Comparative Analysis of Costing Methods for Magnetic Resonance Imaging in a Tertiary Care Teaching Hospital: An Observational Study

Abstract

Health-care costs, often determined through outdated methods, fail to capture the true costs of care delivery. Traditional costing methods in the health-care sector have proven insufficient, leading to potential revenue losses and increased patient out-of-pocket expenses. Activity-based costing (ABC) and time-driven ABC (TDABC) offer alternative approaches to cost calculation, aiming for a more accurate reflection of resource consumption. This descriptive observational study was conducted in the magnetic resonance imaging (MRI) center of a tertiary care teaching hospital, focusing on a single noncontrast MRI scan costing. Direct observations and record reviews, including standard operating procedures, policy letters, financial documents, and miscellaneous records, were employed. Using traditional costing, the unit cost of an MRI scan was calculated at INR 1291.51. ABC yielded a unit cost of INR 3613.77, while TDABC resulted in a unit cost of INR 2764.39. A comparison between the three costing methods revealed potential revenue losses with traditional costing. In contrast, TDABC appeared to strike a balance between financial prudence and reduced patient out-of-pocket expenses. The study emphasizes the significance of understanding true costs in health-care delivery. The results advocate for the adoption of TDABC as a favorable compromise, enabling the hospital to retain revenue without burdening patients with additional costs. Notably, the study highlights the necessity for a granular understanding of true costs for successful transitions from volume to value in health care.