This research work focuses its attention on the ABC / ABM Methodology Proposal at the “Mario Muñoz” Military Hospital, based on a study of variables. Its main objective is to propose a methodology for the implementation of an ABC / ABM System in the “Mario Muñoz” Military Hospital and its specific objectives are:
- Present the theoretical foundations of the research. Study the model of Tamarit (2002) deepening the psychosocial dimension. Determine the variables that influence the implementation of the ABC / ABM System in the Military Hospital "Mario Muñoz". Propose a methodology for implementation of an ABC / ABM System at the “Mario Muñoz” Military Hospital.
The proposed system aims to facilitate decision-making by the organization's managers, since the current cost system lacks information to efficiently manage the services demanded by the client.
abc-abm-activity-based-cost-and-management-systemA broad search for criteria from different authors was carried out on the evolution of Management Accounting, analyzing its main contributions and demonstrating the advantages of ABC / ABM over Traditional Costs.
As a result of the research, important conclusions are reached that help to improve the way of managing the resources and activities that are consumed and executed in the areas under study. They also allow these variables to be considered to guide the researcher towards where he should go before proposing a methodology for the implementation of a Cost and Management System based on Activities for any Cuban company.
INTRODUCTION
The current business environment imposes the need for organizational units to modify the management of their processes and activities. In turn, business improvement seeks greater efficiency in Cuban companies, so that they are recognized both in the national and international markets.
A new organizational culture is gradually being reached in companies, trying to adapt to the new environment that surrounds them, in order to increase their market possibilities. To the extent that this occurs on the outside, important changes occur within it with the same speed, both in organizational structures and in management.
New techniques and tools are succeeded in replacing the already traditional ones, in order to establish maximum efficiency in business management. To do this, new procedures are introduced to strengthen the organization internally, with respect to the environment and customer demands.
At the end of the 1980s, the Activity-based Costing and Management System (ABC / ABM) took a greater boom, especially in Europe and North America. In this sense, it can be pointed out that it is a different management system from the known ones and although it has elements of the previous systems, it shows advantages already proven in companies that want to be leaders in the market.
When comparing the ABC / ABM System with the previous ones, it creates a new causal relationship, based on the fact that costs depend on the execution of certain activities, which in turn are a consequence of obtaining products or services that customers demand..
This Cost and Management System could be adapted and adopted by any company, but the degree of generalization is low in most of the countries that are pioneers in this powerful management tool (USA, Canada, Australia, France, Spain and Japan). Although its implementation is easier in those companies or organizations that have significant financial resources.
The ABC / ABM is currently considered, within the theories related to business management, as a tool to be successful in the proper use of information for internal and external decision making.
Within the business practice according to the articles consulted, there are limitations that have influenced the failure of the ABC / ABM System. However, there is evidence of the need to adopt these systems that guarantee a more effective calculation and management of costs.
In Cuba, there is still no adoption of the ABC / ABM System by companies, although it should be noted that research in this regard has been accelerated for its future introduction. Based on these arguments, this work was developed at the “Mario Muñoz” Military Hospital, in the city of Matanzas.
This organization does not have a system of tools with a management approach linked to the costs incurred in it.
The research problem lies in how to manage more quality information on costs that allows making appropriate decisions?
Starting from the Scientific Problem, the following hypotheses are raised:
If a new methodology is proposed that recognizes the variables that influence the implementation of the ABC / ABM System, then it will be possible to obtain timely information for decision-making at the “Mario Muñoz” Military Hospital.
The General Objective of this work to comply with the proposed Hypothesis is:
Propose a methodology for the implementation of an ABC / ABM System in the "Mario Muñoz" Military Hospital.
From the General Objective, the following Specific Objectives are derived:
- Present the theoretical foundations of the research. Study the model of Tamarit (2002), delving into the psychosocial dimension. Determine the variables that influence the implementation of the ABC / ABM System in the “Mario Muñoz” Military Hospital. Propose a Methodology for the implementation of the ABC / ABM System in the hospital under study.
In the research, methods, techniques and tools are used that facilitate the obtaining of data for the analysis of the object of study, among which are: interviews, questionnaires, surveys, observations, report studies of the selected entity and statistical methods.
In order to propose a methodology to implement this system in the “Mario Muñoz Monroy” Military Hospital, the influence of variables related to the organization and the behavior of individuals in the implementation of the ABC / ABM System will be addressed in the work.
DEVELOPING
Historical evolution of Management Accounting
From ancient times, dating from 4500 years before our era (BC), accounting documents are reported in ancient Mesopotamia, which had determinations of wage costs and some of them indicated the existence of merchandise inventories.
