The Costing Systems in Saudi Arabian Hospitals: Do They Need to Be Modified?

Abstract

Since most costing system studies concentrate on the manufacturing industry, the costing systems in Saudi Arabian hospitals are an important area to be investigated given a current lack of focus in this field. In this context, this article highlights the cost systems in 50 Saudi Arabian hospitals in both the public and private sectors. The participants in the study were asked about the costing systems used and which one they would prefer to use, along with the factors influencing ABC adoption. The main findings show that only 28% (14) of the surveyed hospitals adopt ABC. The adoption of ABC was much higher in public hospitals than private hospitals. In addition, general hospitals considered using ABC more often than specialised hospitals. There were some variables which could affect the ABC adoption, such as the education and qualifications of the accounting and management staff, the level of overhead costs and the size of hospitals. The greatest benefit of ABC adoption, which is agreed to by the participants, was the improvement in the quality of service. On the other hand, the participants also agreed that the biggest challenge of ABC adoption was the lack of staff expertise.