Cost transparency in different external environments is essential for good management for many reasons. If you are looking for tools to support management decisions, to create financial transparency in your hospital, to get good insight into the costs per activity in all of the areas in the hospital, a reliable costing model is essential.

Tragpi has been creating financial transparency for hospitals in The Netherlands and abroad for the past 15 years. Currently, over 60 Dutch hospitals work with the Tragpi Costing models, the majority of these hospitals update their costing models on a yearly basis.

Our cost models show the links between costs, resources, procedures and patient groups, making it easy for hospital staff and management to analyse relevant costs. Our costing models provide a full audit trail for the automatic generation of a detailed cost model.

The reliability of the information used is of vital importance. To be able to create a valid costing model, Tragpi gathers data from the Hospital Information System regarding costs, activities and the organisational structure of the hospital. Robust costing models resemble the day to day routines in the hospital, hence Tragpi engages in a discussion with the particular departments in your hospital.

Costing Models
In co-operation with hospital staff the Cost Model is being created.

Identifying your Organisational Structure: Direct and Indirect Costs
In co-operation with the organisation, direct and indirect departments will be identified. The indirect departments (i.e. purchase and logistic department, facility management etc.) are allocated to direct departments through weighed keys. By doing this, we ensure that direct departments are only being charged with the amount of indirect costs, which they are actually responsible for. This process is called “step down” activity based costing.

Direct Costs
Subsequent to assessing the allocation of indirect costs to direct departments, the direct departments will be visited. During these visits, together with the departments, it is estimated by which ratio, the costs of the department (resources) that should be allocated to the activities performed. In this discussion, the hands-on knowledge of staff working in the department is of vital importance. By executing these discussions, the costing model will resemble the actual routines of the hospital.

Comparing apples with apples: Tragpi Standard Costing Model
These results can, upon request of the hospital, be benchmarked with peers from The Netherlands, Ireland or a broader International setting. In order to benchmark the results of costing projects it is of vital importance that each costing model is created on the same basis. Therefore, next to the technically structured way of creating costing models, Tragpi maintains a document called the "Tragpi Standard Costing Model", which acts as a guideline during the process of cost model building.

Validation
In order to ensure that the transparency created within the hospital is useful, support within the organisation of the results of the costing project is of importance. Therefore, we validate and correct the results of the costing project with the departments involved before the results are finalised for the hospital.