In the Middle Ages the union organization was reached as the socioeconomic basis of production, but only with the development of the Industrial Revolution did the improvement of cost systems begin, which is attributed to the technological advance of the time, This led to an increase in production capacity as the principle of specialization of large-scale work was applied, leading to a notable decrease in the unit cost of products.
Although it should be noted that it could not be said that it was already a finished or perfected Cost Accounting, since the three elements of cost were not specifically defined (Figure # 1), however, different authors (Backer, Jacobsen, Polimeni and Ripoll) define their concepts as follows:
- Direct Materials (MD), these are those that can be easily or directly identified in the production of an article and that are associated with the product / service; Direct Labor (MOD), physical or mental effort expended in the transformation of the raw materials and materials in the final product / service, it is directly associated with the worker who transforms raw materials into products or services to the client; Indirect Manufacturing Costs (CIF), are the costs that indirectly participate in the elaboration of a product / service, is associated with the control of indirect materials, indirect labor and all other indirect manufacturing costs. These costs cannot be directly identified with specific products / services.
Figure # 1: Elements of a product. Source: self made.
At that time, only direct materials and direct labor were considered, not addressing in this way the problem of analysis of indirect manufacturing costs. Furthermore, the information provided by these very traditional systems was not used to make competitive or market decisions.
To delve into the origin and development of Management Accounting, it is important to be able to define the concepts of costs and expenses as terminology to follow. In this sense, there are different criteria of specialists on them. Among the authors studied in this regard, the following stand out: Marx (1867), Pedersen (1958), Lawrence (1960), Horngren (1969), Polimeni, Fabozzy and Adelberg (1990) and Mallo (1991).
In this sense, the author defines cost as the amount paid to obtain a product / service and expense as a cost that has generated a benefit and is now over. In other words, making their criteria coincide with those of Polimeni (1992) and Pérez (2003).
These arguments lead to an analysis between Traditional Accounting and Management Accounting.
There are different methods for recording and calculating Traditional or Conventional Costs (Figure # 2).
Traditional Cost Accounting is a classic form, which is fundamentally characterized by providing information that helps the organization's internal decision making, ensuring the registration and control of product costs, associated with production volume, that is, with a purely internal and limited view of the Company; with a formal and rigid profile, focusing their attention on the resources that the product consumes and not on those aspects that really added value in the process of making these.
The value is "The sum of the perceived benefits that the client receives minus the costs perceived by him when acquiring and using a product or service" and is also defined as "several singular processes that form a chain when they group all the fulfillment of tasks into a delimited system, regardless of the subjects who perform the tasks ”.
The cost calculation methods that have been traditionally applied in the Cost Accounting field are methods inherited from the industrial organization in force in the first half of the 19th century. It was, then, to compete in limited markets and with very specific products. Production costs used to be fundamentally direct, since the output obtained by the companies corresponded in many cases to a single production.
The current development of technology has led to the acceleration of Management Accounting, not only from the theoretical point of view, but from the perspective of the adoption and implementation of systems with a philosophy of activities, and with a management approach.
Management Accounting, the main information system of the organization, has to capture, record, process and transmit all the information, internal and external, to address the decision-making process that occurs in the company, informing about all the variables the environment and the organization itself that may have a significant influence on business performance, the process being known as the "set of activities carried out for a specific purpose, pursuing a global object and which can lead to a material or immaterial output".
The dynamics of the economic environment has led Management Accounting to introduce changes in its philosophy, and for this reason, this discipline is currently showing a new development and encompassing realities and areas that had not even been considered to analyze a few years ago.
Thus, it can be stated that Management Accounting is subjecting the internal production and control systems to a deep renovation and, consequently, the management systems of companies, in which the idea that minimization is being abandoned of costs constitutes the axis of competitiveness.
