. The use of multiple performance measures (MPM) in MAS is becoming more and more popular. The manner in which non financial measures (NFM) are used and combined with financial measures (FM) seems to be even more varied than the number of models proposed by scholars and practitioners. Furthermore, it is argued that when firms attempt to improve some critical activity areas (such as product, processes, customers and market development) this implies that the company is trying to integrate and coherently coordinate organizational efforts. For this reason it is appropriate to analyse the new performance measurement "packages" used in practice. The various aspects of these "packages" are worth investigation and the paper focuses the different “pathways” adopted by companies working in Italy by examining the variables that cause variety of behaviour in the implementation of NFM in MAS. The approach adopted also calls for the analyses of these pathways by studying the perceived outcomes of the new practices. In order to test these pathways, data was collected from 35 automotive manufacturing units. The principle findings of this survey, which took into account a qualified sample of large and medium firms, underlined that the articulation of FM and NFM in MAS varied in each firm belonging to the sample. Therefore the paper, firstly investigated into the relationship between the different structures of MAS and some contingent variables (e.g. size, strategy, adoption of ERP Systems, …), secondly, it examined the relationship between the contingent variables and the perceived outcomes of multiple measures systems. Consistent evidence was found of firms using multiple measures, but our results indicate that there was a significant relationship among these pathways and few “classic” contextual variables. On the contrary, our results indicate more interesting behaviors by combining these variables in smaller segmental groups of firms. Finally, the important role of the controller in managing effectively the MPM is highlighted in the study. The paper is a consequence of a wider research project focused on the analysis of the integration process between FM and NFM in MAS

A survey on non financial measure practices in Italian management accounting systems

Today’s competitive environment shows a noticeable change in information needs. The integration of financial and non financial measures in management accounting systems seems to be in a state of flux. Some of the main changes concern establishing new models for measuring enterprise activities proposed by consultant firms. In our opinion it is difficult to say that these models are representative of a new way of developing novelty management accounting systems. The manner in which non financial measures can be combined with financial ones can be more varied than the number of known models. This variety provides an opportunity to identify the specific advantages and disadvantages related to the use of non financial measures in real - world management accounting systems. In particular, some changes are created from new non-financial information contained in different information systems, for instance, those coming from production, quality, safety and environmental areas. These measures can be combined in new ways with financial information produced by accounting systems in order to improve consciousness and knowledge. Furthermore, the limits of traditional financial performance indicators have been highlighted and analysed. These measures could be manipulated to give an apparent boost to financial performance. They also lack relevance for taking action as they do not explain the fundamental causes of problems or anticipate the fundamental changes in business. In other words they are too aggregated and synthetic for guiding managerial action and insufficiently oriented to measuring “intangible assets” (customer relationships, products and services innovation, high quality and responsive operating processes, employee capabilities, skills and motivation). This paper deals with non financial practices in management accounting systems and presents evidence of an empirical survey on a sample of large and medium size Italian firms. It is designed to give visibility to the changes described above. The survey was defined after the first analysis of the case study presented at 5th EIASM International Seminar on Manufacturing Accounting Research in Pisa, Italy. The paper presented at the aforementioned seminar illustrates the different experiences and developments obtained by each case study in using performance measurements, in particular it tries to focus on innovative results obtained or experiences still in progress in respect of the use of both financial and non financial indicators. The survey aims at identifying these aspects of practice on a broad scale. Thus the first purpose of the survey is to explore the “state of the art” in management accounting practices of large and medium size enterpris es selected in some traditional manufacturing sectors. In particular this research has been developed in order to identify the way of using non financial indicators at business unit level. Thus the research shows some relations between corporate management accounting systems and local projects. Some of the results, contrast with the Kaplan and Norton assumptions and, at the same time, show a significant preference for forms of integration with different sets of measures (reporting cards) that are still under development. It is important to underline that the use of non financial indicators can be very different and its application is in a state of flux. The paper is one of the results obtained through a national research project funded by the Ministry of Education, University and Research (MIUR). The main objective of this project is the definition of a conceptual framework for assessing the potential and level of integration of financial and non-financial information

Non-Financial Measures In Italian Management Accounting Systems: Some Emerging Practices From A Survey

The use of non-financial measures in management accounting systems is growing. The manner in which non-financial measures are combined with financial measures can be wider than the number of models proposed by scholars and practitioners. This integration seems to be in a state of flux. For this reason the analysis of the structure of these new pathways and outcomes related to the use of non-financial measures in management accounting systems seems to be useful. With regard to this, management is introducing the non-financial information, for instance, coming from production, quality, safety and environment information systems. These measures can be combined in new ways with financial information produced by accounting systems which surely will improve decision-making process and increase management accounting systems effectiveness. The main purpose of the paper is to explore the “state of the art” regarding non-financial practices in management accounting systems in some Italian Traditional Manufacturing Industries. For this reason the paper, after a literature review of the recent survey on this topic, deals with and presents the evidence of our empirical survey on a sample of large and medium size Italian firms. The survey is based on the results of the case study that illustrates the different experiences and developments obtained by each case study in using performance measurements. In particular the case analysis tries to focalise on innovative results or experiences still in progress regarding the use of both financial and non-financial measurements. The paper aims at verifying these first results on a broad scale through the survey. This paper has especially been developed to identify the way of using non-financial measures. The results show a significant preference for forms of integration with different structure gradients that are still under development. It should be underlined that the use of non-financial measures can be very different and its application is in a state of flux, but the respondent management further highlights the presence of outcomes in this integration process. The respondents are quite uniform in recognising the positive and negative perceived outcomes. Finally, we have examined the role of the controller in the process of integration of non-financial measures in management accounting systems. The paper is the result of a national research project funded by the Ministry of Education, University and Research (MIUR) and through the much appreciated suggestions during the EAA Annual Congress of Copenhagen. The main changes concern the analysis of the literature review, the meaningfulness of the data-base and the assessment of some variables related with the phenomenon of financial and non-financial information integration

Management Accounting Change as a Learning Process: An Empirical Analysis.

This study provides an interpretation of management accounting change based on the model of problem management proposed by Kolb (1983) and the theory of experiential learning (Kolb, 1976, 1984). It is based on a fourteen year longitudinal case study and this time scale has facilitated the exploration of two novel aspects of management accounting change. First, it becomes apparent that the costing information change which occurred was not a discrete event but more of a process of experience and learning conducted through what amounted to several iterations of trial and error that extended over several years. Experiencing and using new information are activities which, in themselves, generate conditions for further information change. Thus, the events and experiences which predate a change in practice are important factors in understanding how and why the change happened. Second, the actors involved were not passive bystanders of change. They actively participated in it and specifically developed an organisational mechanism to sensitise themselves to the process of organisational learning which drove the changes in the organisation’s costing system