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Cost Accounting as a Possible Solution for Financial Sustainability of Croatian Public Hospitals

Author

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  • Ivana Drazic Lutilsky

    (University of Zagreb, Department of Accounting, Faculty of Economics and Business, Croatia)

  • Berislav Zmuk

    (University of Zagreb, Department of Statistics, Faculty of Economics and Business, Croatia)

  • Martina Dragija

    (University of Zagreb, Department of Accounting, Faculty of Economics and Business, Croatia)

Abstract

The purpose of this paper is to present the current usage of cost accounting methodology in Croatian public hospitals through conducted empirical research and to provide opinions of accountants and financial officers regarding possible implementation of cost accounting methodology in public hospitals. In the paper, the authors analyze the accounting system in Croatian public hospitals, identifying the flaws of the current accounting system with regard to the recording and allocation of costs. National healthcare systems of different European countries provide a theoretical background for the usage of accrual accounting basis and cost accounting methodologies, showing better governance and financial sustainability of public hospitals which have introduced cost accounting methodology. The conducted empirical research shows that accountants and financial officers believe that the healthcare system in Croatia is ready for a change in the current accounting system based on the modified accrual basis through the implementation of accrual accounting basis and full costing approach to cost allocation. Full costing approach is also known as activity-based accounting method for cost allocation. The authors also recommend some initial steps for implementation of the new cost accounting system in Croatian public hospitals.

Suggested Citation

  • Ivana Drazic Lutilsky & Berislav Zmuk & Martina Dragija, 2016. "Cost Accounting as a Possible Solution for Financial Sustainability of Croatian Public Hospitals," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 18(2), pages 5-38, December.
    • Handle: RePEc:iez:survey:ces-v18_2-2016_drazic-lutilsky-zmuk-dragija
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    References listed on IDEAS

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    1. Eriotis, Nikolaos & Stamatiadis, Filippos & Vasiliou, Dimitrios, 2011. "Assessing Accrual Accounting Reform in Greek Public Hospitals: An Empirical Investigation," MPRA Paper 30246, University Library of Munich, Germany.
    2. Davor VAŠIČEK & Gorana ROJE, 2010. "Accounting System in Croatian Public Healthcare Organizations: an Empirical Analysis," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 6(6(547)), pages 37-58, June.
    3. Nikolaos Eriotis & Filippos Stamatiadis & Dimitrios Vasiliou, 2011. "Assessing Accrual Accounting Reform in Greek Public Hospitals: An Empirical Investigation," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 4(1), pages 153-184, March.
    4. Polyzos, Nikolaos & Karanikas, Haralampos & Thireos, Eleftherios & Kastanioti, Catherine & Kontodimopoulos, Nick, 2013. "Reforming reimbursement of public hospitals in Greece during the economic crisis: Implementation of a DRG system," Health Policy, Elsevier, vol. 109(1), pages 14-22.
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    More about this item

    Keywords

    accrual accounting basis; cost accounting system; public hospitals; financial sustainability; statistical analysis;
    All these keywords.

    JEL classification:

    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    Statistics

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