In the works of different authors, the factors that have determined the obsolescence or expiration of the traditional cost systems implemented for conditions different from the current ones were analyzed and which can be summarized as follows:
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| Table # 1: Factors that have determined the obsolescence of traditional management systems. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| YEAR | AUTHOR | LIMITATIONS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1985 | Millar and Vollman | Lack of cost visibility. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1987 | Cooper | The systematic distortion of the cost of the products, caused by the use of methods based on the volume of production to absolve the indirect costs. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1988 | Cooper and Kaplan | Lack of analysis of costs in non-productive units. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1988 | Cooper and Kaplan
In addition to the above, the Kendall method was used to evaluate the judgment of the experts. Once Phase I is explained, the following phases of the ABC / ABM methodology are explained. Phase II: Management of processes and activities This phase is developed, with the aim of obtaining the processes that are executed in the hospital, determining the sub-processes that are inherent to it and the activities that correspond to it, considering the stages described in the previous figure. Stage 1: Analysis of the processes It comprises a management stage, where the advisors and users of the system participate jointly. In it, the selected experts participate, who have knowledge in management systems and have a general command of the entity's processes. The experts list all the processes and activities that take place in the various areas of the hospital, derived from the application of the brainstorming method. Once the processes have been selected, we proceed to the second stage of Phase II. Stage 2: Design or strategic redesign of processes At this stage people participate who can provide important criteria given the degree of experience accumulated in the activity they carry out. It is a stage that involves the majority of hospital workers, since all the areas that carry out activities inherent to the selected processes participate. The general strategic objectives that were considered to choose these processes are the following:
The definition of the scope of the processes, leads to delimit which are the activities that are most related to a given process, which allows, reducing the number of activities to be executed in each process and sub-process, thus eliminating or reducing those activities that do not add value. In the design or strategic redesign, the processes that most pay tribute to the activities demanded by customers are managed, thus defining those who participate in the service offered to each customer. Once the processes are known, the analysis of the activities carried out in the hospital is carried out. Stage 3: Analysis of activities For the analysis of the activities, the classification of Porter (1985) will be used, in primary activities and support activities. Noting that if it is important to identify the primary activities, it is also important to identify the support activities, since the latter guarantee that all of them can be carried out as efficiently as possible. In this sense, value-added support activities generate a significant amount of value to the product or service, similar to the value produced by primary activities. Well, in some way, it guarantees the quality and success of the service that the client demands. Sometimes support activities ensure the final value of the product or service. Finally, the importance of having the activities well identified makes it possible to achieve better resource management in each activity carried out. Likewise, it facilitates the feedback process regarding the potential and key processes selected in the hospital. By selecting the activities that participate in the process, the inputs and outputs of each of them can be more clearly identified, as well as the resources they consume in their execution. Figure # 5 summarizes the elements that characterize the activities. From the analysis of the activities, the classification of the activities in the fourth stage is established. Stage 4: Hierarchy of activities by levels The hierarchy of activities is nothing more than the grouping of homogeneous activities at different levels according to their behavior in the process. The activities should be grouped by levels: unit level; batch level; product level; client level and finally hospital level. The hierarchy of activities in this research is established considering the parameter that determines the variability of the cost, in this way we work with variable costs at different levels of activity, which allows transforming most of the indirect costs with respect to the service, into direct costs with respect to some of the activity levels mentioned above. In this sense, the activities are classified according to the level at which they are executed, and depending on this, the type of activity measure that will be selected to assign the costs of the activities demanded by the service will depend. The grouping of activities by levels allows the identification of all those activities that will be necessary for each service, which facilitates the management and cost of said activities. Likewise, it facilitates the grouping of activities given the cost driver assigned to it. Once the activities are classified, we proceed to the fifth and final stage of this second phase, where the cost drivers that show the greatest cause-effect relationship with respect to the activity will be identified and chosen. Stage 5: Choice of cost drivers At this stage, it is important to clearly define the difference between the cost driver and the activity unit: Cost driver: it constitutes the cause of the origin of the cost, that is, the variable that causes the level of cost reached. Activity unit: represents the effect and is related to the result of the process, that is, to the final service or product, therefore, it determines or tries to measure the effect, determining the variations in the cost structure of an activity. A characteristic of the proposed procedure is that the same cost driver can be used for various activities, as long as the grouped activities are homogeneous. At this stage, certain costs may appear that are not clearly identified or related to a specific activity and, therefore, as explained previously, they will be assigned to costs for the period. In other words, the cost is affected at the business level and not the cost of a specific activity. Once the cost drivers for each activity have