Original Research

The adoption of Activity-Based Costing in private health care facilities in South Africa

Gideon Botha, Elda du Toit
Journal of Economic and Financial Sciences | Vol 10, No 2 | a20 | DOI: https://doi.org/10.4102/jef.v10i2.20 | © 2017 Gideon Botha, Elda du Toit | This work is licensed under CC Attribution 4.0
Submitted: 06 December 2017 | Published: 06 November 2017

About the author(s)

Gideon Botha, University of Pretoria, South Africa
Elda du Toit, University of Pretoria, South Africa

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The implementation of a South African National Health Insurance, combined with the potential of price reforms, has the potential to adversely affect the profitability of the health care industry. This could force management to look at ways to better understand the causal link between costs and the activities that drive costs. The study aimed to determine the extent of ABC use in health care facilities in South Africa, what the perceived and actual benefits are of adopting ABC and what other management tools and techniques are considered important. A structured questionnaire was sent to a target population, to which 51% of recipients responded. The results revealed that the rate of ABC adoptions has increased from 1.2% in 1994 to approximately 46% today. The growth in ABC adoptions and the high level of ABC adoption in relation to hospitals in the USA and Ireland indicate that the hospital industry in South Africa acknowledges the value ABC can add.


Activity-based costing; ABC; health care facilities; National Health Insurance; health care costs; profitability; management tools and techniques


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