Table Of ContentRATIONALE FOR ADOPTING JANNE
JÄRVINEN
ACTIVITY-BASED COSTING
IN HOSPITALS Faculty of Economics and
Business Administration,
Three longitudinal case studies
Department of Accounting and Finance,
University of Oulu
OULU 2005
Tiivistelmä suomeksi
JANNE JÄRVINEN
RATIONALE FOR ADOPTING
ACTIVITY-BASED COSTING
IN HOSPITALS
Three longitudinal case studies
Academic Dissertation to be presented with the assent of
the Faculty of Economics and Business Administration,
University of Oulu, for public discussion in Auditorium
TA105, Linnanmaa, on December 10th, 2005, at 12 noon
OULUN YLIOPISTO, OULU 2005
Copyright © 2005
University of Oulu, 2005
Supervised by
Professor Jukka Pellinen
Reviewed by
Professor Sven Modell
Professor Salme Näsi
ISBN 951-42-7947-6 (nid.)
ISBN 951-42-7948-4 (PDF) http://herkules.oulu.fi/isbn9514279484/
ISSN 1455-2647 http://herkules.oulu.fi/issn14552647/
OULU UNIVERSITY PRESS
OULU 2005
Järvinen, Janne, Rationale for adopting activity-based costing in hospitals.
Three longitudinal case studies
Faculty of Economics and Business Administration, Department of Accounting and Finance,
University of Oulu, P.O.Box 4600, FIN-90014 University of Oulu, Finland
2005
Oulu, Finland
Abstract
In the 1990's, a large number of Finnish hospitals began implementing new cost accounting systems,
which were aimed at pricing the hospital outputs at full cost. Often the method of choice was activity-
based costing, which was in the process of being transferred from the manufacturing industry to
health care service production. The aim of this study is to analyse the motivations and rationale of this
phenomenon in the light of three longitudinal case studies.
The first case study is archival, using documents produced between 1996 and 2002. In the second
case study, the data consists mainly of research diaries and personal observation and covers a hospital
district activity-based costing and pricing project of 2000–2001. The third case study covers
budgeting and costing development in a private, non-profit hospital by analysing documents and field
notes. Institutional theory is used to interpret the findings in the three case studies.
The theoretical framework used in analysing the data draws on Roberts and Greenwood's (1997)
ideas, according to which an organisation's rational and efficiency-seeking actions are constrained by
both economic (bounded rationality) and institutional factors. The results indicate that different
constraints imposed on efficiency-seeking behaviour such as activity-based costing implementation
may lead to different solutions concerning implementation. It is noteworthy that while all three case
organisations represent the health care sector, their approaches to activity-based costing have been
quite dissimilar. While institutional theory leads us to believe that managerial accounting systems
may be converging due to the institutional pressures, evidence from the case studies supports the
notion that this convergence seems limited to the adoption of the systems – function of the systems
seems to remain characteristically different.
Keywords: activity-based costing, constrained-efficiency framework, cost accounting, full
cost pricing, health care, hospital, institutional theory
Järvinen, Janne, Perusteluja toimintolaskennan käyttöönotolle sairaaloissa.
Kolme pitkittäisaineistoon perustuvaa tapaustutkimusta
Taloustieteiden tiedekunta, Laskentatoimen ja rahoituksen yksikkö, Oulun yliopisto, PL 4600,
90014 Oulun yliopisto
2005
Oulu, Finland
Tiivistelmä
Useat suomalaiset sairaalat aloittivat 1990-luvulla laajamittaisia kustannuslaskentaprojekteja, joissa
tähdättiin täyskatteiseen hinnoitteluun. Usein valittuna menetelmänä oli toimintolaskenta, jota
siirrettiin teollisesta toimintaympäristöstä terveydenhuollon palvelutuotantoon. Tutkimuksen
tavoitteena on tarkastella tämän ilmiön syitä ja motiiveja kolmen tapaustutkimuksen valossa, joista
kaksi on sairaanhoitopiirejä ja kolmas on voittoa tavoittelemattoman yhteisön omistama yksityinen
sairaala.
