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Asante Teaching Hospital Activity Based Costing Case Solution

Solution Id Length Case Author Case Publisher
2698 1754 Words (8 Pages) Melissa Jean, Courtney Young Ivey Publishing : W16558
This solution includes: A Word File A Word File and An Excel File An Excel File

Asante is a charitable hospital that receives funding from private foundations. All hospitals operate under the fundamental premise of making a profit. Because of this, Asante provides reasonably profitable medical services and has the opportunity to tailor its knowledge and operations to gain a competitive edge. The hospital's adaptability serves as a foundation for uniqueness. Courtney Young was an intern at Asante teaching hospital, and she had gathered some cost data from various interviews with the staff to make a recommendation to the CEO of the hospital as to whether their current pricing system is worthwhile or not or whether they should also use the same method of pricing which the competitors use. Hence, to present a more accurate analysis to the CEO of Asante teaching hospital, Courtney Young decided to use different costing techniques to accurately calculate cost per patient and cost per the level of service provided by Asante, which then can help Asante in terms of revenue growth and improved customer service. 

Following questions are answered in this case study solution

  1. Perform a strength, weaknesses, opportunities, and threats (SWOT) analysis. What implications can you draw for the pricing strategy alternatives? What are the implications to the SWOT if Asante continues with itemized pricing or switches to bundles pricing?

  2. Calculate the cost per minute for each type of employee.

  3. Allocate overhead costs to each level of service using the appropriate cost drivers.

  4. Calculate total costs per patient and price per patient at each level of care.

  5. If you were Courtney, what pricing recommendation would you make to the CEO?


Case Analysis for Asante Teaching Hospital Activity Based Costing

1. Perform a strength, weaknesses, opportunities, and threats (SWOT) analysis. What implications can you draw for the pricing strategy alternatives? What are the implications to the SWOT if Asante continues with itemized pricing or switches to bundles pricing?

Any corporation can look into their strengths, weaknesses, opportunities, and threats in connection to project preparation or business settings by using the SWOT analysis. Other terms for it comprise of situational analysis and situational evaluation. As far as Asante teaching hospital is concerned, it also has some strengths, weaknesses, opportunities, and threats which need to be looked into and analyzed.


If we talk about strengths, Asante teaching hospital is the top-ranked hospital in South Africa. It is considered to be one of those hospitals that has quality and highly skilled staff, and this means they have an excellent public image, which they can use for their marketing which will then bring in more patients, which will help them financially as they will go for different type of healthcare services. In addition to this, another strength is that they operate entirely loan free. Private promoters wholly fund every operation, and thus no need arises to take any bank loan, saving their finance cost, that is, interest payments and ultimately save their costs. Also, they have a really strong market position. Asante achieved a financial performance of R378 million per year, which shows they efficiently manage every dollar they receive from insurance companies and private promoters. Talking about insurance companies, they also provide Asante with proper and timely checks, which is an additional strength for Asante.


When it comes to weaknesses, Asante teaching hospital also faces these, and they need to address them to avoid future problems or any sort of financial or non-financial complication. They have almost no support from the government authorities, and being one of the most highly valued hospitals in the country, support from the government would have helped them immensely. Also, as Asante is a not-for-profit organization, many investors will be hesitant to invest their funds in Asante as the main agenda of Asante is not to make profits. It's more about providing service to the community. Since investors are motivated by profits and as a result, Asante will face difficulty raising funds from such investors. Another weakness of Asante is that they have a complex billing process, which ruins the customer service experience for the patients. There is a lack of standardized billing, which means that the billing process is a bit inefficient, with long queues and waiting times. This is always bothersome for the patients as many of them would require hospital services on an urgent basis, and this inefficient billing system may decrease the number of patients who visit Asante which will badly affect the financial position of the hospital. 

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