One of the most significant issues in developing countries
is needed resources in the health sector, because over 5%
of GNP and about 5% to 10% of Government expenditure
has been allocated to this part1 . One of the many possible
ways to reduce fiscal deficit is to trim down the government
expenditure wherever possible. According to World
Bank studies hospitals consume about 50% to 80% of
the health sector budget because of cost growth of medical
equipments, medicines, skilled manpower etc2
. This
increased cost expands the healthcare budget allotted to
an individual unit or hospital, and throws a challenge to
the hospital administration to provide high quality services
with constrained resources. Therefore, it becomes
crucial to understand the cost at different activity levels
of a hospital in order to control the same and make a hospital
more cost efficient3
. The hospital uses a number of
standard accounting costing methodologies.