Canadian health-care systems have faced tremendous difficulties and criticism, especially with regards to high wait times and service quality. According to the World Health Organization Global Health Expenditure Database, Canada has been one of the largest spenders on health care since 2000. However, this high spending has not led to better quality care. 

That’s why Professor Shujun Ding has received a Social Sciences and Humanities Research Council Insight Development Grant for a project titled The Application of Time-Driven Activity-Based Costing in Canadian Hospitals. Professor Ding will examine the use of time-driven activity-based costing (TDABC) in health care, to better understand cost management practices in Canadian hospitals (a key issue given Canada’s ageing population). He will survey and interview hospital staff, to understand what influences implementation of TDABC in hospitals, the impact of implementation and variations in how it’s implemented. 

For Professor Ding, “management accounting tools and the typical elements of management control systems (MCS) are consistently listed among the 25 most popular tools employed by executives around the globe. But the implementation of such tools and techniques in the health-care sector is understudied. My proposed study aims to provide first-hand empirical evidence … and would lay a foundation for follow-up studies to continue examining MCS in health care.”

The 2013 Commonwealth Fund International Health Policy Survey also found high dissatisfaction with Canadian health care, which increased due to the COVID-19 pandemic. Time-driven activity-based costing is a potential solution to many of the problems health care systems are facing. 

Trying a New Approach

Since its development in 2004, time-driven activity-based costing has been a popular cost management system. It’s been used in other industries but has only recently become popular in health care.

TDABC can help with decision-making and planning, increase efficiency in budgeting to reduce wait times and reduce resources allocated to some needs, allowing them to be used elsewhere. 

Professor Ding’s research could have both a practical and an academic impact, improving cost management systems, facilitating evidence-based health-care policy and adding to the literature on health-care cost management systems.