Time-driven activity-based costing for health care provider supply chains

ABSTRACT

Health care providers currently operate in an environment of complex supply chains and increasing costs where approximately one third of hospital operating expenses are related to supplies. It is pertinent that health care providers have a clear understanding of their supply chain process costs. Knowing how these costs are driven and where opportunities for cost reduction exist can support health care provider supply chain (HPSC) efficiency. In this article, we present a time-driven activity-based costing (TDABC) supply chain cost methodology for health care providers. A TDABC management system can provide health care providers with valuable product and process supply chain cost information by investigating logistics activities, resource consumption, and time drivers. Our HPSC TDABC methodology is demonstrated in a case study conducted for the supply chain department of a 200-bed, not-for-profit hospital.

Additional information

Notes on contributors

Martha Gonzalez

Martha Gonzalez, M.S., is a health care systems engineer at the University of Texas MD Anderson Cancer Center. Martha works to ensure that the patients at MD Anderson have care that is safe, effective, patient centered, timely, efficient, and equitable. Martha is a certified project management professional and holds an M.S. in industrial engineering from the University of Arkansas.

Heather Nachtmann

Heather Nachtmann, Ph.D., serves as the Associate Dean for Research in the College of Engineering and a professor of industrial engineering at the University of Arkansas. Dr. Nachtmann serves as director of the Maritime Transportation Research and Education Center and the Mack-Blackwell Transportation Center. She is a Fellow of the American Society for Engineering Management and Institute for Industrial and Systems Engineers. She received her Ph.D. from the University of Pittsburgh in 2000.

Edward Pohl

Edward Pohl, Ph.D., is professor and Head of the Industrial Engineering Department at the University of Arkansas. Ed received his Ph.D. in systems and industrial engineering from the University of Arizona. His primary research interests are in reliability, engineering optimization, health care and supply chain risk analysis, and decision making. Ed is a Fellow of Institute for Industrial and Systems Engineers and Society of Reliability Engineers, a senior member of IEEE, and a member of INCOSE, INFORMS, and ASEM.