Publications

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March 2004 (Revised April 2005)
Case

Midwest Office Products

Presents an easy introduction to time-driven activity-based costing (ABC) that allows students to build a simple ABC model of order profitability. Midwest's time-driven ABC approach is based on two categories of parameter estimates. The first is the cost per hour of... View Details

Keywords: Cost; Price; Activity Based Costing and Management; Time Management; Financial Reporting; Profit; Performance Improvement; Order Taking and Fulfillment; Performance Evaluation

Article

Better Accounting Transforms Health Care Delivery

By: Robert S. Kaplan and Mary L. Witkowski

The paper describes the theory and preliminary results for an action research program that explores the implications from better measurements of health care outcomes and costs. After summarizing Porter's outcome taxonomy (Porter 2010), we illustrate how to use process... View Details

Keywords: Activity Based Costing and Management; Research; Health Care and Treatment; Health Industry

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March 1998 (Revised April 1998)
Case

Lehigh Steel

By: V.G. Narayanan and Laura Donohue

Lehigh Steel is a specialty steel manufacturer that plummeted from record profits to record losses in less than three years, driven by an inability to distinguish between profitable and unprofitable business. The scale and growth of service activities and overhead... View Details

Keywords: Measurement and Metrics; Product; Cost; Activity Based Costing and Management; Profit; Accounting; Corporate Finance; Steel Industry

February 2000 (Revised March 2000)
Case

Owens & Minor, Inc. (B)

By: V.G. Narayanan and Lisa Brem

After a manager at Owens & Minor, a national medical and surgical distribution company, proposes and develops a formalized activity-based pricing and activity-based management approach to sales and service provision, this case explore the outcome. View Details

Keywords: Activity Based Costing and Management; Logistics; Distribution; Price; Supply Chain Management; Sales; Outcome or Result; Management Style; Medical Devices and Supplies Industry; Distribution Industry

September 2009 (Revised October 2010)
Case

Elkay Plumbing Products Division

The vice president of sales learns that the most profitable 1% of the division's customers generate 100% of profits, and that two of the division's largest customers lose 50% of profits. The division has just finished a project to install a time-driven activity-based... View Details

Keywords: Activity Based Costing and Management; Profit; Management Systems; Consumer Products Industry; Industrial Products Industry

April 2010 (Revised September 2011)
Case

Supply Chain Partners: Virginia Mason and Owens & Minor (A) (Abridged)

By: V.G. Narayanan and Lisa Brem

Owens & Minor (O&M) performed lean inventory services for Virginia Mason (VM) as its Alpha Vendor, but the outdated industry pricing model created perverse incentives and could not capture O&M's costs. Together, O&M and VM created an activity-based pricing model: Total... View Details

Keywords: Supply Chain Management; Partners and Partnerships; Activity Based Costing and Management; Business Model; Non-Governmental Organizations; Nonprofit Organizations; Motivation and Incentives; Asset Pricing; Cost Accounting; Fair Value Accounting; Medical Devices and Supplies Industry

May 1995 (Revised April 1998)
Case

AT&T Paradyne

A company making data communication devices has adopted a Total Quality philosophy for working with suppliers, employees, and customers. The finance group finds its existing cost system has become obsolete because of a shift from manual to automatic production... View Details

Keywords: Decisions; Product; Corporate Accountability; Activity Based Costing and Management; System; Performance Efficiency; Financial Reporting; Operations; Technology Industry; Telecommunications Industry

Article

Achieving Value in Highly Complex Acute Care: Lessons from the Delivery of Extra Corporeal Life Support

By: Michael Nurok, Jonathan Warsh, Erik Dong, Jeffrey Lopez, Mayumi Kharabi and Robert S. Kaplan

We applied a value (outcomes and cost) analysis to extracorporeal life support (ECLS), a relatively rare but very expensive ICU therapy with highly variable outcomes. To address the outcome component of the value approach, we created guidelines for ECLS delivery; to... View Details

