Cost Analysis of Mri Services in Iran: An Application of Activity Based Costing Technique Publisher



Bayati M^{1, 2} ; Ahari AM^{1, 3} ; Badakhshan A¹ ; Gholipour M⁴ ; Joulaei H²
Source: Iranian Journal of Radiology Published:2015

Abstract

Background: Considerable development of MRI technology in diagnostic imaging, high cost of MRI technology and controversial issues concerning official charges (tariffs) have been the main motivations to define and implement this study. Objectives: The present study aimed to calculate the unit-cost of MRI services using activity-based costing (ABC) as a modern cost accounting system and to fairly compare calculated unit-costs with official charges (tariffs). Materials and Methods: We included both direct and indirect costs of MRI services delivered in fiscal year 2011 in Shiraz Shahid Faghihi hospital. Direct allocation method was used for distribution of overhead costs. We used micro-costing approach to calculate unit-cost of all different MRI services. Clinical cost data were retrieved from the hospital registering system. Straight-line method was used for depreciation cost estimation. To cope with uncertainty and to increase the robustness of study results, unit costs of 33 MRI services was calculated in terms of two scenarios. Results: Total annual cost of MRI activity center (AC) was calculated at USD 400,746 and USD 532,104 based on first and second scenarios, respectively. Ten percent of the total cost was allocated from supportive departments. The annual variable costs of MRI center were calculated at USD 295,904. Capital costs measured at USD 104,842 and USD 236, 200 resulted from the first and second scenario, respectively. Existing tariffs for more than half of MRI services were above the calculated costs. Conclusion: As a public hospital, there are considerable limitations in both financial and administrative databases of Shahid Faghihi hospital. Labor cost has the greatest share of total annual cost of Shahid Faghihi hospital. The gap between unit costs and tariffs implies that the claim for extra budget from health providers may not be relevant for all services delivered by the studied MRI center. With some adjustments, ABC could be implemented in MRI centers. With the settlement of a reliable cost accounting system such as ABC technique, hospitals would be able to generate robust evidences for financial management of their overhead, intermediate and final ACs. © 2015, Tehran University of Medical Sciences and Iranian Society of Radiology.