Prescription Costs and Conversion FactorEstimation Using the Activity-Based Costing Approach
Asian Tax Journal Vol. 8 No. 3 (2007), pp. 33-52
Abstract
The purpose of the study is to separate the total cost of pharmacy into a medicine related activity cost which is reimbursed by Korean National Health Insurance Corporation(KNHIC) and a non－medicine activity cost. Total cost of the pharmacy is estimated based on cost data of 48 pharmacies. To increase the reliability of data, we used interviews, visits, calls and letter of inquiry to tax accountants. Starting from the total cost, we removed costs that cannot be reimbursed by KNHIC but incorporated operating cost, capital cost and medical malpractice costs.The activity－based costing (ABC) approach is used to allocate labor, material and overhead costs of pharmacists. ABC enabled us to derive more accurate costs related with prescription services. The conversion factor of 2003 year is distributed approximately within the range of 43∼47won per relative value unit. <Key words> activity－based costing, prescription costs, conversion factor, health insurance,relative value units.
Keywords
- activity-based costing
- prescription costs
- conversion factor
- health insurance
- relative value units