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KMID : 0387320040140010089
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Korean Journal of Health Policy and Administration
2004 Volume.14 No. 1 p.89 ~ p.120
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Cost Driver Analysis in General Hospitals Using Simultaneous Equation Model and Path Model
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Yang Dong-Hyun
Lee Won-Shik
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Abstract
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The purpose of this empirical study is to test hypotheses in order to identify the cost drivers that drive indirect costs in general hospitals in Korea. In various cases studies, it has been suggested that overhead costs are driven by volume and complexity variables, how they are structurally related and how the cost impacts of these variables can be estimated in practice. A unique feature of the research is the treatment of complexity as an endogenous variable. It is hypothesized that level of hospital complexity in terms of the number of services provided(i.e., "breath" complexity) and the intensity of individual services(i.e., "depth" complexity) are simultaneous determined with the level of overhead costs needed to support the complexity.
Data used in this study were obtained from the Database of Korean Health Industry Development Institute, Health Insurance Review Agency and analyzed using simultaneous equation model, path model,
The results found those volume and complexity variables are all statistically significance drivers of general hospital overhead costs. This study has documented that the level of service complexity is a significant determinant of hospital overhead costs, caution should exercised in interpreting this as supportive of the cost accounting procedures associated with ABC.
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KEYWORD
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Cost Drives Overhead costs, Volume, Complexity
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