The use of the transition cost accounting system in health services research

Abstract

The Transition cost accounting system integrates clinical, resource utilization, and financial information and is currently being used by several hospitals in Canada and the United States to calculate the costs of patient care. Our objectives were to review the use of hospital-based cost accounting systems to measure costs of treatment and discuss potential use of the Transition cost accounting system in health services research. Such systems provide internal reports to administrators for formulating major policies and strategic plans for future activities. Our review suggests that the Transition cost accounting information system may useful for estimating in-hospital costs of treatment.

Figure 1

Step 1: Classification of departments as direct or indirect cost centers.

Figure 2

Step 2: Identification of department level intermediate products.

Figure 3

Step 3: Estimation of direct costs of intermediate products.

Figure 4

Step 4: Identification of application rates for allocating indirect costs.

Figure 5

Step 5: Allocation of indirect costs to direct cost centers.

Figure 6

Step 6: Estimation of indirect costs and total unit costs of intermediate products.