Ensimmäisessä tapaustutkimuksessa aineisto on dokumentteihin perustuvaa arkistomateriaalia
vuosilta 1996–2002. Lisäksi kustannuslaskentamallien rakennetta on tarkasteltu käymällä läpi
laskelmissa tehtyjä rakenteellisia ja teknisiä ratkaisuja sekä laskentasääntöjä. Toisessa
tapaustutkimuksessa aineisto koostuu pääasiassa tutkijan päiväkirjoista ja havainnoista, ja sisältää
sairaanhoitopiirin laajuisen kustannuslaskenta- ja hinnoitteluprojektin kuvauksen vuosilta
2000–2001. Kolmannessa tapaustutkimuksessa käydään läpi yksityisen sairaalan budjetoinnin ja
kustannuslaskennan kehitystä dokumentteihin ja tutkijan muistiinpanoihin nojautuen.
Teoreettisena viitekehyksenä aineiston tulkinnassa käytetään Robertsin ja Greenwoodin (1997)
rajoitetun tehokkuuden mallia, jonka mukaan organisaation tehostamispyrkimyksiä rajoittavat sekä
taloudelliseen rationaalisuuteen liittyvät tekijät (rajoitettu rationaalisuus) että institutionaaliset
tekijät. Tutkimuksen tulokset osoittavat, että erityyppiset rajoittavat tekijät vaikuttavat
organisaatioiden tehokkuuspyrkimyksiin (joihin toimintolaskentaprojektit on luettava) siten, että
lopputuloksena on erilaisia sovelluksia toimintolaskennan käyttöönotosta. On huomionarvoista, että
vaikka kaikki tutkimuksen kohteena olleet tapaukset ovat erikoissairaanhoidon organisaatiota, niiden
tavat ottaa toimintolaskenta käyttöön ovat olleet toisistaan hyvin poikkeavia. Vaikka
institutionaaliseen teoriaan perustuvasta tutkimuksesta voikin tehdä sellaisen johtopäätöksen, että
ulkoiset paineet muovaavat organisaatioita samanlaisiksi, näiden tapaustutkimusten perusteella on
mahdollista väittää, että samanlaisuuden paineet liittyvät laskentajärjestelmien käyttöönottoon
järjestelmien toiminnan jäädessä varsin erityyppisiksi.
Asiasanat: institutionaalinen teoria, kustannuslaskenta, rajoitetun tehokkuuden malli,
sairaala, toimintolaskenta, täyskatteinen hinnoittelu
Acknowledgements
My thesis now accomplished, I feel indebted to all those people who have given their
support to this project and hence have contributed in one way or another to this
dissertation.
First and foremost, I would like to express my gratitude to Professor Jukka Pellinen
for his valuable comments and insight. Furthermore, I wish to thank my colleagues at the
Department of Accounting and Finance for their encouragement and intellectual support
Secondly, this work would not have been possible without the invaluable cooperation
of the staff of Oulu and Tampere University Hospitals. Special thanks are especially due
to chief of surgery and intensive care, Dr. Kari Haukipuro at Oulu University Hospital
and CFO, M.Sc. (Admin) Lasse Kärki, currently at the Hospital of Joint Replacement
(COXA). I have been most fortunate to have had the opportunity to learn from such
mentors in the interesting field of hospital cost accounting. My most sincere thanks are
also due to Outi, Päivi, Siru and many others I have forgotten to mention.
Thirdly, I would like to thank the participants of the CIGAR Doctoral Colloquium in
held in June, 2003 in Bodø, Norway, for helpful comments and ideas. Support and
encouragement has been provided by Professor Pirjo Koivukangas and Assistant
Professor Timo Hyvönen Lic. Sc.(econ). Also, warm thanks are due to Dr. Seppo
Eriksson for assisting in practical matters related to publishing this thesis, and Virginia
Mattila MA for proofreading.
Fourthly, financial support for this dissertation was provided by Kunnallisalan
Kehittämissäätiö. This support is gratefully acknowledged.
Finally, this work would not have been accomplished without the support of my
family. I wish to thank my father, mother and sister for their encouragement and setting
an example for me to follow in my life. My most hearty thanks are due to my wife Sanna
and our daughter Aino, to whom I will be forever in debt. As I now look back at the days
I spent away from home, either visiting hospitals in other parts of the country, or writing
all this down at my parents’ summer cabin on the shores of lake Viitajärvi in Haukipudas,
not to mention the weekends I was away to finish this work, I feel this has been the
greatest sacrifice of all. Your support has made all this possible.
Oulu, November 2005 Janne Järvinen
Description:organisations represent the health care sector, their approaches to activity-based costing have been notion that this convergence seems limited to the adoption of the systems – function of the systems seems to rational decision making and institutional influences is thus one of the starting poi
