The use of activity-based costing in South African private health care industry

Gideon Botha,Frans Vermaak

doi:10.4102/jef.v8i2.106

Abstract

The private health care industry is facing uncertainty and change as a result of the market inquiry being undertaken by the Competition Commission into the private health care industry, the introduction of the National Health Insurance and the possibility of fee regulation. This study seeks to determine the extent to which activity-based costing is used within the operations of private health care facilities in South Africa. A structured online questionnaire was used to collect the primary data; it was completed by 32 private health care facilities and three hospital groups. This study found that the level of activity-based costing adoption at a health care facility level increased from 1.2% in 1994 to 31% in 2013. The increase in the level of activity-based costing adoption indicates that the private health care facilities are willing to adopt and use innovative management tools and techniques to face their current challenges.

Highlights

In South Africa, 8.5% of the country's gross domestic product (GDP) is currently spent on health expenditure
Around 5% of the GDP is spent on private health care, which services about 7 million people, and the remaining 3.5% caters for the other 41 million people who are dependent on the public health care sector (Bateman, 2010:352)
In order to bridge the gap between the private and public health care systems, the South African government has decided to phase in the National Health Insurance (NHI) over the few years

Summary

Introduction

In South Africa, 8.5% of the country's gross domestic product (GDP) is currently spent on health expenditure (this includes both the public and private health sector). Around 5% of the GDP is spent on private health care, which services about 7 million people, and the remaining 3.5% caters for the other 41 million people who are dependent on the public health care sector (Bateman, 2010:352). This exceeds the recommendation of the World Health Organisation that advises that a country should spend around 5% of its GDP on health care (Department of Health, 2011:9). The impact that this special tax will have on the number of people with private medical insurance will only be determined when the NHI tax has been introduced

Methods

Results

Conclusion