The containment of cost of health care.

The cost of health care services has become increasingly important to society. Although hospital physicians are traditionally not involved in cost calculation and cost containment, they bear the consequences of budget restrictions. Since 1987, the reimbursement for clinical laboratories in Belgian hospitals has changed towards an envelope based system. Clinical biologists became aware that new resources can only be obtained mainly through cost reductions. But to contain cost, one must understand how it is generated. Activity based costing (ABC) is a new technique developed for strategic management in the industry. By analyzing the cost of all activities involved in the production process, this technique is very well suited to calculate cost in service organizations like medical departments. Using the principles of ABC, we performed a detailed analysis of the cost of a microbiology laboratory, determining the full cost as well as the proportion of each cost sorts (materials, labor, ...) for each laboratory test. This analysis illustrates that cost can effectively be calculated in a hospital department and guide doctors in the evaluation of alternative medical techniques, investments in automation, and the decision on medical priorities. In our opinion, cost containment of hospital care must start from within each medical department. Responsibility and participation of physicians in the discussion on budget allocation are essential in the process of cost containment of the hospital health care.