Ethical Considerations in Medical Coding Audits

Ethical Considerations in Medical Coding Audits

Importance of Annual Updates in Medical Coding

The importance of ethics in medical coding cannot be overstated, particularly when considering the role these principles play during medical coding audits. Medical coding is a critical component of the healthcare industry, serving as the backbone for billing, reimbursement, and statistical analysis. It ensures that healthcare providers receive appropriate compensation for their services while maintaining patient privacy and data integrity. Proper workforce planning through staffing agencies reduces operational disruptions staffing agency for medical assistant accounting. However, with this responsibility comes an obligation to uphold ethical standards, especially during audits.


Ethical considerations in medical coding audits are vital because they safeguard against fraud, errors, and abuse within the system. Audits are designed to ensure accuracy and compliance with established guidelines and regulations. They help identify discrepancies that could lead to financial loss or compromise patient care. Adhering to ethical standards during these audits is essential to maintain trust between healthcare providers, insurers, and patients.


One of the primary ethical considerations is accuracy. Coders must ensure that all codes accurately reflect the services provided without exaggeration or misrepresentation. This requires a thorough understanding of medical terminology and procedures, as well as staying updated with changes in coding standards. Ethical coders resist any temptation to manipulate codes for financial gain or expediency.


Confidentiality is another cornerstone of ethical medical coding practices. Coders have access to sensitive patient information, making it imperative that they protect this data from unauthorized disclosure. During audits, maintaining confidentiality becomes even more crucial as auditors review detailed records and documentation.


Moreover, transparency plays a significant role in fostering an ethical environment during medical coding audits. Healthcare organizations should encourage open communication and provide clear guidelines on how auditing processes will be conducted. This transparency helps prevent misunderstandings or suspicions of wrongdoing.


Training and education also contribute significantly to upholding ethics in medical coding audits. Continuous professional development ensures that coders remain competent in their roles and aware of evolving ethical expectations. Organizations should invest in regular training programs focusing on both technical skills and ethical decision-making.


Ultimately, embedding ethics into every aspect of medical coding-especially during audits-not only enhances the credibility of healthcare institutions but also promotes fair treatment for all stakeholders involved. By prioritizing accuracy, confidentiality, transparency, and ongoing education, the industry can mitigate risks associated with unethical behavior while ensuring optimal outcomes for patients.


In conclusion, the significance of ethics in medical coding extends far beyond mere compliance; it serves as a foundation for building trust within the healthcare ecosystem. As such, ethical considerations should be at the forefront of every audit process to uphold integrity across all facets of healthcare delivery.

In the complex realm of healthcare, medical coding audits play a crucial role in ensuring accuracy, compliance, and financial integrity. However, these audits are not without their ethical challenges. As we delve into the topic of ethical considerations in medical coding audits, it is important to highlight the common ethical dilemmas that professionals might encounter and how they can navigate these challenges while upholding the highest standards of integrity.


One of the foremost ethical challenges in medical coding audits is maintaining patient confidentiality. Medical coders and auditors have access to sensitive patient information, which must be handled with utmost care. The Health Insurance Portability and Accountability Act (HIPAA) sets stringent guidelines for safeguarding patient data, but the onus remains on individuals involved in coding and auditing to ensure that privacy is never breached. This involves implementing secure processes for managing data, being vigilant about who has access to information, and constantly updating security protocols to counteract potential threats.


Another significant ethical issue is accuracy versus pressure from external entities such as insurance companies or healthcare providers. Coders may face pressure to alter codes to maximize reimbursement or minimize red flags during an audit. This poses a direct threat to ethical standards as it can lead to fraudulent claims or misrepresentation of services rendered. It is imperative for coders and auditors to resist such pressures and adhere strictly to factual reporting based on documented clinical evidence.


Conflicts of interest also pose a challenge in medical coding audits. Auditors must remain impartial when reviewing records; however, relationships between healthcare providers and auditors can sometimes blur objectivity. Ethical auditing requires clear boundaries and transparency about any potential conflicts that could influence judgment or decision-making processes.


The challenge of keeping abreast with ever-changing regulations further complicates the ethical landscape in medical coding audits. Continuous education is essential for coders and auditors as they strive to remain compliant with both national guidelines like ICD-10-CM/PCS updates and payer-specific rules. Ignorance due to outdated knowledge cannot serve as an excuse for errors that result from non-compliance.


Finally, there's the moral responsibility towards patients' well-being beyond just financial implications. Coders should be aware that inaccuracies can impact patient care decisions made by clinicians relying on coded data for treatment plans or research outcomes.


To address these ethical challenges effectively requires fostering a culture rooted deeply in ethics within organizations conducting medical coding audits-one where training programs emphasize not only technical skills but also reinforce principles like honesty, accountability, transparency, respect for privacy rights-and cultivating environments where open dialogue about ethical dilemmas is encouraged without fear of retribution.


In conclusion, navigating the common ethical challenges inherent in medical coding audits demands vigilance commitment from every individual involved-from coders through managers-to uphold trustworthiness essential not only protecting patients' interests but also ensuring operational credibility within our healthcare systems at large.

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Key Changes and Additions to the Latest ICD-10-CM Code Set

In the realm of medical coding audits, the ethical considerations surrounding confidentiality and privacy are both paramount and multifaceted. As healthcare advances in its complexity and reliance on digital systems, safeguarding patient information has become a critical concern for medical professionals, coders, auditors, and policymakers alike.


Confidentiality in medical coding audits refers to the obligation to protect sensitive patient information from unauthorized access and disclosure. This principle is rooted in the ethical duty of healthcare providers to ensure that patients' personal health information (PHI) remains secure. In practice, this means adopting rigorous standards for handling data during audits, such as encrypting electronic records and ensuring that only authorized personnel have access to them.


The importance of confidentiality cannot be overstated; it is foundational to maintaining trust between patients and healthcare providers. When patients believe their private information is secure, they are more likely to disclose complete and accurate details about their health conditions. This openness is crucial not only for effective treatment but also for accurate medical coding and billing processes. Any breach of confidentiality could lead to significant harm-both emotional and financial-to patients, as well as potential legal repercussions for healthcare organizations.


Privacy concerns in medical coding audits extend beyond mere data protection; they encompass respecting patients' rights over their own information. The Health Insurance Portability and Accountability Act (HIPAA) in the United States provides a legal framework designed to balance the need for data sharing in healthcare with necessary privacy protections. Auditors must navigate these regulations carefully, ensuring compliance while conducting thorough examinations of coding practices.


One ethical challenge lies in achieving transparency without compromising privacy. Auditors must communicate findings clearly with relevant stakeholders without divulging individual patient details unnecessarily. Striking this balance requires a nuanced understanding of both ethical principles and regulatory mandates.


Moreover, with technological advancements come new challenges: electronic health records (EHRs), cloud computing, and big data analytics offer unprecedented opportunities for improving healthcare delivery but also present novel risks to patient privacy. Medical coding auditors must stay abreast of these developments and continuously refine their practices to mitigate potential threats.


Ethical training for those involved in medical coding audits should emphasize not only technical skills but also a deep appreciation for the values underpinning confidentiality and privacy. This includes fostering an organizational culture where every team member understands their role in protecting patient information throughout the audit process.


In conclusion, as we navigate an increasingly digital world within healthcare settings, maintaining confidentiality and respecting privacy continue to be central tenets of ethical practice in medical coding audits. By prioritizing these concerns-and by equipping professionals with the knowledge needed to uphold them-we can ensure that trust remains at the heart of patient-provider relationships even amidst rapid technological change.

Key Changes and Additions to the Latest ICD-10-CM Code Set

Impact of Updates on Healthcare Providers and Coders

In the ever-evolving landscape of healthcare, where data is a cornerstone of decision-making and patient care, ensuring accuracy and integrity in data reporting takes on paramount importance. This focus is particularly critical in the realm of medical coding audits, where ethical considerations are at the forefront. The significance of accurate data cannot be overstated; it forms the basis for patient treatment plans, research advancements, and healthcare policies. Hence, maintaining its integrity is not just a technical necessity but an ethical obligation that healthcare professionals must uphold.


Medical coding translates complex medical procedures and diagnoses into standardized codes used for billing and statistical purposes. Given this crucial role, any inaccuracies can lead to significant consequences-ranging from financial losses to compromised patient care. Therefore, audits serve as essential checkpoints to ensure that coding practices align with established standards and regulations. However, conducting these audits comes with its own set of ethical challenges.


