Application Of Activity - Based Costing In Cost Estimation Of Medical Service Project In Public Hospitals

In the mid-1980s, Robert Kaplan and Robin Cooper put forward the methodology of Activity-based Costing (ABC). With refined cost accounting, ABC aims to find a more reasonable and accurate method for the allocation of indirect costs, which can correctly reflect the real cost of each product or service, prevent the problem of product cost cross subsidy, and also avoid an inherent disadvantage of cost accounting:valuing accounting over management. Thus ABC has a great significance in increasing the long-term benefits of comprehensive management.As early as the 1990s, many western countries had begun to gradually introduce ABC from manufacturing industry to service, medical and other industries, and try to apply it in some hospitals for the cost accounting of certain medical projects. Over the years, ABC has been applied in a great number of hospitals in the West, continuously being improved and promoted. As contrast, at present, the hospitals in China still use the traditional cost management method of extensive calculation, with which the cost accounting will be done only after the service project is finished to show the cost of the project, and then to allocate the cost.This paper examines and analyses the existing researches, based on the actual situation of the public hospitals in China, it aims to demonstrate whether it is feasible to apply ABC as a new method of cost accounting for the hospital management in China, and to put forward suggestions for future improvement in terms of cost management. Based on the result of applying the ABC in the cost accounting of four chosen medical service projects in a triple-A level public hospital in China, this paper will further illustrate the feasibility of applying ABC in hospital cost accounting, and try to expound the significance of ABC in hospital cost management.This paper discusses from six aspects:The first chapter is introduction, it mainly includes the research background and significance, domestic literature review and the innovation of this paper.The second part focuses on the basic concept of ABC.The third part is the application example.The fourth part includes the summary of the whole paper and hopes for related researches in the future.