Management Accounting and Control Systems in Az Monica

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Assignment Management Accounting

Management accounting and control systems at AZ Monica

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Module: Management accounting II                

Faculty: Prof Geert Scheipers                Veerle Baekelandt

                Antwerp Management School

Due Date: December 12, 2013                Part-time Executive MBA

Assignment Management Accounting
Management accounting and control systems at AZ Monica

1. Setting the scene

This paper is about the management accounting and control systems at AZ Monica, a hospital with the focus on secondary health care. AZ Monica is a fusion hospital with a capacity of 477 beds over two campuses. The hospital employs 1200 people including 177 permitted doctors. AZ Monica offers on both campuses basic medical services as well as specialized services such as orthopedics, ophthalmology, revalidation medicine, plastic and reconstructive surgery. The paper will particularly focus on discussing the management accounting and control systems between doctors and hospital management. The duality between doctors and hospital management, meaning that the clinical processes are separated from the management processes, are giving conflicts on a daily basis. These tensions are therefore absorbing a lot of energy at the expense of improving and optimizing care processes.

The best strategy to optimize patient care is to develop a management accounting and control system that is mutually agreed between partners. This mutually agreed system will at the same time improve the collaboration between doctors and hospital management which again benefits the patient.

1. Introduction

The rise in the aging population and the increased standard of living reinforces two tendencies that are heavily burden the organization of care:

• the evolution towards a further specialization of acute medicine,

• the increase of chronic diseases and multi-morbidity.

This transition, together with the need to keep health care high in quality, widely accessible and affordable, confronts us with the need to reflect on the way we manage, organize and control care.

Therefore management accounting and control systems are becoming important to contain health care organization cost^[1]. There is an almost complete lack of understanding how much it costs to deliver patient care, much less how those costs compare with the outcomes achieved^[2]. The issue in health care is that to properly manage value, both result and cost must be measured at patient level2. Better result measurement will, by itself, lead to significant improvements in the value of health care delivered, as providers’ incentives shift away from performing highly reimbursed services towards improving the health status of the patients2, ^[3], ^[4]. It is possible to determine the predominant paths followed by patients with a particular medical condition. With good estimates of the typical clinical paths an individual patient takes for a medical condition, using the Time-Driven Activity-Based Costing (TDABC) system, costs can be accurately and relatively easily assigned to each step in the process along the clinical path^[5].

But the major difficulty in our hospital is that doctors are self-employed. They focus mainly on operational processes and their own medical discipline rather than the hospital as a whole. In their view the relation to the hospital is limited to renting infrastructure, equipment or staff to develop their practice2.

1. Management accounting and control systems in AZ Monica

1. Cultural control

The mission of AZ Monica is :

“Op een respectvolle, vriendelijke manier kwaliteitszorg aanbieden”.

For hospital management in AZ Monica it is very important that all employees have an idea of what the actual mission of the hospital is and what the goals are we need to achieve.

To enable this, hospital management uses several tools such as :

• encouraging people to attend sessions where the mission statement and the goals are communicated,
• involving the different stakeholders in setting the strategy to achieve the goals,
• creating several opportunities in the structure of the organization to give feedback to hospital management.

1. Boundary control

One of the main issues to achieve the mission statement is to deliver quality care. Our hospital is challenged to create value-driven care, with attention to patients needs and the care must be accessible and affordable for all.

Hospital management strives to realize this by implementing Total Quality Management Programs (TQM) such as :

1. ‘Baby Friendly Hospital’ Initiative (2013)’,
2. ‘European Social Fund’ label (2011)’,
3. ‘Lean management’ – Productive ward (2012)’ and
4. ‘JCI accreditation’ (2017).

a) The Baby-friendly Hospital Initiative (BFHI) is a global effort launched by WHO and UNICEF to implement practices that protect, promote and support breastfeeding^[6].