One primary ethical consideration is transparency. Auditors must remain impartial and transparent throughout the auditing process to foster trust among stakeholders. Transparency involves clear communication about audit objectives, methodologies used, and findings obtained. When auditors operate transparently, they mitigate suspicions of bias or misconduct that could otherwise undermine the credibility of their work.


Confidentiality is another vital ethical concern in medical coding audits. Patient information handled during these processes is highly sensitive; thus, maintaining confidentiality safeguards against unauthorized access or breaches. Ethical auditors prioritize the protection of personal health information by adhering strictly to privacy laws such as HIPAA (Health Insurance Portability and Accountability Act), which outlines stringent guidelines for handling patient data.


Moreover, competence plays a crucial role in upholding accuracy in data reporting during audits. Auditors must possess not only technical proficiency but also a deep understanding of ethical principles guiding their work. Continuous education ensures they stay updated with ever-changing codes and regulations-a commitment that directly impacts their ability to conduct thorough and precise evaluations.


Conflict of interest poses yet another ethical challenge within medical coding audits. Auditors must remain vigilant against situations where personal interests might conflict with professional duties-such conflicts could compromise objectivity or result in biased outcomes detrimental to organizational integrity.


Finally, fostering an environment conducive to accountability underscores all efforts toward ensuring accuracy and integrity in data reporting during medical coding audits. Healthcare organizations should encourage open dialogue about errors without fear of retribution so employees feel empowered to report inaccuracies when discovered rather than concealing them due out-of-fear repercussions-this culture ultimately leads towards continuous improvement across systems' operations while reinforcing ethically sound practices at every level involved therein!


In conclusion then: Ensuring Accuracy Integrity Data Reporting within Topic Ethical Considerations Medical Coding Audits constitutes indispensable facet modern-day healthcare delivery system-it demands unwavering commitment from both individuals institutions alike navigate complexities inherent therein responsibly ethically always prioritizing welfare patients above all else!

Strategies for Staying Informed About Code Changes

Addressing potential conflicts of interest in the realm of medical coding audits is a crucial component of maintaining ethical standards and ensuring integrity within healthcare systems. Medical coding audits play a vital role in verifying the accuracy of billing processes, thereby affecting financial reimbursements, patient care quality, and compliance with regulations. As such, any conflict of interest that arises can compromise these processes and lead to significant ethical dilemmas.


A conflict of interest occurs when an individual's personal interests could potentially interfere with their professional obligations. In the context of medical coding audits, this could manifest in various ways. For instance, an auditor might have a financial interest in the outcomes of an audit if they are employed by or associated with a healthcare provider whose records they are reviewing. Such situations can lead to biased reporting or manipulation of data to benefit specific parties, ultimately undermining the audit's purpose.


To address these conflicts effectively, organizations must implement robust policies and procedures designed to identify and mitigate potential biases. This begins with fostering a culture of transparency where auditors disclose any relationships or interests that may influence their judgment. Regular training sessions on ethical practices and conflict management should be mandated for all personnel involved in auditing processes.


Moreover, employing independent third-party auditors can serve as an effective strategy to reduce bias. These external entities are less likely to have vested interests in the outcome of audits compared to internal employees who might be influenced by organizational loyalties or pressures from superiors.


Instituting checks and balances is another critical measure. By rotating audit teams periodically and ensuring that multiple reviewers assess each audit report before finalization, organizations can minimize individual biases and promote objectivity.


Beyond procedural safeguards, it is essential for leadership within healthcare institutions to champion ethics as a foundational pillar. Encouraging open dialogue about potential conflicts without fear of retribution fosters an environment where ethical considerations are prioritized over personal gains.


In conclusion, addressing potential conflicts of interest in medical coding audits requires a multifaceted approach centered around transparency, independence, rigorous oversight, and strong organizational ethics. By implementing these strategies diligently, healthcare institutions can uphold high standards of integrity while safeguarding both financial accountability and patient trust.

Challenges and Solutions in Adapting to New Codes

In the realm of healthcare, medical coding audits serve as a crucial mechanism to ensure accuracy, compliance, and ultimately, the integrity of patient records and billing processes. As these audits become increasingly pivotal in safeguarding the healthcare system's financial and ethical fabric, upholding ethical standards during their execution is paramount. Strategies for maintaining these ethical standards not only contribute to the credibility of auditing processes but also fortify trust between healthcare providers, patients, and auditors.


First and foremost, transparency must be at the core of any audit strategy. Transparency involves clear communication about the objectives, scope, and methodology of the audit with all stakeholders involved. By providing detailed information on how data will be collected, analyzed, and reported, auditors can alleviate concerns over potential biases or misuse of information. This openness fosters an environment where trust is built on clarity rather than suspicion.


Another critical strategy is adherence to professional codes of ethics specific to medical auditing. Organizations like the American Health Information Management Association (AHIMA) offer robust guidelines that dictate ethical conduct in medical coding practices. Auditors should be well-versed in these standards and commit to them as a blueprint for their operations. This commitment includes maintaining confidentiality regarding patient information-a legal requirement under regulations such as HIPAA-and ensuring that any findings are reported accurately without distortion for personal or organizational gain.


Ongoing education plays a significant role in upholding ethical standards in medical coding audits. The landscape of healthcare regulations is ever-evolving; thus continuous training ensures that auditors remain knowledgeable about current laws and industry best practices. Regular workshops and certification programs can help auditors stay informed about new compliance requirements or technological advancements that may impact auditing procedures.


Furthermore, cultivating an organizational culture that emphasizes ethics can significantly influence individual behavior within audit teams. Leaders should encourage open dialogue about ethical dilemmas and foster an environment where team members feel empowered to voice concerns without fear of reprisal. Establishing a formal process for reporting unethical behavior ensures that issues are addressed promptly and appropriately.


Finally, implementing checks and balances within audit processes acts as a safeguard against unethical conduct. Peer reviews or third-party oversight can provide objective assessments of an auditor's work, reducing conflicts of interest or errors stemming from unchecked authority. By incorporating multiple perspectives into the review process, organizations can enhance both accuracy and fairness in their audits.


In conclusion, upholding ethical standards in medical coding audits requires a multifaceted approach grounded in transparency, adherence to professional ethics codes, continuous education, an ethically driven organizational culture, and robust oversight mechanisms. These strategies collectively ensure that audits serve their intended purpose: promoting accountability while protecting patient interests-ultimately enhancing the quality and effectiveness of healthcare services across the board.

 

The exterior of Bellvitge University Hospital in L'Hospitalet de Llobregat, Spain, with entrance and parking area for ambulances.

A hospital is a healthcare institution providing patient treatment with specialized health science and auxiliary healthcare staff and medical equipment.[1] The best-known type of hospital is the general hospital, which typically has an emergency department to treat urgent health problems ranging from fire and accident victims to a sudden illness. A district hospital typically is the major health care facility in its region, with many beds for intensive care and additional beds for patients who need long-term care.

Specialized hospitals include trauma centers, rehabilitation hospitals, children's hospitals, geriatric hospitals, and hospitals for specific medical needs, such as psychiatric hospitals for psychiatric treatment and other disease-specific categories. Specialized hospitals can help reduce health care costs compared to general hospitals.[2] Hospitals are classified as general, specialty, or government depending on the sources of income received.

A teaching hospital combines assistance to people with teaching to health science students and auxiliary healthcare students. A health science facility smaller than a hospital is generally called a clinic. Hospitals have a range of departments (e.g. surgery and urgent care) and specialist units such as cardiology. Some hospitals have outpatient departments and some have chronic treatment units. Common support units include a pharmacy, pathology, and radiology.

Hospitals are typically funded by public funding, health organizations (for-profit or nonprofit), health insurance companies, or charities, including direct charitable donations. Historically, hospitals were often founded and funded by religious orders, or by charitable individuals and leaders.[3]

Hospitals are currently staffed by professional physicians, surgeons, nurses, and allied health practitioners. In the past, however, this work was usually performed by the members of founding religious orders or by volunteers. However, there are various Catholic religious orders, such as the Alexians and the Bon Secours Sisters that still focus on hospital ministry in the late 1990s, as well as several other Christian denominations, including the Methodists and Lutherans, which run hospitals.[4] In accordance with the original meaning of the word, hospitals were original "places of hospitality", and this meaning is still preserved in the names of some institutions such as the Royal Hospital Chelsea, established in 1681 as a retirement and nursing home for veteran soldiers.