Keywords: Health Care and Treatment; Cost Management; Value; Analysis

Read Now

22 Jul 2014
First Look

First Look: July 22

Publications August 2013 hfm (Healthcare Financial Management) Improving Value with TDABC By: Kaplan, Robert S. Abstract—The article discusses the benefits of time-driven activity-based costing (TDABC)... View Details

Keywords: Sean Silverthorne

Research Summary

By: Srikant M. Datar

Datar's research interests are in the cost management and management control areas. He has published his research on activity-based management, quality, productivity, time-based competition, new product development, bottleneck management, incentives and ... View Details

April 2009 (Revised June 2010)
Case

Supply Chain Partners: Virginia Mason and Owens & Minor (A)

By: V.G. Narayanan and Lisa Brem

Virginia Mason Medical Center (VM) hired Owens & Minor (O&M) as its alpha vendor for medical/surgical supplies in 2004. By 2005, O&M was performing Just-in-Time and Low Unit of Measure services for VM, but they believed the pricing model in the industry was outdated.... View Details

Keywords: Activity Based Costing and Management; Price; Distribution; Supply Chain Management; Medical Devices and Supplies Industry

July 2021 (Revised July 2022)
Case

Brigham & Women's Hospital: Using Patient Reported Outcomes to Improve Breast Cancer Care

By: Robert S. Kaplan, Navraj S. Nagra and Syed S. Shehab

Dr. Andrea Pusic, breast cancer reconstruction surgeon, wants to extend outcomes measurement beyond traditional surgical metrics of infections, complications, and survival rates. The case describes her development of a new mobile phone app, which collects patients’... View Details

Keywords: Health Care and Treatment; Outcome or Result; Cost Management; Activity Based Costing and Management; Mobile and Wireless Technology; Health Testing and Trials; Surveys; Health Industry; Boston

June 1987 (Revised May 1990)
Case

John Deere Component Works (B)

Having installed an activity-based system, the division is now exploring the insight provided by that system. In particular, it is studying the economics of lot-size process planning and product mix management. View Details

Keywords: Activity Based Costing and Management; Production; Business or Company Management; Planning; Cost Accounting; Cost Management; Product Marketing; Management Practices and Processes; Consumer Products Industry; Agriculture and Agribusiness Industry

12 Mar 2019
First Look

New Research and Ideas, March 12, 2019

available. Publisher's link: https://www.hbs.edu/faculty/Pages/item.aspx?num=55802 forthcoming Journal of Medical Economics Time-Driven Activity-Based Cost Analysis for Outpatient Anticoagulation Therapy:... View Details

Keywords: Dina Gerdeman

March 2007 (Revised August 2014)
Case

Survey Masters LLC (A)

By: William J. Bruns

Partners in a service firm are reviewing results for 2006, wondering whether large or small projects are more profitable. Present reports make small projects look more profitable. However, activity-based accounting reveals that large projects are more profitable and... View Details

Keywords: Activity Based Costing and Management; Financial Reporting; Cost vs Benefits; Financial Strategy; Service Industry

Research Summary

Overview

By: Srikant M. Datar

Professor Datar has several research and course development interests. His initial areas of research interest were in cost management and management control, strategy implementation and governance. Over the last few years his areas of interest are management education,... View Details

07 Mar 2018
Research & Ideas

Electronic Health Records Were Supposed to Cut Medical Costs. They Haven't.

time-driven activity-based costing, a method Kaplan co-developed. “We tracked how much time each person spent dealing with that bill, we determined the cost per minute of each person, and we just multiplied... View Details

Keywords: by Roberta Holland; Health

June 2010 (Revised December 2010)
Case

Hôpital de Pontoise

By: Richard M.J. Bohmer, Daniela Beyersdorfer and Simon Harrow

In 2010, Andre Razafindranaly, managing director of a large French public hospital, considers which organizational structure will help them adjust to the changing health sector environment. The move from global budget to activity-based funding has led his and many... View Details

Keywords: Activity Based Costing and Management; Governance Controls; Governing Rules, Regulations, and Reforms; Health Care and Treatment; Leading Change; Service Delivery; Organizational Change and Adaptation; Organizational Structure; Health Industry; France