Evaluating a model for unit-based cost allocation at hospitals: A case-study of the neonatal clinic at Karolinska University Hospital

Abstract: As healthcare costs increase, so does the need for accurate cost allocation systems. This thesis evaluates how current employee incentive structures would be affected by a move from clinic-based to unit-based cost allocation. Knowledge about current systems and incentive structures at the hospital, and opinions of the unit-based cost allocation system, was gathered by interviewing employees at the neonatal clinic at Karolinska University Hospital. The results from the interviews and an independent analysis concluded that healthcare professionals, without relation to budgetary work, are largely indifferent to costs and the financial systems of the clinic in general. All interviewees agreed that unit-based costing would better reflect the resource usage per patient. Implementing a unit-based cost allocation system at Karolinska University Hospital, using the nurses' schedule as a starting point, could be a simple and effective way to more accurately distribute costs per patient without adding additional administration or costs for the hospital or its employees.