Etymology

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During the Middle Ages, hospitals served different functions from modern institutions in that they were almshouses for the poor, hostels for pilgrims, or hospital schools. The word "hospital" comes from the Latin hospes, signifying a stranger or foreigner, hence a guest. Another noun derived from this, hospitium came to signify hospitality, that is the relation between guest and shelterer, hospitality, friendliness, and hospitable reception. By metonymy, the Latin word then came to mean a guest-chamber, guest's lodging, an inn.[5] Hospes is thus the root for the English words host (where the p was dropped for convenience of pronunciation) hospitality, hospice, hostel, and hotel. The latter modern word derives from Latin via the Old French romance word hostel, which developed a silent s, which letter was eventually removed from the word, the loss of which is signified by a circumflex in the modern French word hôtel. The German word Spital shares similar roots.

Types

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Some patients go to a hospital just for diagnosis, treatment, or therapy and then leave ("outpatients") without staying overnight; while others are "admitted" and stay overnight or for several days or weeks or months ("inpatients"). Hospitals are usually distinguished from other types of medical facilities by their ability to admit and care for inpatients whilst the others, which are smaller, are often described as clinics.

General and acute care

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The best-known type of hospital is the general hospital, also known as an acute-care hospital. These facilities handle many kinds of disease and injury, and normally have an emergency department (sometimes known as "accident & emergency") or trauma center to deal with immediate and urgent threats to health. Larger cities may have several hospitals of varying sizes and facilities. Some hospitals, especially in the United States and Canada, have their own ambulance service.

District

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A district hospital typically is the major health care facility in its region, with large numbers of beds for intensive care, critical care, and long-term care.

In California, "district hospital" refers specifically to a class of healthcare facility created shortly after World War II to address a shortage of hospital beds in many local communities.[6][7] Even today, district hospitals are the sole public hospitals in 19 of California's counties,[6] and are the sole locally accessible hospital within nine additional counties in which one or more other hospitals are present at a substantial distance from a local community.[6] Twenty-eight of California's rural hospitals and 20 of its critical-access hospitals are district hospitals.[7] They are formed by local municipalities, have boards that are individually elected by their local communities, and exist to serve local needs.[6][7] They are a particularly important provider of healthcare to uninsured patients and patients with Medi-Cal (which is California's Medicaid program, serving low-income persons, some senior citizens, persons with disabilities, children in foster care, and pregnant women).[6][7] In 2012, district hospitals provided $54 million in uncompensated care in California.[7]

Specialized

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Starship Children's Health, a children's hospital in Auckland, New Zealand
McMaster University Medical Centre, a teaching hospital in Hamilton, Ontario
All India Institute of Medical Sciences, New Delhi, a large teaching hospital in India

A specialty hospital is primarily and exclusively dedicated to one or a few related medical specialties.[8] Subtypes include rehabilitation hospitals, children's hospitals, seniors' (geriatric) hospitals, long-term acute care facilities, and hospitals for dealing with specific medical needs such as psychiatric problems (see psychiatric hospital), cancer treatment, certain disease categories such as cardiac, oncology, or orthopedic problems, and so forth.

In Germany, specialised hospitals are called Fachkrankenhaus; an example is Fachkrankenhaus Coswig (thoracic surgery). In India, specialty hospitals are known as super-specialty hospitals and are distinguished from multispecialty hospitals which are composed of several specialties.[citation needed]

Specialised hospitals can help reduce health care costs compared to general hospitals. For example, Narayana Health's cardiac unit in Bangalore specialises in cardiac surgery and allows for a significantly greater number of patients. It has 3,000 beds and performs 3,000 paediatric cardiac operations annually, the largest number in the world for such a facility.[2][9] Surgeons are paid on a fixed salary instead of per operation, thus when the number of procedures increases, the hospital is able to take advantage of economies of scale and reduce its cost per procedure.[9] Each specialist may also become more efficient by working on one procedure like a production line.[2]

Teaching

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A teaching hospital delivers healthcare to patients as well as training to prospective medical professionals such as medical students and student nurses. It may be linked to a medical school or nursing school, and may be involved in medical research. Students may also observe clinical work in the hospital.[10]

Clinics

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Clinics generally provide only outpatient services, but some may have a few inpatient beds and a limited range of services that may otherwise be found in typical hospitals.

Departments or wards

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A hospital contains one or more wards that house hospital beds for inpatients. It may also have acute services such as an emergency department, operating theatre, and intensive care unit, as well as a range of medical specialty departments. A well-equipped hospital may be classified as a trauma center. They may also have other services such as a hospital pharmacy, radiology, pathology, and medical laboratories. Some hospitals have outpatient departments such as behavioral health services, dentistry, and rehabilitation services.

A hospital may also have a department of nursing, headed by a chief nursing officer or director of nursing. This department is responsible for the administration of professional nursing practice, research, and policy for the hospital.

Many units have both a nursing and a medical director that serve as administrators for their respective disciplines within that unit. For example, within an intensive care nursery, a medical director is responsible for physicians and medical care, while the nursing manager is responsible for all the nurses and nursing care.

Support units may include a medical records department, release of information department, technical support, clinical engineering, facilities management, plant operations, dining services, and security departments.

Remote monitoring

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The COVID-19 pandemic stimulated the development of virtual wards across the British NHS. Patients are managed at home, monitoring their own oxygen levels using an oxygen saturation probe if necessary and supported by telephone. West Hertfordshire Hospitals NHS Trust managed around 1200 patients at home between March and June 2020 and planned to continue the system after COVID-19, initially for respiratory patients.[12] Mersey Care NHS Foundation Trust started a COVID Oximetry@Home service in April 2020. This enables them to monitor more than 5000 patients a day in their own homes. The technology allows nurses, carers, or patients to record and monitor vital signs such as blood oxygen levels.[13]

History

[edit]

Early examples

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In early India, Fa Xian, a Chinese Buddhist monk who travelled across India c. AD 400, recorded examples of healing institutions.[14] According to the Mahavamsa, the ancient chronicle of Sinhalese royalty, written in the sixth century AD, King Pandukabhaya of Sri Lanka (r. 437–367 BC) had lying-in-homes and hospitals (Sivikasotthi-Sala).[15] A hospital and medical training center also existed at Gundeshapur, a major city in southwest of the Sassanid Persian Empire founded in AD 271 by Shapur I.[16] In ancient Greece, temples dedicated to the healer-god Asclepius, known as Asclepeion functioned as centers of medical advice, prognosis, and healing.[17] The Asclepeia spread to the Roman Empire. While public healthcare was non-existent in the Roman Empire, military hospitals called valetudinaria did exist stationed in military barracks and would serve the soldiers and slaves within the fort.[18] Evidence exists that some civilian hospitals, while unavailable to the Roman population, were occasionally privately built in extremely wealthy Roman households located in the countryside for that family, although this practice seems to have ended in 80 AD.[19]

Middle Ages

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The declaration of Christianity as an accepted religion in the Roman Empire drove an expansion of the provision of care.[20] Following the First Council of Nicaea in AD 325 construction of a hospital in every cathedral town was begun, including among the earliest hospitals by Saint Sampson in Constantinople and by Basil, bishop of Caesarea in modern-day Turkey.[21] By the twelfth century, Constantinople had two well-organised hospitals, staffed by doctors who were both male and female. Facilities included systematic treatment procedures and specialised wards for various diseases.[22]

Entrance to the Qalawun complex in Cairo, Egypt, which housed the notable Mansuri hospital

The earliest general hospital in the Islamic world was built in 805 in Baghdad by Harun Al-Rashid.[23][24] By the 10th century, Baghdad had five more hospitals, while Damascus had six hospitals by the 15th century, and Córdoba alone had 50 major hospitals, many exclusively for the military, by the end of the 15th century.[25] The Islamic bimaristan served as a center of medical treatment, as well nursing home and lunatic asylum. It typically treated the poor, as the rich would have been treated in their own homes.[26] Hospitals in this era were the first to require medical licenses for doctors, and compensation for negligence could be made.[27][28] Hospitals were forbidden by law to turn away patients who were unable to pay.[29] These hospitals were financially supported by waqfs, as well as state funds.[25]

In India, public hospitals existed at least since the reign of Firuz Shah Tughlaq in the 14th century. The Mughal emperor Jahangir in the 17th century established hospitals in large cities at government expense with records showing salaries and grants for medicine being paid for by the government.[30]

In China, during the Song dynasty, the state began to take on social welfare functions previously provided by Buddhist monasteries and instituted public hospitals, hospices and dispensaries.[31]

Early modern and Enlightenment Europe

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A hospital ward in 6th century France

In Europe the medieval concept of Christian care evolved during the 16th and 17th centuries into a secular one. In England, after the dissolution of the monasteries in 1540 by King Henry VIII, the church abruptly ceased to be the supporter of hospitals, and only by direct petition from the citizens of London, were the hospitals St Bartholomew's, St Thomas's and St Mary of Bethlehem's (Bedlam) endowed directly by the crown; this was the first instance of secular support being provided for medical institutions.

