Cost of a unit of blood – An activity-based costing in a tertiary care teaching hospital

Abstract

CONTEXT: Costing enables administrators in planning for future expansion, evaluates cost-effectiveness, and helps in mobilization of resources. Costing of services like blood banking and transfusion is complex, more particularly in a service-oriented (not for profit) setup. Activity-based costing (ABC) helps in identifying all the resources involved at every step. AIM: The aim of the study was to analyze the cost of processing blood components in the blood transfusion services (BTS) department (blood center) of a private trust-funded tertiary care teaching hospital in South India. SETTINGS AND DESIGN: This was a retrospective study and an economic evaluation. METHODOLOGY: Cost an activities data was collected by observation and unstructured interviews of Blood Centre staff. The costing model was created based on the activities, cost heads and the costs were apportioned appropriately followed by calculation of the final costs. RESULTS: An ABC model with nine steps, which identified fifty substeps modeling the activities, was used to estimate the cost. The manpower cost (direct and indirect) was the highest cost driver followed by the direct material cost of the blood bag. ABC analysis revealed that component separation was the most expensive process step followed by cross-matching, specialized packed cells preparation, storage, and infection testing. CONCLUSIONS: Despite excluding fixed costs related to land, infrastructure, building, and equipment capital and depreciation, the ABC model costing was higher than the Government of India released costing. A homogenized ABC model helps in identifying and refining methods to adopt cost efficiency measures at the institutional level but also raises the question whether cost-efficiency requires a policy-level intervention. Additional data collected across the country and analyzed in a standardized manner can aid in the same.