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Using activity-based costing to guide strategic decision making.

Activity-based costing (ABC) is not widely used in the healthcare industry. Some healthcare provider organizations are considering ABC, however, because of its potential to improve resource management and thereby maximize efficiency. ABC supports better pricing practices through more accurate costing and can be used to identify underutilized resources as well as associated costs that can be reduced. ABC can be a useful tool for determining the cost of unused capacity and for making strategic management decisions that will reduce costs.