Introduction of concept of cost centre management in a public hospital in South Africa

Background: Information on hospital unit costs is valuable to health policy makers, managers, and researchers. Its importance is recognised internationally by the World Health Organization (WHO) and nationally by the South African Department of Health. Although some projects had attempted to introduce this concept in South Africa, none of them became sustainable. Objectives: To identify the cost centres in a large public hospital (Johannesburg Hospital) and to determine factors influencing its implementation and lastly, to provide future directions for successful and sustainable operation through transfer of skills. Methodology: Setting of the study was Johannesburg Hospital, a public sector hospital in South Africa. The study has used context analysis technique to analyze the operational environment of the hospital. Results: The study identified three types of cost centres: Overhead, Intermediate, and Final. The context analysis showed remarkable differences in comparison with Italian public hospitals. Various important factors were identified during this study, which may be classified into three broad categories: external, internal, and process. Discussion: Focus of hospital management should shift from cost minimisation. It should also consider other factors such as number of patients, levels of patients, clinical outcomes, clinical governance, organisational efficiency, and organisational culture, which might play a significant role. This requires expertise in clinical economics, which is not readily available in developing countries like South Africa. Training of hospital staff in the new way of thinking, internal communication, and regular feedback are probably other important factors to its success. Conclusion: A stepwise approach based on proper planning and a context analysis should be used for successful implementation of this type of activity in a public hospital setting. Key words: cost centre, public hospital.
Information on hospital unit costs is valuable to health policy makers, managers, and researchers for at least three purposes: budgeting, the assessment of hospital efficiency, and economic assessment of different [...]