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Eur. J.Psychiat.Vol.21, N.° 2, (117-123)
2007
Keywords:Unit cost, Process, Patient, Mental Health
Care, ABC.
Adaptation of activity-based-costing (ABC) to
calculate unit costs in Mental Health Care in Spain
Karen Moreno
Department of Accounting and Finance,
Universidad Complutense de Madrid
SPAIN
ABSTRACT – Background: To date, numerous cost-of-illness studies have been using
methodologies that don’t provide trustworthy results for decision making in mental health
care.
Objectives: The aims of this paper are design and implement a cost methodology by
process of patient’s care to calculate unit costs in mental health in Spain in 2005 and com-
pare the results with the reached ones by traditional methods.
Methods: We adapted Activity-Based-Costing to this field analyzing the organizational
and management structure of Mental Health’s public services in a region of Spain, Navarre,
describing the processes of care to patient in each resource and calculating their cost.
Results: We implemented this methodology in all resources and obtained unit cost per
service. There are great differences between our results and the ones calculated by tradi-
tional systems. We display one example of these disparities contrasting our cost with the
reached one by the methodology of Diagnostic Related Group (DRG).
Conclusions: This cost methodology offers more advantages for management than tra-
ditional methods provide.
Received 27 March 2006
Accepted 14 July 2006
Background
In last years, there has been a great con-
cern about cost-of-illness studies in mental
health care, since these papers are not using
a solid cost methodology and so are not
obtaining trustworthy results
1-11
and besides,
the results obtained until now and the design
of management tools based on them are
quite little
10
.
There are many deficiencies of traditional
cost methodologies utilized to date; some
studies calculate the total expenditure of
patient’s care for a certain mental pathology,
but they don’t obtain unit costs per patient or
per service; this fact doesn’t allow using the
results for cost-effectiveness analysis or in
economic evaluations or in decision making
about financing for example
12-16
. However,
there are papers that calculate unit costs per
patient or service but, most of them, are using
tariffs or prices previously established; these
figures are taken as valid but with their use,
average costs are obtained that do not reveal
the totality of emaciated resources by type of
patient
12,17-23
. In other cases, if unit costs are
calculated, the budgetary expenditure has
been taken as the total consumption of
resources in each service, and unit costs are
the result of dividing that amount between the
number of patients who have used the service;
this average cost is not correct since the con-
sumption of resources will be different
according to patient’s pathology; let’s think
about one Mental Health Centre, a schizo-
phrenic patient will receive treatment mainly
with psychiatrist and nurse, but a depressive
person will spend more time with psycholo-
gist, so the cost of both people will be com-
pletely different. Moreover, there are many
concepts, like amortizations of an investment,
that are not included in the budgetary expen-
diture and so that cost calculated according to
it, is not complete.
Due to the previously stated, it’s neces-
sary to design a solid methodology; it must
be easy to implant, it should make possible
the comparison at international level and
provide reliable results for being used in any
kind of economic evaluation (cost-effective-
ness analysis, efficacy analysis, decision
making about financing…); this is exactly
our main aim of our paper, to get this
methodology and compare our results with
the reached ones by traditional methods.
Methods
We are going to analyze all schizophrenic
patients (1,300 people) living in Navarre,
region in the North of Spain with 600,000
habitants, because of relevance of this pathol-
ogy
2,4,5,7,13
. We will evaluate all Mental
Health’s public services that specifically are:
9 Mental Health Centres, 2 Psychiatric Wards
in Hospital, 2 Day-Hospitals, a Rehabilitation
Clinic with two types of services provided
(part-time hospitalization and day-centre) and
a Long and Medium Term Residential Care.
Some instruments will be utilized in the
development of this research: one of them is
the European Service Mapping Schedule
(ESMS), system of standardization of
resources presented in 2000 and later adapted
in some zones of Spain and specifically in
Navarre
24-26
. Furthermore, we will compare
our methodology with the traditional cost sys-
tem used in each service: for example, we will
use DRG system, tariffs fixed by Navarre’s
Government for some services or simply unit
costs calculated by the staff of the resources.
We proceeded of this way: first of all, we
analyzed the organizational and management
structure of Mental Health’s public services.