In 1682, Charles II founded the Royal Hospital Chelsea as a retirement home for old soldiers known as Chelsea Pensioners, an instance of the use of the word "hospital" to mean an almshouse.[32] Ten years later, Mary II founded the Royal Hospital for Seamen, Greenwich, with the same purpose.[33]

1820 engraving of Guy's Hospital in London, one of the first voluntary hospitals to be established in 1724
Ruins of the Hospital San Nicolás de Bari in Santo Domingo, Dominican Republic, recognized by UNESCO for being the oldest hospital built in the Americas.[34][35] Built between 1514 and 1541.
Pennsylvania Hospital (now part of University of Pennsylvania Health System). Founded in 1751, it is the earliest established public hospital in the United States.[36][37][a] It is also home to America's first surgical amphitheatre and its first medical library.

The voluntary hospital movement began in the early 18th century, with hospitals being founded in London by the 1720s, including Westminster Hospital (1719) promoted by the private bank C. Hoare & Co and Guy's Hospital (1724) funded from the bequest of the wealthy merchant, Thomas Guy.

Other hospitals sprang up in London and other British cities over the century, many paid for by private subscriptions. St Bartholomew's in London was rebuilt from 1730 to 1759,[38] and the London Hospital, Whitechapel, opened in 1752.

These hospitals represented a turning point in the function of the institution; they began to evolve from being basic places of care for the sick to becoming centers of medical innovation and discovery and the principal place for the education and training of prospective practitioners. Some of the era's greatest surgeons and doctors worked and passed on their knowledge at the hospitals.[39] They also changed from being mere homes of refuge to being complex institutions for the provision and advancement of medicine and care for sick. The Charité was founded in Berlin in 1710 by King Frederick I of Prussia as a response to an outbreak of plague.

Voluntary hospitals also spread to Colonial America; Bellevue Hospital in New York City opened in 1736, first as a workhouse and then later as a hospital; Pennsylvania Hospital in Philadelphia opened in 1752, New York Hospital, now Weill Cornell Medical Center[40] in New York City opened in 1771, and Massachusetts General Hospital in Boston opened in 1811.

When the Vienna General Hospital opened in 1784 as the world's largest hospital, physicians acquired a new facility that gradually developed into one of the most important research centers.[41]

Another Enlightenment era charitable innovation was the dispensary; these would issue the poor with medicines free of charge. The London Dispensary opened its doors in 1696 as the first such clinic in the British Empire. The idea was slow to catch on until the 1770s,[42] when many such organisations began to appear, including the Public Dispensary of Edinburgh (1776), the Metropolitan Dispensary and Charitable Fund (1779) and the Finsbury Dispensary (1780). Dispensaries were also opened in New York 1771, Philadelphia 1786, and Boston 1796.[43]

The Royal Naval Hospital, Stonehouse, Plymouth, was a pioneer of hospital design in having "pavilions" to minimize the spread of infection. John Wesley visited in 1785, and commented "I never saw anything of the kind so complete; every part is so convenient, and so admirably neat. But there is nothing superfluous, and nothing purely ornamented, either within or without." This revolutionary design was made more widely known by John Howard, the philanthropist. In 1787 the French government sent two scholar administrators, Coulomb and Tenon, who had visited most of the hospitals in Europe.[44] They were impressed and the "pavilion" design was copied in France and throughout Europe.

19th century

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A ward of the hospital at Scutari, where Florence Nightingale worked and helped to restructure the modern hospital

English physician Thomas Percival (1740–1804) wrote a comprehensive system of medical conduct, Medical Ethics; or, a Code of Institutes and Precepts, Adapted to the Professional Conduct of Physicians and Surgeons (1803) that set the standard for many textbooks.[45] In the mid-19th century, hospitals and the medical profession became more professionalised, with a reorganisation of hospital management along more bureaucratic and administrative lines. The Apothecaries Act 1815 made it compulsory for medical students to practise for at least half a year at a hospital as part of their training.[46]

Florence Nightingale pioneered the modern profession of nursing during the Crimean War when she set an example of compassion, commitment to patient care and diligent and thoughtful hospital administration. The first official nurses' training programme, the Nightingale School for Nurses, was opened in 1860, with the mission of training nurses to work in hospitals, to work with the poor and to teach.[47] Nightingale was instrumental in reforming the nature of the hospital, by improving sanitation standards and changing the image of the hospital from a place the sick would go to die, to an institution devoted to recuperation and healing. She also emphasised the importance of statistical measurement for determining the success rate of a given intervention and pushed for administrative reform at hospitals.[48]

By the late 19th century, the modern hospital was beginning to take shape with a proliferation of a variety of public and private hospital systems. By the 1870s, hospitals had more than trebled their original average intake of 3,000 patients. In continental Europe the new hospitals generally were built and run from public funds. The National Health Service, the principal provider of health care in the United Kingdom, was founded in 1948. During the nineteenth century, the Second Viennese Medical School emerged with the contributions of physicians such as Carl Freiherr von Rokitansky, Josef Škoda, Ferdinand Ritter von Hebra, and Ignaz Philipp Semmelweis. Basic medical science expanded and specialisation advanced. Furthermore, the first dermatology, eye, as well as ear, nose, and throat clinics in the world were founded in Vienna, being considered as the birth of specialised medicine.[49]

20th century and beyond

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Cabell Huntington Hospital located in Huntington, West Virginia (2014)
White H on blue background, used to represent hospitals in the US.
During peacetime, hospitals are often marked by symbols. A white 'H' on a blue background is often used in the United States. During military conflicts, a hospital may be marked with the emblem of the red cross, red crescent or red crystal in accordance with the Geneva Conventions.

By the late 19th and early 20th centuries, medical advancements such as anesthesia and sterile techniques that could make surgery less risky, and the availability of more advanced diagnostic devices such as X-rays, continued to make hospitals a more attractive option for treatment.[50]

Modern hospitals measure various efficiency metrics such as occupancy rates, the average length of stay, time to service, patient satisfaction, physician performance, patient readmission rate, inpatient mortality rate, and case mix index.[51]

In the United States, the number of hospitalizations grew to its peak in 1981 with 171 admissions per 1,000 Americans and 6,933 hospitals.[50] This trend subsequently reversed, with the rate of hospitalization falling by more than 10% and the number of US hospitals shrinking from 6,933 in 1981 to 5,534 in 2016.[52] Occupancy rates also dropped from 77% in 1980 to 60% in 2013.[53] Among the reasons for this are the increasing availability of more complex care elsewhere such as at home or the physicians' offices and also the less therapeutic and more life-threatening image of the hospitals in the eyes of the public.[50][54] In the US, a patient may sleep in a hospital bed, but be considered outpatient and "under observation" if not formally admitted.[55]

In the U.S., inpatient stays are covered under Medicare Part A, but a hospital might keep a patient under observation which is only covered under Medicare Part B, and subjects the patient to additional coinsurance costs.[55] In 2013, the Center for Medicare and Medicaid Services (CMS) introduced a "two-midnight" rule for inpatient admissions,[56] intended to reduce an increasing number of long-term "observation" stays being used for reimbursement.[55] This rule was later dropped in 2018.[56] In 2016 and 2017, healthcare reform and a continued decline in admissions resulted in US hospital-based healthcare systems performing poorly financially.[57] Microhospitals, with bed capacities of between eight and fifty, are expanding in the United States.[58] Similarly, freestanding emergency rooms, which transfer patients that require inpatient care to hospitals, were popularised in the 1970s[59] and have since expanded rapidly across the United States.[59]

The Catholic Church is the largest non-government provider of health careservices in the world.[60] It has around 18,000 clinics, 16,000 homes for the elderly and those with special needs, and 5,500 hospitals, with 65 percent of them located in developing countries.[61] In 2010, the Church's Pontifical Council for the Pastoral Care of Health Care Workers said that the Church manages 26% of the world's health care facilities.[62]

Funding

[edit]
Clinical Hospital Dubrava in Zagreb, Croatia

Modern hospitals derive funding from a variety of sources. They may be funded by private payment and health insurance or public expenditure, charitable donations.

