The clinical allocation of joint blood product costs

Transfusion services in England provide a joint platelet product and a more costly, but better quality, non-joint alternative. Unfortunately, management is unsure of the optimal manufacturing balance between the two because, for reasons of accounting expediency, all joint costs are allocated to red...

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Bibliographic Details
Published in:Management accounting research 2003-06, Vol.14 (2), p.165-176
Main Authors: Trenchard, P.M., Dixon, R.
Format: Article
Language:English
Subjects:
Accounting
Allocation models
Blood
Blood products
Blood transfusions
Common costs
Cost allocation methods
Costs
Health care
Joint costs
Management
Management accounting
Medicine
Quality
Resource allocation
Studies
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Summary:Transfusion services in England provide a joint platelet product and a more costly, but better quality, non-joint alternative. Unfortunately, management is unsure of the optimal manufacturing balance between the two because, for reasons of accounting expediency, all joint costs are allocated to red cells and none to platelets. Purchasers and users may be unaware of this problem because of supplementary costs, incurred beyond the split-off point, that create a finite transfer price. In response, this study introduces a consensus clinical view of joint blood product manufacture, as an alternative basis for allocating joint costs, and presents pilot data. When this model is examined in the context of the accounting literature a number of parallels emerge. Furthermore, the history of transfusion points strongly to the clinical outcome value of products as the overriding driver of short-term manufacturing as well as its long-term development, lending support to the use of clinical consensus in the derivation of allocations. This contrasts with the use of quantitative red cell demand as the main cost driver in the current transfusion service model.
ISSN:1044-5005
1096-1224
DOI:10.1016/S1044-5005(03)00021-0