Method of determining task costs for activity based costing models

• US 7,149,700 B1
• Filed: 05/21/1999
• Issued: 12/12/2006
• Est. Priority Date: 05/21/1999
• Status: Expired due to Fees

• Current Assignee: Whittier Group Incorporated
• Original Assignee: Whittier Group Incorporated
• Inventors: Munoz, Michael, Oksan, Emre
• Primary Examiner(s): Dixon, Thomas A
• Application Number:
  US09/316,725
• Time in Patent Office: 2,762 Days
• Field of Search: 705/7, 705/8, 705/9, 705/10, 705/400, 705/2
• US Class Current: 705/7.27
• CPC Class Codes: G06Q 10/06 Resources, workflows, human or project management; Enterprise or organisation planning; Enterprise or organisation modelling
• CPC Class Codes: G06Q 10/0633 Workflow analysis
• CPC Class Codes: G06Q 10/06375 Prediction of business process outcome or impact based on a proposed change
• CPC Class Codes: G06Q 10/10 Office automation; Time management
• CPC Class Codes: G16H 40/20 for the management or administration of healthcare resources or facilities, e.g. managing hospital staff or surgery rooms

Abstract

A method of carrying out activity based costing in a professional practice, such as a healthcare practice or hospital is provided. The costs of activities involving an operator are calculated based on the time the operators should be expected to spend on a task, and the cost overhead, particularly the payment, of the operator. This is achieved using a Pre-Determined Motion Time System such as the MOST® system. This allows the inherent profitability of a business operation to be established independent of the current employees, so that the profitability of the business processes themselves can be ascertained.

Claims

1. A method of performing costing of tasks including healthcare activities, said method comprising:

a) establishing a list of healthcare tasks involved in a work process wherein said healthcare tasks involves execution by a human operator;

b) for each task, determining;

(1) how much the time to complete the task can vary from a standard with a single person and from person to person,

(2) the frequency the task is performed,

(3) how easy it is to measure the time to perform the task,

(4) how many sub-components the task has,

(5) whether the task requires analysis or thinking,

(6) the complexity of the task,

(7) if standard charges for the task by law exist, and

(8) the financial impact of the task,

c) for each task, deciding which one of four available methods of measurement should be used for calculating the duration of the task depending on the determining step, including;

(1) expert opinions,

(2) time studies,

(3) industry standards, and

(4) an operator independent method of task time measurement based on independently timing each motion in a procession of motions required to perform said healthcare task without timing from a beginning of said healthcare task to an end of said healthcare task a human performing said healthcare task;

d) establishing a first cost component of each healthcare task as a function of the duration of said healthcare task and the cost per unit time for said human operator;

e) establishing a second cost component of each healthcare task dependent on non-labor costs of the process, a portion of each non-labor cost being apportioned to said healthcare task as a function of the time of execution of said healthcare task by said human operator, machine operating time or other relative consumption of a resource;

f) maintaining the expected time to complete said activities and the cost per unit time of said operator in a memory of a computer; and

g) calculating a task cost using a processor of said computer including the step of summing the first and second components for the healthcare task to establish the cost of the healthcare task.

7. A method according to claim 1 wherein a difference between the calculated time to complete a task independent of the operator and the actual time taken by the operator is used to establish a risk profile for the business, on the basis that a positive difference implies that work is not being carried out with the required care.

2. A method of performing costing of tasks including healthcare activities, said method comprising the steps of:

a) establishing a list of healthcare tasks involved in a work process for a medical operating room or a medical examination room and including determining whether or not at least one of said healthcare tasks that involves execution by a human operator is a variable task determined to be a variable task by considering;

(1) the variance of the time to complete the task determined to be a variable task relative to a standard,

(2) how often the task determined to be a variable task occurs,

(3) how difficult it is to measure accurately,

(4) whether the task determined to be a variable task has identifiable sub-components, and

(5) the financial impact to a healthcare business of which the healthcare activities are a part,

b) calculating the duration of said at least one healthcare task determined to be a variable task by using an operator independent method of task determined to be a variable task time measurement based on independently timing each motion in a procession of motions required to perform said healthcare task determined to be a variable task without timing from a beginning of said healthcare task determined to be a variable task to an end of said healthcare task determined to be a variable task a human performing said healthcare task determined to be a variable task;

c) establishing a first cost component of each healthcare task determined to be a variable task as a function of the expected time of execution of said healthcare task determined to be a variable task and the cost per unit time for said human operator;

d) establishing a second cost component of each healthcare task determined to be a variable task dependent on non-labor costs of the process, a portion of each non-labor cost being apportioned to said healthcare task determined to be a variable task as a function of the time of execution of said healthcare task determined to be a variable task by said human operator, machine operating time or other relative consumption of a resource;

e) maintaining the expected time to complete said activities and the cost per unit time of said operator in a memory of a computer; and

f) calculating a task cost independent of the efficiency of the human operator using a processor of said computer including the step of summing the first and second components for the healthcare task to establish the cost of the healthcare task.

3. A method according to claim 2 wherein the operator independent method of task time measurement is a predetermined motion time system.

4. A method according to claim 3 wherein the operator independent method of task time measurement is the Maynard Operation Sequence Technique.

5. A method in accordance with claim 2 wherein said healthcare tasks involved in said work process are executed by two or more different human operators.

6. A method in accordance with claim 2 wherein a utilization ratio of said operator is calculated based on the total task time calculated to be necessary to complete all tasks in all work processes executed by said operator and the total time worked by said operator.

8. A method according to claim 2 wherein a difference between the calculated time to complete a task independent of the operator and the actual time taken by the operator is used to establish hidden liability of unperformed work, on the basis that a positive difference implies that tasks are being left incomplete.

9. A method in accordance with claim 2 wherein the healthcare tasks together form the work process, said method further comprising the step of:

f) summing the costs of the healthcare tasks in said process to give a process cost, and utilizing the process cost to determine the cost of the work process.

10. A method in accordance with claim 9 wherein the costs in the work process comprise the costs associated with a business unit.

11. A method in accordance with claim 9 wherein the costs in the work process comprise business line costs of a business line.

12. A method according to claim 11 wherein the business line costs and the revenue brought in by the business line are used to calculate the profitability of the business line, which is in turn used to correctly price the business line.

13. A method according to claim 9 wherein a financial model of revenue, costs and profit is created.

14. A method in accordance with claim 13 wherein at least one of ROI, ROC and IRR are determined for a capital investment.

15. A method in accordance with claim 9 wherein a business goal is set and changes in process cost and time are calculated.

16. A method in accordance with claim 9 wherein said method is further utilized to establish the cost of all work processes in said business.

17. A method in accordance with claim 9 wherein said operation costs comprise at least one of department costs and total business operating costs.

18. A method according to claim 9 wherein revenue generated by said process is calculated and profitability of said work process is calculated based on the difference between said cost of said process and said revenue.