ABC System Analysis In Healthcare

ABC system analysis can be applied to every management situation one encounters. For this week’s discussion, healthcare is the area of business in which I will be focusing on.
Service lines vary tremendously, especially within the health care system. Whether it is based on speciality, size, budget or access to different technology, information and care, it is crucial to have the most specific and detail system in an industry that really is, life or death. Every decision that is made in the health care profession essentially comes down to one thing - cost. Which is why having the most accurate facts on hand are critical. Not to just save patients money, but to help the hospital distribute money and set budgets in the most effective way.
The

reason the ABC system is such a need for this field is due to indirect costs individuals may encounter and overhead for the entire hospital, these are determined by dividing the operation or procedure by the number of patients to have used it. “Hospitals assume over-head cost per patient day is the same irrespective of the patient type, level of care, procedure being performed, or length of stay. (Udpa, 1996).” This provides inaccurate costs per patients and uses the predicted average cost. This also can influence with an individuals insurance and treatments they can afford. However, “Overhead costs relating to admission and registration do not vary with the number of patient days but with the number of patients admitted (Udpa, 1996). What this means is that they track costs between registration and admission in a different type of system than they do with cost of actual procedures. Using two different systems can cause confusion and miscommunication - using the most effective system is the most practical choice. This would be the ABC system.
The ABC system maintains and process information all while distinguishing activities and breaking each aspect down individually for what the budget of a department should be, not basing it on the number of patients then finding an average. Budget is a critical factor for hospitals and healthcare to stay afloat. Using the best technological advancements at a cost in which the hospital can provide will assure the best and accurate care. Sources