Reimbursement of health service costs and management accounting systems in practice: an Australian non-profit hospital case study

Purpose This study aims to explore how reimbursement negotiation of health-care services influences management accounting and control systems in a nonprofit private hospital. Attempts have been made to obtain an in-depth understanding that explains the choice of the cost management systems and strategies used by a hospital operating within its institutional funding environment. Design/methodology/approach This paper uses a qualitative case study approach, which comprises semi-structured interviews with key informants to understand how different bases of reimbursement impact management accounting systems in a nonprofit private hospital. Findings This study highlights that, unlike publicly funded hospitals, nonprofit hospitals face multiple bases in the reimbursement process of health-care services in their institutional environment, which impact their internal processes, including management accounting systems. It also reports the organizational processes to negotiate with external funding bodies, where different funding logics were accommodated. Research limitations/implications This research focuses on a single case study, and its findings need to be interpreted carefully. Repayment systems can be different and subject to changes over time, which can influence various nonprofit hospitals to adopt different Organizational strategies that require contextual understanding. Originality/value This paper contributes to extant knowledge on how reimbursement of health-care costs affects internal organizational processes, including management accounting.