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Increasing growth and development of medical technology and procedures has raised radiology costs, thereby increasing healthcare costs. Technology upgradations are inevitably accompanied by the cost of procuring such technologies to health care organizations, in terms of both capital costs and operating costs. These costs can have very significant impacts on the financial health of healthcare systems. This has lead to a rising interest of administrators from healthcare organizations. Cost awareness has become vital even in radiology departments. Having details of costs incurred related to the resources used in procedures to define their actual price and to plan future investments in the department. Hence a healthcare organization needs to estimate and control the costs while monitoring the revenue generated. Since the investments are huge, it is important to consider the cost of spare parts and labour charges as a vital constituent of operating cost. The last three decades have brought major changes in radiology services with the introduction of many complex services. Further, the equipment for the two major processes ie the CT and the MRI scans are a costly investment. Hence many researchers have highlighted the need for analyzing the efficiency, effectiveness and the costs related to these type of equipment. The reviews revealed few such studies have been conducted about CT and MRI. This study performs Activity Based Costing of the services provided by CT-scan and MRI machine in the radiology department and estimates the break-even point. Activity-based cost (ABC) accounting has been used in industrial and service-providing units. In the literature, there is scant information about the use of ABC accounting in health care and radiology. There is particularly scarce information about the cost structure of today's transitional period in radiology.
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