With the consecution of this stage we had a
clear vision of available services for patients
and we knew how these services were related;
this phase was carried out with a focal point
with Director of Mental Health’s area in
Navarre, the person who better knows the
framework of mental health in the region, who
gave details of all Mental Health’s public ser-
vices during three meetings of 45 minutes
approximately. Having all these data, we
resorted of ESMS codes and we checked that
all services were codified with the right code.
After, having an exhaustive knowledge
about services, we followed having focal
points, but in this case with personnel of each
kind of service; maintaining 2 interviews of
30 minutes approximately with them, we
managed to design the processes that identify
care and management of each resource.
These processes are identified with the group
118 K. MORENO
of activities that cause expenses and repre-
sent a care’s protocol of the service; in this
way, we have developed a care’s model for
patients through the design of processes and
the list of activities that compose them. For
validating these models for each service, we
formed a focal group, one per service with
the directors, and 2 meetings were of one
hour long. Finally we reached a consensus
about these care’s models.
Once we have this map of activities
designed for each service, the next step con-
sisted of allocation of resources to each
process for being able to calculate unit costs.
This task was not complicated because we
had at our disposal all necessary information;
we calculated unit costs per process and after,
with this data, we easily obtained cost per
patient by means of the aggregation of cost of
processes that each patient had needed.
With all this data, we proceeded to design
a spreadsheet for each service that can be
updated next years without any complication.
Results
This methodology was implemented in all
Mental Health’s public services in Navarre; we
have obtained very good results and unit costs
per patient were calculated for all services in
2005 and were compared with the ones reached
by traditional methodologies obtaining impor-
tant differences. As one example of these out-
comes, we display results for a specific service;
we have chosen the Psychiatric Ward in Hospital
because we can show differences in costs
between our results and D.R.G. methodology
that it’s commonly accepted and used
17,27,28
.
This resource is codified with R2, code of Euro-
pean Service Mapping Schedule (ESMS); in
Figure 1, we show the organizational and man-
agement structure of Mental Health’s public ser-
vices. As we can observe, this service is taking
care of patients coming from Mental Health
Centres (80%), Day-Hospitals (5%) or Emer-
gency Department (15%) and people discharged
from it will go to Mental Health Centres, Day-
Hospitals or Rehabilitation Clinic.
ABC FOR MENTAL HEALTH CARE 119
Figure 1. Map of Mental Health’s Public Services in Navarre with links between them and ESMS codes.
The design of care’s processes to patient
in this service can be watched on Figure 2
according to the protocol of care to patient
just as the focal group set. The description
of the activities that compose each process
and the allocation of resources implied in
each one are displayed on Table I.
120 K. MORENO
Table I
Description of care’s processes to schizophrenic patients in Psychiatric Ward in Hospital and allocation of
necessary resources to carry out them.
Processes Description Personnel Length
Admission in the service. Patient’s data registry. Administrative Official 10 minutes
Previous consultation. Evaluation consultation for diagnose Psychiatrist. 1 hour
and decide the treatment.
Stay in the unit.
Blood general test. Blood general test for detecting if there is Nurse, laboratory
abuse substance or something like that. personnel.
Interview with relatives. Interview with relatives. Social worker. 45 minutes
Patient daily consultation. Revision daily consultation for Psychiatrist. 30 minutes
evaluating the patient's state.
Feeding. Catering given to the patients. –
Medicine treatment. Specific unidose consumed –
by each patient.
Daily care. Daily care given to patients 3 nurses, 6 clinic assistants. 7 hours
by morning shift.
Daily care given to patients 4 nurses, 7 clinic assistants. 7 hours
by afternoon shift.
Daily care given to patients Nurse, 2 clinic assistants. 10 hours
by night shift.
Checkup consultation. Checkup consultation after patient Mental Health Centre’s 30 minutes
is discharged. psychiatrist.
Figure 2. Design of care’s processes to patient in Psychiatric Ward in Hospital in Navarre for schizophrenic patients.
