Idle theatre time is not free. It is cost with nothing to absorb it.
The most expensive resources in a hospital, theatres, scanners, specialist staff, cost the same whether they are used or not. TDABC sets capacity cost rates against practical capacity, so the gap between what you pay for and what you use stops hiding inside a blended average and shows up as a number you can act on.
Cost and Profitability Consulting · 150+ models since 2010 · TDABC
Hospital capacity is costed against practical capacity, taken at 80 to 85 percent of theoretical, never 100. Unused capacity then surfaces as a measurable cost: one A&E supply-demand study found utilisation under three-quarters, leaving roughly a quarter of capacity untapped; in another, a dedicated surgical-linen technician was occupied only around 13 percent of the time. TDABC prices idle capacity so it can be redeployed or removed, rather than buried in overhead.
Cost against the wrong capacity and the idle vanishes.
Every capacity cost rate has a denominator. Use theoretical capacity, every minute on the calendar, and the rate comes out too low, because no theatre or scanner runs flat out. The honest denominator is practical capacity, 80 to 85 percent of theoretical. The difference between practical capacity and actual use is the cost of idle resource, and unless it is reported it hides inside product cost, making every procedure that touches an under-used theatre look more profitable than it is.
PRACTICAL CAPACITY VS ACTUAL USE
Illustrative. The gap between practical capacity and actual use is unpriced cost. TDABC reports it by resource, an under-used A&E, a specialist role occupied a fraction of the time, so it can be managed.
Once idle is a number, it can be managed.
TDABC reports idle capacity by theatre, scanner, ward or role, and that figure drives scheduling, staffing and investment decisions: redeploy the under-used technician, fill the A&E utilisation gap, or scale a resource down. It is the same capacity-cost discipline used across sectors, applied where the assets are among the most expensive in any industry. Our dialysis-unit case study is a worked example of pricing capacity honestly on a real unit.
Set practical capacity
80 to 85 percent of theoretical for each theatre, scanner, ward and role. The honest base for every rate.
Measure actual use
The minutes each resource actually delivered. The gap to practical capacity is the idle cost.
Report it by resource
Idle is rarely uniform. One theatre runs hot; another sits half-empty. The model shows which.
Redeploy, fill or scale
Move work to fill the gap, redeploy the under-used role, or right-size the resource, each on a number.
Frequently asked questions
- How do you cost unused capacity in a hospital?
- Set the capacity cost rate against practical capacity, taken at 80 to 85 percent of theoretical, never 100. The gap between practical capacity and actual use is the cost of idle resource, and TDABC reports it by theatre, scanner, ward or role, so it can be redeployed or removed rather than buried in overhead.
- Why does theatre utilisation matter to profitability?
- Theatres, scanners and specialist staff cost the same whether used or not. Low utilisation spreads a high fixed cost over fewer cases, raising the real cost of every procedure. A theatre costed at 100 percent utilisation looks cheaper per minute than it is, so every procedure that uses it looks more profitable than it is.
- Where does the margin hide in capacity?
- In the denominator. Cost capacity against theoretical rather than practical and the idle time disappears into the rate; cost it against practical capacity and the idle time appears as what it is, unabsorbed cost waiting to be managed through scheduling, staffing or investment decisions.
Put a number on the capacity you are not using.
The Profit Check needs no data upload. It points to where idle capacity is most likely hiding in your cost, and what filling or removing it is worth.
- Duration
- 12 to 15 minutes
- You receive
- Score, 7 dimensions, sector benchmark
- Price
- Free, no email needed
Proof
A dialysis unit. A €349K deficit made visible, then cut to €52K. Published in the APDH hospital magazine, not a marketing claim.
Read the case study →Who you would be talking to
Miguel Guimarães, Founding Partner
Cost and profitability practitioner for 25+ years. Lectured alongside Professor Robert S. Kaplan at the CFO conference in Amsterdam (2009).
Call +351 910 313 731