In the United Kingdom, the National Health Service delivers health care to legal residents funded by the state "free at the point of delivery", and emergency care free to anyone regardless of nationality or status. Due to the need for hospitals to prioritise their limited resources, there is a tendency in countries with such systems for 'waiting lists' for non-crucial treatment, so those who can afford it may take out private health care to access treatment more quickly.[63]

In the United States, hospitals typically operate privately and in some cases on a for-profit basis, such as HCA Healthcare.[64] The list of procedures and their prices are billed with a chargemaster; however, these prices may be lower for health care obtained within healthcare networks.[65] Legislation requires hospitals to provide care to patients in life-threatening emergency situations regardless of the patient's ability to pay.[66] Privately funded hospitals which admit uninsured patients in emergency situations incur direct financial losses, such as in the aftermath of Hurricane Katrina.[64]

Quality and safety

[edit]

As the quality of health care has increasingly become an issue around the world, hospitals have increasingly had to pay serious attention to this matter. Independent external assessment of quality is one of the most powerful ways to assess this aspect of health care, and hospital accreditation is one means by which this is achieved. In many parts of the world such accreditation is sourced from other countries, a phenomenon known as international healthcare accreditation, by groups such as Accreditation Canada in Canada, the Joint Commission in the U.S., the Trent Accreditation Scheme in Great Britain, and the Haute Autorité de santé (HAS) in France. In England, hospitals are monitored by the Care Quality Commission. In 2020, they turned their attention to hospital food standards after seven patient deaths from listeria linked to pre-packaged sandwiches and salads in 2019, saying "Nutrition and hydration is part of a patient's recovery."[67]

The World Health Organization reported in 2011 that being admitted to a hospital was far riskier than flying. Globally, the chance of a patient being subject to a treatment error in a hospital was about 10%, and the chance of death resulting from an error was about one in 300. according to Liam Donaldson. 7% of hospitalised patients in developed countries, and 10% in developing countries, acquire at least one health care-associated infection. In the U.S., 1.7 million infections are acquired in hospital each year, leading to 100,000 deaths, figures much worse than in Europe where there were 4.5 million infections and 37,000 deaths.[68]

Architecture

[edit]

Modern hospital buildings are designed to minimise the effort of medical personnel and the possibility of contamination while maximising the efficiency of the whole system. Travel time for personnel within the hospital and the transportation of patients between units is facilitated and minimised. The building also should be built to accommodate heavy departments such as radiology and operating rooms while space for special wiring, plumbing, and waste disposal must be allowed for in the design.[69]

However, many hospitals, even those considered "modern", are the product of continual and often badly managed growth over decades or even centuries, with utilitarian new sections added on as needs and finances dictate. As a result, Dutch architectural historian Cor Wagenaar has called many hospitals:

"... built catastrophes, anonymous institutional complexes run by vast bureaucracies, and totally unfit for the purpose they have been designed for ... They are hardly ever functional, and instead of making patients feel at home, they produce stress and anxiety."[70]

Some newer hospitals now try to re-establish design that takes the patient's psychological needs into account, such as providing more fresh air, better views and more pleasant colour schemes. These ideas harken back to the late eighteenth century, when the concept of providing fresh air and access to the 'healing powers of nature' were first employed by hospital architects in improving their buildings.[70]

The research of British Medical Association is showing that good hospital design can reduce patient's recovery time. Exposure to daylight is effective in reducing depression.[71] Single-sex accommodation help ensure that patients are treated in privacy and with dignity. Exposure to nature and hospital gardens is also important – looking out windows improves patients' moods and reduces blood pressure and stress level. Open windows in patient rooms have also demonstrated some evidence of beneficial outcomes by improving airflow and increased microbial diversity.[72][73] Eliminating long corridors can reduce nurses' fatigue and stress.[74]

Another ongoing major development is the change from a ward-based system (where patients are accommodated in communal rooms, separated by movable partitions) to one in which they are accommodated in individual rooms. The ward-based system has been described as very efficient, especially for the medical staff, but is considered to be more stressful for patients and detrimental to their privacy. A major constraint on providing all patients with their own rooms is however found in the higher cost of building and operating such a hospital; this causes some hospitals to charge for private rooms.[75]

See also

[edit]

Notes

[edit]
  1. ^ "Although Philadelphia General Hospital (1732) and Bellevue Hospital in New York (1736) are older, the Philadelphia General was founded as an almshouse, and Bellevue as a workhouse."

