Activity-based costing: a practical model for cost calculation in radiotherapy

Abstract

Purpose: The activity-based costing method was used to compute radiotherapy costs. This report describes the model developed, the calculated costs, and possible applications for the Leuven radiotherapy department.

Methods and materials: Activity-based costing is an advanced cost calculation technique that allocates resource costs to products based on activity consumption. In the Leuven model, a complex allocation principle with a large diversity of cost drivers was avoided by introducing an extra allocation step between activity groups and activities. A straightforward principle of time consumption, weighed by some factors of treatment complexity, was used. The model was developed in an iterative way, progressively defining the constituting components (costs, activities, products, and cost drivers).

Results: Radiotherapy costs are predominantly determined by personnel and equipment cost. Treatment-related activities consume the greatest proportion of the resource costs, with treatment delivery the most important component. This translates into products that have a prolonged total or daily treatment time being the most costly. The model was also used to illustrate the impact of changes in resource costs and in practice patterns.

Conclusion: The presented activity-based costing model is a practical tool to evaluate the actual cost structure of a radiotherapy department and to evaluate possible resource or practice changes.