Filmless versus film-based systems in radiographic examination costs: an activity-based costing method

In Japanese healthcare institutions, the costs and cost structures of radiographic examinations have changed following installation of picture achieving and communication system (PACS) to improve the efficiency and quality of radiology departments operations. However, precisely estimating the cost of the examination is difficult from an efficiency viewpoint because it comprises several overheads common to various examinations (e.g., equipment expenses labor costs). While direct costs can be readily and conveniently traced to a particular examination, this is not true for indirect costs. In traditional costing systems, the ratio of costs to charges (RCC) and relative value units (RVUs), usually allocate indirect costs to individual examinations based on a measure of volume. The major management limitation of the traditional cost system is that it is not strategic; that is, it allows cross-subsidies between examinations. Therefore, the changes in the examination costs, shifting from a film-based system to a filmless system, are unclear. In addition, Japanese medical personnel generally have a poor awareness of costs, one reason why costs cannot be precisely estimated.

One particular cost accounting methodology is activity-based costing (ABC). The ABC method measures the cost and performance of activities, resources, and cost objects [1, 2]. Works are classified into activities, then resources are assigned to activities, and the latter are assigned to cost objects based on their use. The ABC method recognizes the causal relationships between cost drivers and activities. The advantages of ABC versus RCC and RVUs are as follows: (1) resources consumed at treatment level are more precisely defined and reflected; and (2) resources consumed by a particular cost object are directly tracked and identified to a greater degree [1]. The disadvantages are as follows: (1) ABC is the newest of the three methods, and therefore not as well known; and (2) the calculation method is complicated because of many allocation bases. ABC has been applied to health care organizations [3‐6], and several researchers have applied ABC to radiographic examinations [7‐9].

To our knowledge, no study has specifically addressed the changing costs structures of radiographic examinations, resulting the shift from a film-based system to a filmless system. To provide an efficient examination as part of a medical service, it is necessary for the radiologic technologist to understand the actual costs and to apply cost management processes in a filmless system. ABC can accurately calculate to a greater degree the cost of changing resources or procedures by focusing on each activity.

The primary purpose of this study is to identify the cost structure of a radiographic examination, comparing a filmless system with that of a film-based system using the ABC method. To clarify these changing costs and cost structures within the medical service, we simulated radiographic examinations in a health clinic to simplify the flow of duties.

In this study, we calculated the costs of radiographic examinations in both a filmless system and a film-based system using the ABC method. Our results indicate that examination costs and cost structures can be expressed by identifying activity costs.

In recent times, hospital management has both emphasized and relied on knowledge regarding the cost of clinical examinations. However, estimating actual examination costs using traditional costing methods is difficult because radiographic examinations include many indirect costs, and the implementation of filmless systems has increased this trend. The ABC method can visualize the operation from a cost standpoint using costing based on relevant activities. Therefore when an operation is improved or evaluated and an equipment/system is introduced or updated, the ABC method can manage the cost of the procedure or support decision-making by clarifying the issue or estimating the improvement effect. Additionally, ABC may be able to heighten the awareness of medical personnel regarding costs by calculating accessible activity costs.

The introduction of filmless systems has resulted in various cost reductions in the use of different types of photography: the higher the number of images, the greater the reduction in costs. The rate of reduction in costs was higher for lumbar examinations (6 views) (38.78%). This result demonstrates that the reduction in film cost had the greatest impact on total cost: film cost was 24.9% of the total cost.

The rate of primary activity increased by 23.6-36.0% because of the implementation of the filmless system. In particular, the activity rate of "take photographs" increased by 18.8-27.8%. This increase in the primary activity rate indicates that the system is cost-effective; therefore such primary activities can provide greater value directly to patients.

Furthermore, the present study confirms that the number of examinations had the greatest influence on examination costs using a filmless system compared with a film-based system. If the number of examinations increased or decreased using a film-based system, the effect on the examination cost was slight because the direct cost rate (e.g., film or film envelope) is higher. Conversely, for a filmless system, the number of examinations had a much greater impact on examination cost; hence a plan to increase the number of examinations is necessary.

The present study does have its limitations. First, clinic costs need to be allocated to each department to accurately calculate examination costs. However, we were interested in the change in costs or cost structures with the introduction of the new system. Therefore, in this study, a clinic's general expenses were not considered. Second, the cost objects only included the main examinations, and operations only included examination flow. Ideally every examination should be included, and re-imaging or the time required for administrative work should also be considered. In addition, the accurate measurement of time is indispensable to determine the actual cost of examinations.

The costs and cost structures of radiographic examinations using a filmless system and a film-based system were calculated using the ABC method. The cost objects were lumbar (6 views), knee (3 views), wrist (2 views), and other, with costs of 2,085, 1,599, 1,165, and 1,641 yen, respectively for a filmless system.3,407, 2,257, 1,602, and 2,521 yen, respectively, for a film-based system. Our results provide clear evidence that the filmless system is more effective than the film-based system in providing services of greater value directly to patients.