References

[edit]
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  2. ^ a b c "India's 'production line' heart hospital". bbcnews.com. 1 August 2010. Archived from the original on 18 April 2017. Retrieved 13 October 2013.
  3. ^ Hall, Daniel (December 2008). "Altar and Table: A phenomenology of the surgeon-priest". Yale Journal of Biology and Medicine. 81 (4): 193–98. PMC 2605310. PMID 19099050. Although physicians were available in varying capacities in ancient Rome and Athens, the institution of a hospital dedicated to the care of the sick was a distinctly Christian innovation rooted in the monastic virtue and practise of hospitality. Arranged around the monastery were concentric rings of buildings in which the life and work of the monastic community was ordered. The outer ring of buildings served as a hostel in which travellers were received and boarded. The inner ring served as a place where the monastic community could care for the sick, the poor and the infirm. Monks were frequently familiar with the medicine available at that time, growing medicinal plants on the monastery grounds and applying remedies as indicated. As such, many of the practicing physicians of the Middle Ages were also clergy.
  4. ^ Lovoll, Odd (1998). A Portrait of Norwegian Americans Today. U of Minnesota Press. p. 192. ISBN 978-0-8166-2832-2.
  5. ^ Cassell's Latin Dictionary, revised by J. Marchant & J. Charles, 260th. thousand.
  6. ^ a b c d e "Our Background". District Hospital Leadership Forum. Archived from the original on 14 July 2014. Retrieved 10 July 2014.
  7. ^ a b c d e Knox, Dennis. "District Hospitals' Important Mission". Payers &–° Providers. Archived from the original on 14 July 2014. Retrieved 10 July 2014.
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  16. ^ The American Journal of Islamic Social Sciences 22:2 Mehmet Mahfuz Söylemez, The Gundeshapur School: Its History, Structure, and Functions, p. 3.
  17. ^ Risse, G.B. Mending bodies, saving souls: a history of hospitals. 1990. p. 56
  18. ^ Ziegler, Tiffany A., Tiffany A. Ziegler, and Troyanos. Medieval Healthcare and the Rise of Charitable Institutions. Springer International Publishing, 2018, 33.
  19. ^ (Guenter Risse, Mending Bodies, Saving Souls: A History of Hospitals, 47–48).
  20. ^ Jan Pelikan, Jaroslav (13 August 2022). "Christianity: Curing and caring for the sick". Encyclopædia Britannica.
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  22. ^ Byzantine medicine
  23. ^ Husain F. Nagamia, [Islamic Medicine History and Current practise], (2003), p. 24.
  24. ^ Glubb, Sir John Bagot (1969), A Short History of the Arab Peoples, retrieved 25 January 2008
  25. ^ a b "The Islamic Roots of the Modern Hospital". aramcoworld.com. Retrieved 20 March 2017.
  26. ^ Islamic Culture and the Medical Arts: Hospitals, United States National Library of Medicine Public Domain This article incorporates text from this source, which is in the public domain.
  27. ^ Miller, Andrew C (2006). "Jundi-Shapur, bimaristans, and the rise of academic medical centres". Journal of the Royal Society of Medicine. 99 (12): 615–617. doi:10.1177/014107680609901208. ISSN 0141-0768. PMC 1676324. PMID 17139063. Another lasting advancement made during this time period was that of physician licensure. In 931 AD Caliph Al-Muqtadir learned that a patient had died in Baghdad as a result of a physician's error. Consequently, he ordered Sinan ibn Thabit to examine all those who practiced the art of healing. Of the 860 medical practitioners he examined, 160 failed. From that time on, licensing examinations were required and administered in various places. Licensing boards were set up under a government official called Muhtasib, or inspector general. The chief physician gave oral and practical examinations, and if the young physician was successful, the Muhtasib administered the Hippocratic Oath and issued a license to practice medicine.
  28. ^ Alatas, Syed Farid (2006). "From Jami'ah to University: Multiculturalism and Christian–Muslim Dialogue". Current Sociology. 54 (1): 112–32. doi:10.1177/0011392106058837. S2CID 144509355.
  29. ^ "Islamic Culture and the Medical Arts: Hospitals". www.nlm.nih.gov. Archived from the original on 21 January 2024. Retrieved 21 January 2024.
  30. ^ Ikram, Sheikh Mohamad (1964). "Economic and Social Developments under the Mughals". Muslim Civilization in India. Columbia University Press. p. 223. ISBN 978-0-231-02580-5.
  31. ^ Goldschmidt, Asaf (2023). "Reacting to Epidemics: The Innovative Imperial Public Health System during the Late Northern Song Dynasty". Chinese Medicine and Culture. 6 (1): 68–75. doi:10.1097/MC9.0000000000000041.
  32. ^ The Royal Hospital Chelsea (Norwich: Jarrold Publishing, 2002), pp. 3–4
  33. ^ J. Bold, P. Guillery, D. Kendall, Greenwich: an architectural history of the Royal Hospital for Seamen and the Queen's House (Yale University Press, 2001), pp. 4–7
  34. ^ "Colonial City of Santo Domingo. Outstanding Universal Value". UNESCO World Heritage Centre website.
  35. ^ "Ruinas del Hospital San Nicolás de Barí". Lonely Planet.
  36. ^ Williams, William Henry (1976). America's First Hospital: The Pennsylvania Hospital, 1751–1841. Haverford House. ISBN 978-0-910702-02-7.
  37. ^ "NPGallery Digital Asset Management System: Pennsylvania Hospital", National Register of Historic Places, National Park Service, retrieved 30 July 2019
  38. ^ "Painted window in St Bartholomew's Hospital". Archived from the original on 17 October 2021. Retrieved 7 June 2019.
  39. ^ Reinarz, Jonathan (2007). "Corpus Curricula: Medical Education and the Voluntary Hospital Movement". Brain, Mind and Medicine: Essays in Eighteenth-Century Neuroscience. pp. 43–52. doi:10.1007/978-0-387-70967-3_4. ISBN 978-0-387-70966-6.
  40. ^ "General Acute Care Hospital in New York". Archived from the original on 16 February 2023. Retrieved 6 October 2019.
  41. ^ Roderick E. McGrew, Encyclopedia of Medical History (Macmillan 1985), p. 139.
  42. ^ Freeman GK (2017). "Books: The Dispensaries: Healthcare for the Poor Before the NHS: Britain's Forgotten Health-care System: Dispensaries: An Alternative to General Practice?". Br J Gen Pract. 67 (655): 81. doi:10.3399/bjgp17X689281. PMC 5308110. PMID 28126876.
  43. ^ Michael Marks Davis; Andrew Robert Warner (1918). Dispensaries, Their Management and Development: A Book for Administrators, Public Health Workers, and All Interested in Better Medical Service for the People. MacMillan. pp. 2–3.
  44. ^ Surgeon Vice Admiral A Revell in http://www.histansoc.org.uk/uploads/9/5/5/2/9552670/volume_19.pdf Archived 6 November 2020 at the Wayback Machine
  45. ^ Waddington Ivan (1975). "The Development of Medical Ethics – A Sociological Analysis". Medical History. 19 (1): 36–51. doi:10.1017/s002572730001992x. PMC 1081608. PMID 1095851.
  46. ^ Porter, Roy (1999) [1997]. The Greatest Benefit to Mankind: A Medical History of Humanity from Antiquity to the Present. New York: W.W. Norton & Company. pp. 316–17. ISBN 978-0-393-31980-4.
  47. ^ Kathy Neeb (2006). Fundamentals of Mental Health Nursing. Philadelphia: F.A. Davis Company. ISBN 978-0-8036-2034-6.
  48. ^ Nightingale, Florence (August 1999). Florence Nightingale: Measuring Hospital Care Outcomes. Joint Commission on Accreditation of Healthcare Organizations. ISBN 978-0-86688-559-1. Retrieved 13 March 2010.[permanent dead link]
  49. ^ Erna Lesky, The Vienna Medical School of the 19th Century (Johns Hopkins University Press, 1976)
  50. ^ a b c Emanuel, Ezekiel J. (25 February 2018). "Opinion | Are Hospitals Becoming Obsolete?". The New York Times.
  51. ^ "Hospital Industry's 10 Most Critical Metrics – Guiding Metrics". guidingmetrics.com. Retrieved 25 November 2018.
  52. ^ "Fast Facts on U.S. Hospitals, 2018 | AHA". 19 July 2024.
  53. ^ "As admissions have slumped and outpatient care booms, hospitals closing or shrinking". Modern Healthcare. Retrieved 25 November 2018.
  54. ^ "Estimating Health Care-Associated Infections and Deaths in U.S. Hospitals, 2002" (PDF). Centers for Disease Control and Prevention. Archived from the original (PDF) on 15 October 2011. Retrieved 9 September 2023.
  55. ^ a b c "Two-Midnight and Observation Rule – Chicago Medical Society". www.cmsdocs.org. Archived from the original on 25 November 2018. Retrieved 25 November 2018.
  56. ^ a b "CMS drops two-midnight rule's inpatient payment cuts". Modern Healthcare. Retrieved 25 November 2018.
  57. ^ "How U.S. Hospitals and Health Systems Can Reverse Their Sliding Financial Performance". Harvard Business Review. 5 October 2017. Retrieved 25 November 2018.
  58. ^ Staff (11 April 2017). "5 common questions about micro-hospitals, answered". www.beckershospitalreview.com. Retrieved 25 November 2018.
  59. ^ a b "When the tiny hospital can't survive: Free-standing EDs with primary care seen as new rural model". Modern Healthcare. 7 September 2011. Retrieved 14 May 2019.
  60. ^ Agnew, John (12 February 2010). "Deus Vult: The Geopolitics of Catholic Church". Geopolitics. 15 (1): 39–61. doi:10.1080/14650040903420388. S2CID 144793259.
  61. ^ Calderisi, Robert. Earthly Mission - The Catholic Church and World Development; TJ International Ltd; 2013; p.40
  62. ^ "Catholic hospitals comprise one quarter of world's healthcare, council reports :: Catholic News Agency (CNA)". Catholic News Agency. 10 February 2010. Retrieved 17 August 2012.
  63. ^ Johnston, Martin (21 January 2008). "Surgery worries create insurance boom". The New Zealand Herald. Retrieved 3 October 2011.
  64. ^ a b Hospitals in New Orleans see surge in uninsured patients but not public fundsUSA Today, Wednesday 26 April 2006
  65. ^ Richmond, Barak D.; Kitzman, Nick; Milstein, Arnold; Schulman, Kevin A. (28 April 2017). "Battling the Chargemaster: A Simple Remedy to Balance Billing for Unavoidable Out-of-Network Care". The American Journal of Managed Care. 23 (4). Retrieved 12 March 2023.
  66. ^ "Emergency Medical Treatment & Labor Act (EMTALA)". Centers for Medicare & Medicaid Services. 26 March 2012. Retrieved 17 May 2013.
  67. ^ "CQC to inspect hospitals on food standards after patient deaths". Health Service Journal. 17 November 2020. Retrieved 24 December 2020.
  68. ^ "Going into hospital far riskier than flying: WHO". Reuters. 21 July 2011. Retrieved 27 January 2019.
  69. ^ Annmarie Adams, Medicine by Design: The Architect and the Modern Hospital, 1893–1943 (2009)
  70. ^ a b "Healing by design". Ode. July–August 2006. Archived from the original on 17 October 2007. Retrieved 10 February 2008.
  71. ^ Yamaguchi, Yuhgo (5 October 2015). "Better Healing from Better Hospital Design". Harvard Business Review. ISSN 0017-8012. Retrieved 30 August 2022.
  72. ^ Sample, Ian (20 February 2012). "Open hospital windows to stem spread of infections, says microbiologist". The Guardian. Retrieved 12 March 2018.
  73. ^ Bowdler, Neil (26 April 2013). "Closed windows 'increase infection'". BBC News. Retrieved 12 March 2018.
  74. ^ "The psychological and social needs of patients". British Medical Association. 7 January 2011. Archived from the original on 14 March 2011. Retrieved 14 March 2011.
  75. ^ Rosenberg, Julian (15 November 2004). "Health administrators go shopping for new hospital designs". National Review of Medicine. Volume 1, no. 21. Archived from the original on 26 December 2008.

