Do Better Cost Accounting Systems Improve Operating Costs? Evidence from a Regulatory Change in the Swiss Healthcare Sector
The central premise of cost accounting is that better costing systems enable
organizations to lower their operating costs. However, this fundamental premise is difficult to test empirically since organizations choose their costing systems endogenously. In this study, we take advantage of a natural experiment in the Swiss healthcare setting where some of the cantons exogenously enacted regulations that require hospitals to obtain certification for the standardized hospital costing system used in the Swiss healthcare sector. We use these certifications as markers of an improvement in cost system quality. Employing a difference-in-differences approach, we find that hospital operating costs decrease by, on average, 6-7% in the period following the certification of the standardized costing system compared to hospitals that are not subject to the regulations. The findings are robust to specifications that use propensity-score matching to balance the treated and untreated subsamples, and that take the staggered treatment timing into account.