Implementation of activity based costing in the Mafikeng Provincial Hospital

Abstract

This research study was probing the possible role that could be played by implementing activity based costing in ascertaining the patient treatment cost in Mafikeng Provincial Hospital. A continued failure of the health institutions in providing services to communities due to shortage of funds. The primary goal of the research document was to identify cost activities and pooling them together in realistic activity cost pools. The research should be able to provide the hospital with a document in implementing activity based costing system as a tool for financial management. A literature study was done to identify advantages and disadvantages through a thorough investigation. A description of the process involved in the design of activity based costing system was explained. In conclusion it was identified that the current operation could be modified to suite the implementation of activity based costing in determining the patient treatment cost to the hospital. It is concluded that the current system in the hospital underestimated the patient treatment cost and recovery cost for services provided. The outcome of the research had shown that the health managers will have a better understanding of the cost related to patient treatment cost. It was concluded that this system could lead to a cost containment and redirection of scarce resources to important activities.