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Indicator Metadata

NameAdministrative Expense
Short/Other Names

Administrative Service Expense as a Percentage of Total Expense

DescriptionThis indicator measures the percentage of the legal entity's total expenses that were spent in administrative departments such as finance and human resources.
InterpretationA high percentage indicates that administrative costs are a large portion of the region's hospital expenses; a low percentage indicates that administrative costs are a small portion of a region's hospital expenses.
HSP Framework Dimension

Health System Inputs and Characteristics: Efficient allocation of resources

Areas of Need

Not applicable

Geographic Coverage

Newfoundland and Labrador, Prince Edward Island, New Brunswick, Nova Scotia, Quebec, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia, Yukon, Northwest Territories

Reporting Level/Disaggregation

National, Province/Territory, Region, Facility, Others: This indicator is calculated at the level of the legal entity and aggregated to the other levels. For Ontario and Yukon, the hospital is the legal entity. For Quebec, the établissement is the legal entity. For all other jurisdictions, the regional health authority is considered the legal entity.

Indicator Results

Accessing Indicator Results on Your Health System: In Depth

Identifying Information
NameAdministrative Expense
Short/Other Names

Administrative Service Expense as a Percentage of Total Expense

Indicator Description and Calculation
DescriptionThis indicator measures the percentage of the legal entity's total expenses that were spent in administrative departments such as finance and human resources.
Calculation: Description

The indicator is calculated by dividing the legal entity's administrative expenses net of recoveries (including expenses for administration, finance, human resources and communications) by total expenses net of recoveries.

The unit of analysis of this indicator is a dollar of expense. The indicator is expressed as the percentage of total expenses that are in administrative departments. The indicator is calculated by fiscal year.

Calculation: Geographic Assignment

Place of service

Calculation: Type of Measurement

Percentage or proportion

Calculation: Adjustment Applied

None

Calculation: Method of Adjustment

The range of acceptable values is 1st quartile (25th percentile) − 1.5 × IQR to 3rd quartile (75th percentile) + 1.5 × IQR, where IQR stands for the interquartile range. Values outside of this range are removed from provincial and national averages.

Denominator

Description:
The denominator includes all expenses net of recoveries.
Inclusions:
Codes include, for all functional and accounting centres, 7* and 8*, as well as secondary financial accounts 1 2* and 3* to 9*. External recoveries are netted to reflect hospital expenses only.
Exclusions:
Internal recoveries (except for 1 28 Sales Revenue) are netted to offset interdepartmental transfers.

Numerator

Description:
The numerator includes all expenses associated with the administrative, finance, human resources and communications functional centres.
Inclusions:
Codes include functional centres 7* 1 10, 7* 1 15, 7* 1 20 and 7* 1 30, as well as secondary financial accounts 1 2* and 3* to 9*. External recoveries are netted to reflect hospital expenses only.
Exclusions:
Internal recoveries (except for 1 28 Sales Revenue) are netted to offset interdepartmental transfers.

Background, Interpretation and Benchmarks
Rationale

The indicator can be used by legal entities to determine whether their administrative expenses should be increased or decreased relative to their total expenses.

The indicator is influenced by finance, administrative, human resources and communications expenses, in proportion to total expenses.

This indicator can be used to improve cost-efficiency.

Interpretation

A high percentage indicates that administrative costs are a large portion of the region's hospital expenses; a low percentage indicates that administrative costs are a small portion of a region's hospital expenses.

HSP Framework Dimension

Health System Inputs and Characteristics: Efficient allocation of resources

Areas of Need

Not applicable

Targets/Benchmarks

Not applicable

References

Not applicable

Availability of Data Sources and Results
Data Sources

CMDB

Available Data Years

Type of Year:
Fiscal
First Available Year:
2011
Last Available Year:
2015

Geographic Coverage

Newfoundland and Labrador, Prince Edward Island, New Brunswick, Nova Scotia, Quebec, Ontario, Manitoba, Saskatchewan, Alberta, British Columbia, Yukon, Northwest Territories

Reporting Level/Disaggregation

National, Province/Territory, Region, Facility, Others: This indicator is calculated at the level of the legal entity and aggregated to the other levels. For Ontario and Yukon, the hospital is the legal entity. For Quebec, the établissement is the legal entity. For all other jurisdictions, the regional health authority is considered the legal entity.

Result Updates
Update Frequency

Every year

Indicator Results

Web Tool:
Your Health System: In Depth
URL:
Accessing Indicator Results on Your Health System: In Depth

Updates

Not applicable

Quality Statement
Caveats and Limitations

The indicator is calculated at the legal entity level. For most jurisdictions, this is the health region. However, for Ontario and Yukon, the legal entity is the hospital, and for Quebec, the établissement is the legal entity.

Trending Issues

In Alberta, the health regions merged in 2009 to become one legal entity, affecting the calculation of this indicator.

Comments

Not applicable