As shown in Table 2, we identified a total of 59 cost objects for EDs. A particular ED may provide all the services listed in Table 2 or a subset of them.
Below we present the costs for all the cost objects identified in the ED from Hospital 1, using the ABC method. As shown in Table 1, Hospital 1 is a high complexity and private teaching hospital with more than six hundred beds. As a teaching hospital, patients can be treated by EM specialists, medical interns and residents. The ER at this hospital has a medical and trauma unit, as well as a critical care unit, with 10 boxes in total. The layout of this ER also includes a triage area.
We calculated the cost of 53 out of the 59 cost objects that this ED provided within a calendar year. We identified and cost 6 processes and 73 activities. Figure 1 shows the indirect costs of the processes that took place in the selected ED.
As shown in Figure 1, the medical care process has the higher proportion (36.9%) of indirect costs whereas the administrative and logistic processes consume more than half (52.1%) of the indirect resources. The indirect resources included in this ABC application can be categorized as: salaries, depreciation of equipment and infrastructure, utilities and medical supplies, office supplies, and maintenance. In order to carry out ABC, we need to recognize the tasks that make up these processes, i.e. the activities. To assign indirect resources to the activities, we define resource drivers such as time, number of procedures, number of employees/ time, usage percentage, and square meters/time.
Once activity costs were calculated, then activities were assigned to the cost objects. To allocate the cost of the activities we use the following cost drivers: time, number of procedures, and consumption index. Table 3 presents the eight most expensive activities from this ED.
According to Table 3, the most expensive activities are medical evaluation ($146,054,786 chilean pesos, equivalent to US$225,000) and re-evaluation ($152,047,070 chilean pesos, equivalent to US$234,000). The main reasons for the elevated costs of these activities are the physicians’ salaries and equipment and infrastructure costs.
The next step of ABC is to allocate the cost of the activities to the cost objects. The cost objects are the 53 services provided by the ED. Table 4 shows the final allocation of direct and indirect costs to these services. The services with the highest total costs are medical consultation ($487,445,524 chilean pesos, equivalent to US$750,000), phleboclysis ($97,601,148 chilean pesos, equivalent to US$150,000) and preparation of patients for hospitalization ($93,013,711 chilean pesos, equivalent to US$143,000). Eighty percent of the medical consultation costs come from three activities: medical evaluation, re-evaluation and filling health records for patients. Similarly, 80% of the phleboclysis services’ cost relates to four activities: intravenous (IV) installation, withdraws of supplies for procedures, medication administration and sample taking activities, registering medical supply consumption, and storage control. For preparation of patients for hospitalization the highest costs (78%) are associated with three activities: filling nursing and medical records for hospitalization activities, and preparing patients for transporting. However, if the unit cost is considered, the most expensive services correspond to referral ($134,507 chilean pesos, equivalent to US$207), resuscitation ($131,859 chilean pesos, equivalent to US$203), and diagnostic and therapeutic puncture ($ 43,526 chilean pesos, equivalent to US$67).
The proposed cost objects list can also be used to accumulate costs at different levels, such as patient or diagnoses. Table 5 shows an example of how the costs objects proposed can be aggregated at a diagnosis level, using the Pneumonia due to Streptococcus pneumoniae diagnosis (code J13 in the ICD-10 coding system).
As shown in Table 5, treating a patient diagnosed with Pneumonia due to Streptococcus pneumoniae costs $43,710 chilean pesos. This cost includes only the services provided by the ED. However, the revenue linked to those services could be imputed to the ED or to another unit at the hospital, given the classification of the services for billing purposes. In this particular case, the total revenue imputed to the ED corresponded to $19,050 chilean pesos. Hence, the ED had losses for an average of $24,660 chilean pesos per patient treated for that diagnosis in the time period included in the analysis.
The results are discussed in the next section.