Opportunities for the improvement of cost accounting systems in public hospitals in Italy and Croatia: a case study

The purpose of this paper is to highlight similarities and differences between one Croatian and one Italian public hospital regarding the implementation of cost accounting and full costing method in their accounting systems. Moving from the theoretical background, it is evident that cost accounting methods introduced in health care sector bring benefits to the whole society through an increased efficiency of the health care services provided. Primarily it ensures better governing of hospital’s resources allowing more transparency in spending public funds. The main topic is that with the introduction of cost accounting system for internal purposes in public hospitals, the management would be able to govern in a more efficient and effective way while reducing costs. The research for this paper was conducted through the interview of accounting officers in one Croatian and one Italian pubic hospital. The main results show that there are differences in legislation background regarding cost recording, but also how they allocate costs to the cost objects and in how they use cost information in their decision-making process. In order to successfully manage public hospitals, it is crucial that true, timely and valid information are obtained as a base for the decision making process. The cost accounting methodology is therefore essential to the management of public hospitals. It must provide information about the type and amount of resources spent, and thus enable the preconditions for control, management and potential reduction of costs.