Activity-Based Costing (ABC) in Healthcare

Activity-Based Costing (ABC) is a cost allocation method that assigns overhead and indirect costs to specific activities based on their consumption of resources. In healthcare, ABC helps accurately determine the cost of patient services, procedures, and departments by tracing expenses to activities like patient registration, laboratory tests, and surgical procedures. For Zambian university students in health economics and management, ABC provides a more precise understanding of cost drivers and profitability than traditional costing methods. It supports pricing, resource allocation, and process improvement decisions. Implementing ABC in Zambian hospitals can reveal inefficiencies, optimize service delivery, and enhance financial transparency for donors and government. Mastery of ABC prepares graduates for roles in health finance, consultancy, and operational management where detailed cost information is critical.