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The case describes the application of activity-based costing to measuring the cost of treating patients. It presents process maps and financial data relating to the processes used during an office visit to a plastic surgeon for three different diagnoses.
To apply TDABC in a health care setting through the calculation of costs and margins for three different procedures.
To identify and consider the implications of the cost numbers.
After reading the case, prepare a 4–6 page written response to answer the following questions:
What is the value proposition that BCH is offering? What is required for BCH to be successful? (Hint: Think Michael Porter in Competitive Strategy)
In this industry situation, why should clinical department heads, such as Drs. Meara and Waters, be interested in developing more accurate costs for their procedures?
Calculate the costs and margins of the three different office visits using: a) RCC method; b) TDABC method. Compare the two sets of numbers. What are the implications?
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