Activity-Based Costing: Leveraging SCM to Examine Cost and Outcomes at a Clinical Pathway Level

Project Description

Quality healthcare means maximizing patient care (positive outcomes) and minimizing costs if applicable, and where able. Traditional costing approaches at Alberta Health Services function in a top-down manner and although of value for macroscopic planning and modelling, are unable to capture the nuance and variability of patients and physician practice. Activity-Based Costing leverages the data streams of clinical information systems (i.e. Connect Care or Sunrise Clinical Manager) to accurately sum (bottom-up) the component activities of patient visits (i.e. labs, DI, meds, consults, OR supplies, etc.) to better understand variability in resource consumption and cost from patient-to-patient. When individualized patient costs are then compared to outcomes, clear opportunities for quality improvement emerge. A pilot project at Alberta Children’s Hospital (query appendicitis population) has been completed and demonstrates the utility of Activity-Based Costing to front-line staff, and what Connect Care should endeavor to provide across the Province.

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Project Details

  • Question:Is there a better way to cost in our healthcare system?
  • Answer:Yes - develop cost of stay based on resources used, activities performed, or in other words, activity-based costing.
  • Challenges:This project required a fundamental shift in thinking at AHS, various technical hurdles as well.
  • Purpose:Demonstrate viability of activity-based costing.