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Activity Based Health Care Case Study

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Are Australian’s being short changed on healthcare due to activity based funding?
Activity based funding (ABF) is a common practice being used around the world and in some Australian hospitals. This essay will examine the practice and determine if value is being added by using ABF and how that effects costing within hospitals.
ABF is the process of receiving funding from the government based on the type and volume of procedures provided to patients. Similar activities are grouped together and classified, with each hospital receiving the same amount of funding for that specific procedure classification.

Value is defined by Porter ME (2010) as being a measurement of outcomes achieved and in health care, this concept should be cenered around customers.

In Australia, $140.2 billion was spent on healthcare in 2011-12 with 69.7% of the funding derived from the Australian government and 27.3% from state and territory governments. Due to the global economic crisis in 2007/2008, government health funding and tax …show more content…
Chan, YC (1993) explains that the initial research and information gathering for a new system can be time consuming and costly. Activity analysis needs to be performed across the whole company to identify activities that consume overhead resources and the consumption of those resources tracked. Given the complexity and range of hospital services, the time and cost of the initial investigation may not be feasible.
For the system to give the level of detail needed to analysis costs verses funding, it can get quite complex and costly. Generally there is a trade off in the design process between accuracy of costing and level of complexity. If a system is too basic, the ability to analyse costs and make decisions will be hindered, not adding any value to the costing process, or improved efficiency to

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