Bibliography

[edit]

History of hospitals

[edit]
  • Brockliss, Lawrence, and Colin Jones. "The Hospital in the Enlightenment", in The Medical World of Early Modern France (Oxford UP, 1997), pp. 671–729; covers France 1650–1800
  • Chaney, Edward (2000), "'Philanthropy in Italy': English Observations on Italian Hospitals 1545–1789", in: The Evolution of the Grand Tour: Anglo-Italian Cultural Relations since the Renaissance, 2nd ed. London, Routledge, 2000.
  • Connor, J.T.H. "Hospital History in Canada and the United States", Canadian Bulletin of Medical History, 1990, Vol. 7 Issue 1, pp. 93–104
  • Crawford, D.S. Bibliography of Histories of Canadian hospitals and schools of nursing.
  • Gorsky, Martin. "The British National Health Service 1948–2008: A Review of the Historiography", Social History of Medicine, December 2008, Vol. 21 Issue 3, pp. 437–60
  • Harrison, Mar, et al. eds. From Western Medicine to Global Medicine: The Hospital Beyond the West (2008)
  • Horden, Peregrine. Hospitals and Healing From Antiquity to the Later Middle Ages (2008)
  • McGrew, Roderick E. Encyclopedia of Medical History (1985)
  • Morelon, Régis; Rashed, Roshdi (1996), Encyclopedia of the History of Arabic Science, vol. 3, Routledge, ISBN 978-0-415-12410-2
  • Porter, Roy. The Hospital in History, with Lindsay Patricia Granshaw (1989) ISBN 978-0-415-00375-9
  • Risse, Guenter B. Mending Bodies, Saving Souls: A History of Hospitals (1999); world coverage
  • Rosenberg, Charles E. The Care of Strangers: The Rise of America's Hospital System (1995); history to 1920
  • Scheutz, Martin et al. eds. Hospitals and Institutional Care in Medieval and Early Modern Europe (2009)
  • Wall, Barbra Mann. American Catholic Hospitals: A Century of Changing Markets and Missions (Rutgers University Press, 2011). ISBN 978-0-8135-4940-8
[edit]

 

Activity-based costing (ABC) is a costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each. Therefore, this model assigns more indirect costs (overhead) into direct costs compared to conventional costing.

The UK's Chartered Institute of Management Accountants (CIMA), defines ABC as an approach to the costing and monitoring of activities which involves tracing resource consumption and costing final outputs. Resources are assigned to activities, and activities to cost objects based on consumption estimates. The latter utilize cost drivers to attach activity costs to outputs.[1]

The Institute of Cost Accountants of India says, ABC systems calculate the costs of individual activities and assign costs to cost objects such as products and services on the basis of the activities undertaken to produce each product or services. It accurately identifies sources of profit and loss.[2]

The Institute of Cost & Management Accountants of Bangladesh (ICMAB) defines activity-based costing as an accounting method which identifies the activities which a firm performs and then assigns indirect costs to cost objects.[3]

Objectives

[edit]

With ABC, a company can soundly estimate the cost elements of entire products, activities and services, that may help inform a company's decision to either:

  • Identify and eliminate those products and services that are unprofitable and lower the prices of those that are overpriced (product and service portfolio aim), or
  • Identify and eliminate production or service processes which are ineffective, and allocate processing concepts that lead to the very same product at a better yield (process re-engineering aim)

In a business organization, the ABC methodology assigns an organization's resource costs through activities to the products and services provided to its customers. ABC is generally used as a tool for understanding product and customer cost and profitability based on the production or performing processes. As such, ABC has predominantly been used to support strategic decisions such as pricing, outsourcing, identification and measurement of process improvement initiatives.

Prevalence

[edit]

Following strong initial uptake, ABC lost ground in the 1990s compared to alternative metrics, such as Kaplan's balanced scorecard and economic value added. An independent 2008 report concluded that manually driven ABC was an inefficient use of resources: it was expensive and difficult to implement for small gains, and a poor value, and that alternative methods should be used.[4] Other reports show the broad band covered with the ABC methodology.[5]

However, application of an activity based recording may be applied as an addition to activity based accounting, not as a replacement of any costing model, but to transform concurrent process accounting into a more authentic approach.

Historical development

[edit]

Traditionally, cost accountants had arbitrarily added a broad percentage of analysis into the indirect cost. In addition, activities include actions that are performed both by people and machine.

However, as the percentages of indirect or overhead costs rose, this technique became increasingly inaccurate, because indirect costs were not caused equally by all products. For example, one product might take more time in one expensive machine than another product—but since the amount of direct labor and materials might be the same, additional cost for use of the machine is not being recognized when the same broad 'on-cost' percentage is added to all products. Consequently, when multiple products share common costs, there is a danger of one product subsidizing another.

ABC is based on George Staubus' Activity Costing and Input-Output Accounting.[6] The concepts of ABC were developed in the manufacturing sector of the United States during the 1970s and 1980s. During this time, the Consortium for Advanced Management-International, now known simply as CAM-I, provided a formative role for studying and formalizing the principles that have become more formally known as Activity-Based Costing.[7]

Robin Cooper and Robert S. Kaplan, proponents of the Balanced Scorecard, brought notice to these concepts in a number of articles published in Harvard Business Review beginning in 1988. Cooper and Kaplan described ABC as an approach to solve the problems of traditional cost management systems. These traditional costing systems are often unable to determine accurately the actual costs of production and of the costs of related services. Consequently, managers were making decisions based on inaccurate data especially where there are multiple products.

Instead of using broad arbitrary percentages to allocate costs, ABC seeks to identify cause and effect relationships to objectively assign costs. Once costs of the activities have been identified, the cost of each activity is attributed to each product to the extent that the product uses the activity. In this way, ABC often identifies areas of high overhead costs per unit and so directs attention to finding ways to reduce the costs or to charge more for more costly products.

Activity-based costing was first clearly defined in 1987 by Robert S. Kaplan and W. Bruns as a chapter in their book Accounting and Management: A Field Study Perspective.[8] They initially focused on manufacturing industry where increasing technology and productivity improvements have reduced the relative proportion of the direct costs of labor and materials, but have increased relative proportion of indirect costs. For example, increased automation has reduced labor, which is a direct cost, but has increased depreciation, which is an indirect cost.

Like manufacturing industries, financial institutions have diverse products and customers, which can cause cross-product, cross-customer subsidies. Since personnel expenses represent the largest single component of non-interest expense in financial institutions, these costs must also be attributed more accurately to products and customers. Activity based costing, even though originally developed for manufacturing, may even be a more useful tool for doing this.[9][10]

Activity-based costing was later explained in 1999 by Peter F. Drucker in the book Management Challenges of the 21st Century.[11] He states that traditional cost accounting focuses on what it costs to do something, for example, to cut a screw thread; activity-based costing also records the cost of not doing, such as the cost of waiting for a needed part. Activity-based costing records the costs that traditional cost accounting does not do.

The overhead costs assigned to each activity comprise an activity cost pool.

From a historical perspective the practices systematized by ABC were first demonstrated by Frederick W. Taylor in Principles of Scientific Management in 1911 (1911. Taylor, Frederick Winslow (1919) [1911]. The Principles of Scientific Management. Harper & Brothers – via Internet Archive (Prelinger Library) Free access icon. LCCN 11-10339; OCLC 233134 (all editions). The Principles of Scientific Management – via Project Gutenberg Free access icon.). Those were the basis of the famous time and motion studies (Time and motion study) that predated the later work by Walter Shewhart (Walter A. Shewhart) and W Edwards Deming (W. Edwards Deming). Kaplan's work tied the earlier work to the modern practice of accounting.

Alternatives

[edit]

Lean accounting methods have been developed in recent years to provide relevant and thorough accounting, control, and measurement systems without the complex and costly methods of manually driven ABC.

Lean accounting is primarily used within lean manufacturing. The approach has proven useful in many service industry areas including healthcare, construction, financial services, governments, and other industries.