been identified and selected, it turns out to continue with Phase III of the proposed procedure. Phase III. Determination of the cost of the processes This phase begins from the sixth stage of the procedure and is fundamentally related to the determination of the cost of the different stages that continue and that are part of the total cost of the services that clients demand in the entity under study. Stage 6: Calculation of the cost of primary and support activities In order to determine the cost of the primary and support activities, it is necessary to use the previously stated stages, since it depends on this to know more exactly the total cost of the activity that is executed within the process. In this sense, the primary documents help and support decision-making through the information they provide from the existing record and control of said activity. At this stage, only the cost of the primary activities is calculated, since there are no support activities in the areas under study. Stage 7: Allocation of the cost of support activities to primary activities. To make the cost allocation it is necessary to consider the 5th. Stage of Phase II. In other words, identify and select the cost drivers that reflect the best cause-effect relationship for each primary activity that is executed. Once the costs of the support activities have been assigned to the primary activities, the costs of the activities are assigned to the different processes carried out in the hospital. Stage 8: Allocation of the cost of activities to the operational processes of the Hospital In this stage, the cost allocation of the activities to support the primary activities of the different processes occurs and the activities of the strategic processes and of support to the operational processes of the hospital under study are assigned. First occurs the allocation of the cost of the support activities to the different primary activities inherent to the different processes that occur, and then the allocation of the primary activities of said processes to the operational processes of the hospital. In turn, it is important to point out that the unidentified costs and expenses of the primary and support activities inherent to the selected processes will be treated as costs and expenses for the period as mentioned above. Finally, in the 9th Stage, the cost of the hospital's operational processes is determined. Stage 9: Calculation of the total cost of operational processes To determine the cost of operational processes, the allocation of the cost of the primary activities of the strategic processes and support to the operational processes of the hospital should be considered. In this sense, the costs that are finally assigned to said operational processes constitute the final objective of each process, which will allow to subsequently evaluate the activities that were not profitable and that must be improved in the shortest possible time and that is reflected in the sequence to follow for the determination of said calculation. Determining the cost of operational processes makes it possible to know how much it costs to execute operational processes. These operational processes are important because they guarantee the quality of each of the services that the hospital offers to its patients. Considering the proposed methodology, the following section proceeds to be implemented in the outpatient areas (nursing and podiatry premises) and in the body of the guard (clean minor surgery premises and in the injection and aerosol cubicle). Implementation of the ABC / ABM Methodology proposed in the “Mario Muñoz” Military Hospital, in the outpatient and guardhouse areas Phase I: Analysis of the variables that influence the implementation of the ABC / ABM System in the “Mario Muñoz” Military Hospital Considering the previous analyzes, Figure # 6 shows the variables that influence the implementation of the ABC / ABM System exposed by the experts based on their experiences. Figure # 6: Selection of variables related to the design of the ABC / ABM System. Source: self made. The 9 variables that most influence the implementation of ABC / ABM according to the experience and the criteria of the experts, are:
Phase II: Management of processes and activities Stage 1: Analysis of the processes MILITARY HOSPITAL PROCESSES - Economic management - Quality Management - Human Capital Management - Material Supply - Development Management - Hospitalization - Urgent and Emergency Care (Guard Corps) - Diagnostic means - Production and Services - Technical Supply - Defending - External Consultation Stage 2: Design or strategic redesign of processes Relevant Processes: - Human Capital Management - Hospitalization - Attention to Emergencies and Emergencies (Guard Corps) - External Consultation - Diagnostic means - Material Supply Stage 3: Analysis of activities All the activities in the cost centers that are the object of the investigation are primary, with no support activities.
Stage 4: Hierarchy of activities by levels All the activities listed in the previous stage are grouped at the customer level. Stage 5: Choice of cost drivers - Activities of the Guard Corps (Cubicle for injections and aerosols).
- Activities of the Guard Corps (local clean minor surgery).
- External Consultation Activities (Nursing).
- External Consultation Activities (Podiatry).
Phase III: Determination of the cost of the processes Stage 6: Calculation of the cost of primary and secondary activities To calculate the cost of the activities, the direct material (MD), direct labor (MOD) and the indirect variable manufacturing costs (CIFv) will be added, this will result in the cost of the activity, not including time (CAs / t). To obtain the cost of the activity including time, the cost previously calculated will be multiplied by the duration of the activity in hours (TD) and the cost of the activity per patient including time (CAi / t) will be obtained.
- Calculation of the cost of the activities of the Guard Corps (injection and aerosol cubicle)
- Calculation of the cost of the Guard Corps activities (clean minor surgery room)
- Calculation of the cost of External Consultation activities (Nursing)
- Calculation of the cost of External Consultation activities (Podiatry)
Stage 7 : Allocation of the cost of secondary activities to primary activities This stage does not proceed in these areas that have been taken to implement the methodology, since the activities are primary. Stage 8 : Allocation of the cost of activities to the operational processes of the Hospital
Stage 9 : Calculation of the total cost of operational processes
Once the methodology has been implemented in the two areas, the conclusions of the work will be addressed. CONCLUSIONS
RECOMMENDATIONS
BIBLIOGRAPHY
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