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Cost and Performance: Complements for Improvement

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Abstract

Activity-based costing (ABC) and Data Envelopment Analysis (DEA) share similar views of resource consumption in the production of outputs. While DEA has a high level focus typically using aggregated data in the form of inputs and outputs, ABC is more detailed and oriented around very disaggregated data. We use a case study of immunisation activities in 24 New Zealand primary care practices to illustrate how DEA and ABC can be used in conjunction to improve performance analysis and benchmarking. Results show that practice size, socio-economic environment, parts of the service delivery process as well as regular administrative tasks are major cost and performance drivers for general practices in immunisation activities. It is worth noting that initial analyses of the ABC results, using contextual information and conventional methods of analysis such as regression and correlations, did not result in any patterns of significance. Reorganising this information using the DEA efficiency scores has revealed trends that make sense to practitioners and provide insights into where to place efforts for improvement.

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Notes

  1. Arguably some of these events could be partly related to the number of vaccinations and classified under the unit level. However we believed that they were more likely to be periodic.

  2. The cost model and results can be seen in Turner et al. [10].

  3. An output orientation measures efficiency in terms of the potential increases in output, where inputs are held constant. This contrasts with an input orientation, which measures efficiency in terms of the potential reduction in input, holding outputs constant. For CRS the efficiency score will be the same under both orientations. For VRS the efficiency score can differ.

  4. The deprivation index provides a graduated scale of deprivation based on a number of variables from Statistics New Zealand. 1 represents the areas with least deprived scores and 10 the most deprived scores regarding socio-economic deprivation.

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Acknowledgements

District Health Boards New Zealand (DHBNZ) and the New Zealand Ministry of Health for their support and the New Zealand Primary Care Practices who agreed to participate in the research. We also thank two anonymous reviewers for their helpful comments.

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Authors and Affiliations

  1. Department of Accounting and Finance, The University of Auckland, Private Bag 92019, Auckland, New Zealand

    Paul Rouse & Julie Harrison

  2. School of Population Health, The University of Auckland, Private Bag 92019, Auckland, New Zealand

    Nikki Turner

Authors
  1. Paul Rouse
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  2. Julie Harrison
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  3. Nikki Turner
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Correspondence to Paul Rouse.

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Rouse, P., Harrison, J. & Turner, N. Cost and Performance: Complements for Improvement. J Med Syst 35, 1063–1074 (2011). https://doi.org/10.1007/s10916-010-9520-1

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  • DOI: https://doi.org/10.1007/s10916-010-9520-1

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