Institutional Pressures for Adopting New Cost Accounting Systems in Finnish Hospitals: Two Longitudinal Case Studies

Abstract

This study explores the motivation and rationale of cost and management accounting change in two Finnish university hospitals. More specifically, the management accounting change studied is the implementation and the adoption of activity-based costing systems, and how these systems, as well as the motivation to implement them, have changed over time. A new cost accounting system is implemented, i.e. an idea is conceived, a project is started and solutions are found. The initiative for the implementation may be intraorganisational or extra-organisational, and the motivation and rationale a combination of economic argumentation and institutional pressure. The actual benefits gained by the adoption of a new costing system will most probably be intangible and non-quantifiable in both industrial and non-profit settings. More properly, the benefits of adopting ABC are seen to relate to the belief systems of organisational actors. Therefore, it may not always be a fruitful approach to study the actual benefits of adopting ABC, but of the belief systems related to the benefits. Speciality health care in Finland is tax-financed. Hospitals are organised in hospital districts, owned by municipalities. A public university hospital finances its operations through patient fees, state subsidies for education and research, and the per-case reimbursement from the municipalities referring the patient (see Figure 1). The municipalities purchase speciality health care through the managed care mechanism, which is also intended to align the municipal speciality health care spending budgets to the hospital district budgets, so as to synchronise the demand and production of speciality health care services. This does not mean that the sum of the health care spending in municipal budgets equals the hospital district’s sales budgets, since municipalities may purchase