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Improving health care costing with resource consumption accounting

Hasan Ozyapici (Department of Business Administration, Eastern Mediterranean University, Famagusta, Cyprus)
Veyis Naci Tanis (Department of Business Administration, Çukurova University, Adana, Turkey)

International Journal of Health Care Quality Assurance

ISSN: 0952-6862

Article publication date: 11 July 2016




The purpose of this paper is to explore the differences between a traditional costing system (TCS) and resource consumption accounting (RCA) based on a case study carried out in a hospital.


A descriptive case study was first carried out to identify the current costing system of the case hospital. An exploratory case study was then conducted to reveal how implementing RCA within the case hospital assigns costs differently to gallbladder surgeries than the current costing system (i.e. a TCS).


The study showed that, in contrast to a TCS, RCA considers the unused capacity, which is the difference between the work that can be performed based on current resources and the work that is actually being performed. Therefore, it assigns lower total costs to open and laparoscopic gallbladder surgeries. The study also showed that by separating costs into fixed and variable RCA allows managers to benefit from a pricing strategy based on the difference between the service’s selling price and variable costs incurred in providing that service.

Research limitations/implications

The limitation of this study is that, because of time constraints, the implementation was performed in the general surgery department only. However, since RCA is an advanced system that has the same application procedures for any department inside in a hospital, managers need only time gaps to implement this system to all parts of the hospital.

Practical implications

This study concluded that RCA is better than a TCS for use in health care settings that have high overhead costs because it accurately assigns overhead costs to services by considering unused capacities incurred by a hospital. Consequently, this study provides insight into both measuring and managing unused capacities within the health care sector. This study also concluded that RCA helps health care administrators increase their competitive advantage by allowing them to determine the lowest service price.


Since the literature review found no study comparing RCA with TCS in a real-life health care setting, little is known about differences arising from applying these systems in this context. Thus, the current study fills this gap in the literature by comparing RCA with TCS for both open and laparoscopic gallbladder surgeries.



Ozyapici, H. and Tanis, V.N. (2016), "Improving health care costing with resource consumption accounting", International Journal of Health Care Quality Assurance, Vol. 29 No. 6, pp. 646-663.



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