CROSWELL UNIVERSITY HOSPITAL

1. Focusing on only the inpatient care cost (ignoring operating room costs), what is the cost of
TAH (non-oncology) under each of the cost accounting systems? A tuboplasty? A TAH
(oncology)? What account for the differences?

Before a have a relation of cost of each procedure, it is important to know the definition of those kind
of surgeries:

 Total Abdominal Hysterectomy – TAH: is a surgical procedure that removes the uterus
through an incision in the lower abdomen. Sometimes it includes removal of one or both ovaries
and fallopian tubes. It is need it in case of gynecologic cancer, such a cancer of uterus or cervix;
and other conditions like fibroids (benign uterine tumors that often cause persistent bleeding,
anemia, pelvic pain or bladder pressure), endometriosis (the tissue lining the inside of your
uterus, grows outside the uterus on your ovaries, fallopian tubes, or other pelvic or abdominal
organs), abnormal vaginal bleeding and chronic pelvic pain. The recovery time could take about
six weeks (MAYO CLINIC, 2018).

 Tuboplasty: is a surgical procedure performed on the fallopian tubes. It is often necessary to

remove a blockage in one of the tubes that may occur either near where the tube meets the
uterus or toward the end of the tube. A blocked fallopian tube can prevent a woman from
becoming pregnant. Most tuboplasty procedures are performed with the intention of increasing
the chances of reproduction in women who may have had difficulty getting pregnant
(Montgomery Fertility Center, 2018). It may use x-ray and ultrasound, in order to determine area
and extent of damage. It is an outpatient surgery, so the patient may leave the same day.

Using each cost accounting systems, ignoring operating room cost, obtain the next results:
ACCOUNTING SYSTEM 1: Cost Summary for Surgical Specialties and ACCOUNTING SYSTEM 2: Cost Breakdown by Surgical Specialty
Anesthesia Average /
Average / Quantity Total
Quantity Total Unit
Unit
TAH (Non - Oncology)
TAH (Non - Oncology)
Bed/Day (General Gynecology) 963 4 3.852
Bed/Day (Gynecology) 927 4 3.708
Total 3.852
Total 3.708

TUBOPLASTY TUBOPLASTY
Bed/Day (Gynecology) 927 3 2.781 Bed/Day (Reproductive/IVF) 728 3 2.184
Total 2.781 Total 2.184

TAH (Oncology) TAH (Oncology)

Bed/Day (Gynecology) 927 7 6.489 Bed/Day (Oncology) 1081 7 7.567
Total 6.489 Total 7.567
 ACCOUNTING SYSTEM 3: Level of Care System
Average /
Quantity Total
Unit
TAH (Non - Oncology)
Bed/Day 270 4 1.080
Medical Treatment Units 207 10 2.070
Nursing Units 42 10 420
Total 3.570

TUBOPLASTY

Bed/Day 270 3 810

Medical Treatment Units 207 7 1.449
Nursing Units 42 5 210
Total 2.469

TAH (Oncology)
Bed/Day 270 7 1.890
Medical Treatment Units 207 20 4.140
Nursing Units 42 38 1.596
Total 7.626

First system (Cost Summary for Surgical Specialties and Anesthesia), averages the monthly costs
of services, implements, procedures, etc., and multiplying it by the number of procedures
performed. Therefore, the same cost weight is charged to each procedure, without differentiating
the quantity of elements or services used in each procedure.
The second system is divided into three categories depending on the type of gynecology. For the
assignment of the cost, it takes into account the quantity of elements or services used according to
the type of procedure, which allows a closer approximation to the real cost.
Finally, the third system differentiates the costs that could have a daily patient maintenance, medical
treatment, and nursing care. Each of these categories takes into account all the elements and
services used during the procedure and the recovery time.
2. Which of the three systems is the best? Why?
We consider that the last two systems are the best options to take into account the costs of each
gynecology procedure, because these two systems categorize each cost depending on the type of
procedure (system 2 - Cost Breakdown by Surgical Specialty) and the units of maintenance,
treatment and nursing care (system 3 - Level of Care System). However, in order to choose which
would be the best cost system for Croswell University Hospital, the availability and participation of
members of the gynecology team should be taken into account, since for system 3 it requires greater
effort and control of each cost. In addition, it must consider the compromise of employees, to record
and control in better detail each part of the cost.

3. From a managerial perspective, of what use is the information in the second and third
systems? How, if at all, would this additional information improve Dr. Julian´s ability to
control costs? How might it help chiefs in non-surgical specialties?
 Second System: It categorize cost by subspecialty. It means that from a managerial perspective the
information can be used to analyze where the Hospital resources are being placed and where efforts
should be allocated depending on the subspecialty.

Third System: It gives a detailed perspective depending on the diagnostic of the patient. It focuses
on specific cases of the illness. Consequently, from a managerial perspective this information could
be used to analyze, for example, cost-effectiveness in nursing care so nurses must be strategically
positioned to minimize cost each time a process is repeated. It can be linked to the Kaizen concept
of continuous improvement, decreasing cost each time by understanding and knowing the process
in detail.

The additional information given by systems 2 and 3 improve Dr. Julian’s ability to control costs
because each model add information to the understanding of the allocation of costs. As a result,
anytime cost increases she can deeply understand what causes it knowing better how to respond
to it improving her response capacity due to the better control ability.

In the case of chiefs in non-surgical specialties, the developed systems could contribute as a first
step to apply accounting cost systems in non-surgical specialties. Additionally, it gives an idea of
how costs are distributed in a regular hospital.

4. What should Dr. Julian do next?

Dr. Julian should share her advances with her co-workers before keep advancing in her costing
models. This is necessary because constructing new costs accounting systems demands effort and
time. Therefore, it is fundamental to know whether other stakeholders in the company agree with
the costing system she is developing before keep spending time on it. If her co-workers agree they
can determine together what to take into account in each model to guarantee success in the use of
the model.

Members of group 6:
Ramiro David Silva
Claudia Lorena Parra Correa

Bibliografía
MAYO CLINIC. (31 de June de 2018). MAYO CLINIC. Obtenido de https://www.mayoclinic.org/tests-
procedures/abdominal-hysterectomy/about/pac-20384559

Montgomery Fertility Center. (5 de January de 2018). Montgomery Fertility Center. Obtenido de

http://www.montgomeryfertilitycenter.com/tuboplasty.php