Cost and operational control in hospitals : a Maltese perspective

Abstract

PURPOSE Given that the area of accounting in health care is relatively new to Malta, it was seen necessary to contribute towards this field by assessing the impact of the introduction of a cost accounting system at Mater Dei Hospital. In an effort to do this, the research contributed by giving an insight on the reaction of clinical people following the introduction of the system, how the system can be used to assess the performance of various hospital wards, and the role which accounting professionals play in this context, amongst others. DESIGN In order to achieve the above objective, semi-structured interviews were carried out both with clinical and financial people. Due to confidentiality purposes the names of the wards selected will not be mentioned, neither the exact post of the clinicians, however clinicians occupied a senior post. Financial professionals from the health sector were also interviewed, including amongst others Malta's Commissioner of Health in the European Union, the Director General of Finance at the Ministry of Health and a high ranking officer in charge of the system's implementation at the general hospital. FINDINGS The cost accounting exercise carried out at Mater Dei Hospital brought with it a change in culture, mostly within clinicians, who previously were not capable of quantifying the cost of their actions. Having clinicians more financially responsible leads to a collective effort to lower hospital costs. The availability of structured accounting information allows the evaluation a department's efficiencies and through the computation of variances, comparisons between the efficiency of various departments, together with an assessment of efficiencies over the years can be made. The costing exercise can also serve as a tool to improve health care sustainability. CONCLUSIONS The study elicited the importance of having a sound accounting structure as a means to provide control over the hospital's costs and operations. However it appeared that the benefits from the cost accounting system did not have time to materialise and hence, the basic framework for the system's successful implementation is still lacking. VALUE Owing to the conclusions reached, it is hoped that this study shall serve to encourage more in depth research which is pivotal for establishing strong financial structures within the health sector.