Discussion
Faced with the necessity of an improved
methodology to calculate unit costs in men-
tal health care, we have implemented ABC
system obtaining results very different from
the ones reached by traditional methods; in
this way we have obtained cost per care’s
process since this alternative was already
suggested as the best option but it had never
been carried out
27,28
.
ABC system presents many advantages
against traditional ones. With our methodol-
ogy we have got a better knowledge about
cost components just as Table II shows. As
processes’ cost is detailed, we can know
which of them supposes a bigger consump-
tion of resources; however, with traditional
methodologies we are not able to have at
our disposal this information.
A second advantage of ABC methodology
is that unit cost contains all necessary resour-
ces; let’s remember that traditional method-
ologies are based on budgetary expenditure
that is not complete because some concepts
like amortizations are not included.
Moreover, this methodology makes pos-
sible cost calculation according to different
temporal horizons; that is, we can calculate
unit cost in a specific service per day, per
month, per year or per stay; for example, in
Table II we have calculated the cost for a
stay of 17 days long, but if our patient had
stayed 25 days the cost would be different
and its calculation is very easy; this possi-
bility is impossible with traditional systems
as DRG in this case only gives one figure
for all patients included in 430 group. This
problem with DRG methodology has been
already stated for many health’s areas and
Psychiatry is not an exception
27
.
As well, it’s worth mentioning that ABC
methodology is not only an instrument to get
unit costs of care based in process. This
ABC FOR MENTAL HEALTH CARE 121
The differences between ABC cost and
DRG cost, group 430, is quite considerable
just as Table II shows. We have considered a
patient who stayed 17 days in this service in
2005.
Table II
Unit cost per process and per schizophrenic patient in Psychiatric Ward in Hospital and cost of DRG 430.
Processes Unit costs (€) 2005
Admission in service
Previous consultation 40
Stay
Blood general test 20
Interview with relatives 35
Patient’s consultation 330
Feeding 95
Medicine treatment 180
Daily care 2,100
Revision consultation 20
Common costs (laundry, sterilisation…) 205
Total cost 3,025 €
DRG 430 Cost 5,105 €
method links cost calculation with the activi-
ties that characterize each process; for this
reason, this system becomes a management
tool very familiar and of easy understanding
for service’s personnel and directors since the
list of activities of each process is an accurate
reflection of work in each service. In this
way, we can contrast the protocol of care’s
processes between areas from a medical point
of view and perhaps improve care’s patient.
In addition, we can affirm that if our cost
is more analytic and reliable, many type of
researches (cost-effectiveness analysis, effi-
cacy analysis, comparisons between areas
or any kind of economic evaluation) will
improve their results; their conclusions will
be more coherent than works made accord-
ing to traditional costs.
Finally, one of the most important advan-
tages of ABC methodology is based on the
improvement of decision making about ser-
vices’ financing, provision of new services,
reorganization of services... If we have at our
disposal a better knowledge about cost com-
ponents, unit cost per process, patient (differ-
entiating for pathologies) and service as a
whole, we are able to make a better decision
than if we only know the traditional cost.
In spite of these properties, this method-
ology shows an important limitation that
lies on the data compilation. If services’per-
sonnel and directors don’t collaborate and
don’t help us to design and describe care’s
processes and allocate resources on them,
this methodology can not be implemented.
Without this closed collaboration, key ele-
ment as it has been stated in previous
papers
29
, this system does not work. But as
we have demonstrated, multidisciplinary
work increases possibilities of success in
the obtaining of trustworthy results.
Another limitation of this study is that we
have only implemented ABC methodology
in a region; it should be very interesting if
we carried out the same work in another
area for validating the use of ABC method-
ology in mental health care.
Acknowledgements
This paper belongs to a research project
funded by Fondo de Investigación Sanitaria
(FIS), PI040077, and also to RIRAG, research
network funded by the same Funding Body.
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Address for correspondence:
Karen Moreno
Universidad Complutense de Madrid
Campus de Somosaguas
Ed. Prefabricado, 3º planta
28223 Pozuelo de Alarcón
Madrid, Spain
Ph: +34-91-3942357
Fax: +34-91-3942381
e-mail: kmorenoo@ccee.ucm.es
ABC FOR MENTAL HEALTH CARE 123
