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

Ivana Drazic Lutilsky (), Berislav Zmuk () and Martina Dragija ()
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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

Croatian Economic Survey, 2016, vol. 18, issue 2, 5-38

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.

Keywords: accrual accounting basis; cost accounting system; public hospitals; financial sustainability; statistical analysis (search for similar items in EconPapers)
JEL-codes: H83 I18 (search for similar items in EconPapers)
Date: 2016
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