DRG-based payment system and management accounting changes in an Indonesian public hospital: exploring potential roles of big data analytics

• Published in: Journal of accounting & organizational change 2022-03, Vol.18 (2), p.325-345
• Main Authors: Fahlevi, Heru, Irsyadillah, Irsyadillah, Indriani, Mirna, Oktari, Rina Suryani
• Format: Article
• Language: English
• Subjects: Accounting changes; Big Data; Cost control; Cost recovery; Data analysis; Efficiency; Health care policy; Health insurance; Hospital costs; Hypotheses; Management accounting; Medical referrals; Patients; Physicians; Prospective payment systems; Research methodology
• ISSN: 1832-5912; 1839-5473
• DOI: 10.1108/JAOC-10-2020-0179

Purpose This study aims to provide insights into management accounting changes (MACs) and potential roles of big data analytics (BDA) in accelerating the MACs in an Indonesian public hospital as a response towards the adoption of the diagnosis-related groups (DRG)-based payment system. Design/methodology/approach A mixed-method approach was used to collect and analyse data from a referral public hospital in Indonesia. First, a BDA simulation was carried out to reveal its usefulness in predicting and evaluating patient costs, and finally improving the cost recovery rate (CRR) of each DRG case. This part formulated and tested the mathematical models that predict patient cost, the CRR and determinants (length of stay/LOS, severity/SEV, patient age/AGE and gender/SEX). For this purpose, data of the top ten inpatient cases of 2018 were collected and analysed. Second, semi-structured interviews with senior staff and doctors were carried out to understand cost control strategies implemented in the hospital and the management and doctors’ perceptions regarding the application of tested mathematical models for cost control. Old institutional economics and new institutional sociology were used to gain insight about how and why management accounting practices changed in the hospital. Findings The findings show that the absence of detailed per-case/patient cost information has not only hindered further evolvement of MACs but also stimulate tensions between managerial and medical worlds in the studied Indonesian public hospital. The simulation of BDA in this study was not only discovering the determinants of case cost recovery but also enabling the prediction of CRR of patients immediately after admission. The application of BDA and casemix accounting in the hospital will potentially become catalysts of discussion and mutual learning between managerial and medical staff in controlling patient costs. Originality/value This paper provides a more comprehensive picture of the potential roles of BDA in cost control practices. The study assesses the feasibility of BDA application in the hospital and evaluates the potential roles and acceptance of BDA application by both management and doctors.