Application of Theory of constraints (TOC) is analysed in a study[12] showing interesting aspects of productive coexistence of TOC and ABC application. Identifying cost drivers in ABC is described as somewhat equivalent to identifying bottlenecks in TOC. However the more thorough insight into cost composition for the inspected processes justifies the study result: ABC may deliver a better structured analysis in respect to complex processes, and this is no surprise regarding the necessarily spent effort for detailed ABC reporting.

Methodology

[edit]

Methodology of ABC focuses on cost allocation in operational management. ABC helps to segregate

  • Fixed cost
  • Variable cost
  • Overhead cost

If achieved, the split of cost helps to identify cost drivers. Direct labour and materials are relatively easy to trace directly to products, but it is more difficult to directly allocate indirect costs to products. Where products use common resources differently, some sort of weighting is needed in the cost allocation process. The cost driver is a factor that creates or drives the cost of the activity. For example, the cost of the activity of bank tellers can be ascribed to each product by measuring how long each product's transactions (cost driver) take at the counter and then by measuring the number of each type of transaction. For the activity of running machinery, the driver is likely to be machine operating hours, looking at labor, maintenance, and power cost during the period of machinery activity.

Application

[edit]

ABC has proven its applicability beyond academic discussion.[citation needed]

ABC

  • is applicable throughout company financing, costing and accounting:
  • is a modeling process applicable for full scope as well as for partial views.
  • helps to identify inefficient products, departments and activities.
  • helps to allocate more resources on profitable products, departments and activities.
  • helps to control the costs at any per-product-level level and on a departmental level.
  • helps to find unnecessary costs that may be eliminated.
  • helps fixing the price of a product or service with any desired analytical resolution.

A report summarizes reasons for implementing ABC as mere unspecific and mainly for case study purposes[13] (in alphabetical order):

  • Better Management
  • Budgeting, performance measurement
  • Calculating costs more accurately
  • Ensuring product /customer profitability
  • Evaluating and justifying investments in new technologies
  • Improving product quality via better product and process design
  • Increasing competitiveness or coping with more competition
  • Management
  • Managing costs
  • Providing behavioral incentives by creating cost consciousness among employees
  • Responding to an increase in overheads
  • Responding to increased pressure from regulators
  • Supporting other management innovations such as TQM and JIT systems

Beyond such selective application of the concept, ABC may be extended to accounting, hence proliferating a full scope of cost generation in departments or along product manufacturing. Such extension, however requires a degree of automatic data capture that prevents from cost increase in administering costs.

Implementation

[edit]

According to Manivannan Senthil Velmurugan, Activity-based costing must be implemented in the following ways:[14]

  1. Identify and assess ABC needs - Determine viability of ABC method within an organization.
  2. Training requirements - Basic training for all employees and workshop sessions for senior managers.
  3. Define the project scope - Evaluate mission and objectives for the project.
  4. Identify activities and drivers - Determine what drives what activity.
  5. Create a cost and operational flow diagram – How resources and activities are related to products and services.
  6. Collect data – Collecting data where the diagram shows operational relationship.
  7. Build a software model, validate and reconcile.
  8. Interpret results and prepare management reports.
  9. Integrate data collection and reporting.

Public sector usage

[edit]

When ABC is reportedly used in the public administration sector, the reported studies do not provide evidence about the success of methodology beyond justification of budgeting practise and existing service management and strategies.

Usage in the US Marine Corps started in 1999.[15][16][17][18]

Use of ABC by the UK Police has been mandated since the 2003-04 UK tax year as part of England and Wales' National Policing Plan, specifically the Policing Performance Assessment Framework.[19]

Integrating EVA and process based costing

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Recently, Mocciaro Li Destri, Picone & Minà (2012)[20] proposed a performance and cost measurement system that integrates the economic value added (EVA) criteria with process based costing (PBC).

Authors note that activity-based costing system is introspective and focuses on a level of analysis which is too low.[citation needed] On the other hand, they underscore the importance to consider the cost of capital in order to bring strategy back into performance measures.[citation needed]

Limitations

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Applicability of ABC is bound to cost of required data capture.[1] That drives the prevalence to slow processes in services and administrations, where staff time consumed per task defines a dominant portion of cost. Hence the reported application for production tasks do not appear as a favorized scenario.

Treating fixed costs as variable

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The potential problem with ABC, like other cost allocation approaches, is that it essentially treats fixed costs as if they were variable. This can, without proper understanding, give some people an inaccurate understanding which can then lead to poor decision making. For example, allocating PPE to individual products, may lead to discontinuation of products that seem unprofitable after the allocation, even if in fact their discontinuation will negatively affect the bottom line.

Tracing costs

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Even in ABC, some overhead costs are difficult to assign to products and customers, such as the chief executive's salary. These costs are termed 'business sustaining' and are not assigned to products and customers because there is no meaningful method. This lump of unallocated overhead costs must nevertheless be met by contributions from each of the products, but it is not as large as the overhead costs before ABC is employed.

Although some may argue that costs untraceable to activities should be "arbitrarily allocated" to products, it is important to realize that the only purpose of ABC is to provide information to management. Therefore, there is no reason to assign any cost in an arbitrary manner.

Transition to automated activity-based costing accounting

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The prerequisite for lesser cost in performing ABC is automating the data capture with an accounting extension that leads to the desired ABC model. Known approaches for event based accounting simply show the method for automation. Any transition of a current process from one stage to the next may be detected as a relevant event. Paired events easily form the respective activity.

The state of the art approach with authentication and authorization in IETF standard RADIUS gives an easy solution for accounting all workposition based activities. That simply defines the extension of the Authentication and Authorization (AA) concept to a more advanced AA and Accounting (AAA) concept. Respective approaches for AAA get defined and staffed in the context of mobile services, when using smart phones as e.a. intelligent agents or smart agents for automated capture of accounting data .

References

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  1. ^ a b CIMA official Terminology, 2005 (PDF). p. 3.
  2. ^ "(pdf) Pg: 231" (PDF).
  3. ^ Bangladesh Cost Accounting Standards-14: Activity Based Costing.
  4. ^ The Review of Policing Final Report by Sir Ronnie Flanagan February 2008
  5. ^ Activity-based costing: A Case study
  6. ^ Staubus, George J. Activity Costing and Input-Output Accounting (Richard D. Irwin, Inc., 1971).
  7. ^ Consortium for Advanced Manufacturing-International
  8. ^ Kaplan, Robert S. and Bruns, W. Accounting and Management: A Field Study Perspective (Harvard Business School Press, 1987) ISBN 0-87584-186-4
  9. ^ Sapp, Richard, David Crawford and Steven Rebishcke "Article title?" Journal of Bank Cost and Management Accounting (Volume 3, Number 2), 1990.
  10. ^ Author(s)? "Article title?" Journal of Bank Cost and Management Accounting (Volume 4, Number 1), 1991.
  11. ^ Drucker Peter F.Management Challenges of the 21st Century. New York:Harper Business, 1999.
  12. ^ Who Wins in a Dynamic World: Theory of Constraints Vs. Activity-Based Costing?
  13. ^ The design and implementation of Activity Based Costing (ABC): a South African survey Archived 13 August 2011 at the Wayback Machine
  14. ^ Velmurugan, Manivannan Senthil. "The Success And Failure of Activity-Based Costing Systems", Journal of Performance Management, 23.2 (2010): 3–33. Business Source Complete. Web. 15 March 2012.
  15. ^ MARINE CORPS ACTIVITY BASED COSTING (ABC)
  16. ^ "Activity-Based Costing (ABC)". Archived from the original on 4 October 2011. Retrieved 31 May 2011.
  17. ^ SAS helps Marine Corps budgets get lean
  18. ^ Energizing cost accounting: Marine Corps financial managers conduct a thorough analysis
  19. ^ Police Service National ABC Model Manual of Guidance Version 2.3 June 2007
  20. ^ Mocciaro Li Destri A., Picone P. M. & Minà A. (2012), Bringing Strategy Back into Financial Systems of Performance Measurement: Integrating EVA and PBC, Business System Review, Vol 1., Issue 1. pp.85-102 https://ssrn.com/abstract=2154117.
[edit]
  • Who Wins in a Dynamic World: Theory of Constraints Vs. Activity-Based Costing? article on SSRN
  • proposed International Good Practice Guidance on Costing to Drive Organizational Performance - International Federation of Accountants

 

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