Objective
Traditional hospital accounting fails to provide an accurate cost of complex surgical care. Here we describe the application of time‐driven activity‐based costing (TDABC) to characterize ...costs of head and neck oncologic procedures involving free tissue transfer.
Study Design
Retrospective cohort study.
Setting
Single tertiary academic medical center.
Methods
An analysis of head and neck oncologic procedures involving microvascular free flap reconstruction from 2018 to 2020 (n = 485) was performed using TDABC methodology to measure cost across operative case and postoperative admission, using quantity of time and cost per unit of each resource to characterize resource utilization. Univariate and generalized linear mixed models were used to examine associations between patient and hospital characteristics and cost of care delivery.
Results
The total cost of care delivery was $41,905.77 ± 21,870.27 with operating room (OR) supplies accounting for only 10% of the total cost. Multivariable analyses identified significant cost drivers including operative time, postoperative length of stay, number of return trips to the OR, postoperative complication, number of free flaps performed, and patient transfer from another hospital or via emergency department admission (P < .05).
Conclusion
Operative time and postoperative length of stay, but not operative supplies, were primary drivers of cost of care for head and neck oncology cases involving free tissue transfer. TDABC offers granular cost characterization to inform cost optimization through unused capacity identification and postoperative admission efficiencies.
Using time-driven activity-based costing (TDABC), a novel cost calculation method that more accurately reflects true resource utilization in healthcare, we sought to compare the total facility costs ...across different body mass index (BMI) groups following total joint arthroplasty (TJA).
The study consisted of 13,806 TJAs (7,340 TKAs and 6,466 THAs) performed between 2019 and 2023. The TDABC data from an analytics platform was employed to depict total facility costs, comprising personnel and supply costs. For the analysis, patients were stratified into four BMI categories: < 30, 30 to < 35, 35 to < 40, and ≥ 40. Multivariable regression was used to determine the independent effect of BMI on facility costs.
When indexed to patients who had BMI < 30, elevated BMI categories (30 to < 35, 35 to <40, and ≥ 40) were associated with higher total personnel costs (TKA 1.03x versus 1.07x versus 1.13x, P < 0.001; THA 1.00x versus 1.08x versus 1.08x, P < 0.001), and total supply costs (TKA 1.01x versus 1.04x versus 1.04x, P < 0.001; THA 1.01x versus 1.02x versus 1.03x, P = 0.007). Total facility costs in TJAs were significantly greater in higher BMI categories (TKA 1.02x versus 1.05x versus 1.08x, P < 0.001; THA 1.01x vs. 1.05x vs. 1.05x, P < 0.001). Notably, when incorporating adjustments for demographics and comorbidities, BMI values of 35, 40, and 45 relative to BMI of 25, exhibit a significant association with a 2, 3, and 5% increase in total facility cost for TKAs and a 3, 5, and 7% increase for THAs.
Using TDABC methodology, this study found that overall facility costs of TJAs increase with BMI. The present study provides patient-level cost insights, indicating the potential need for reassessment of physician compensation models in this population. Further studies may facilitate the development of risk-adjusted procedural codes and compensation models for public and private payors.
Time-Driven Activity-Based Costing (TDABC) systems use time inputs and distinguish between the cost of resource usage and the cost of unused capacity to provide accurate cost information. ...Importantly, TDABC produces aggregate signals of unused capacity at the department level, which offers the potential for superiors to assess misreporting or slack creation during budgeting without knowing which subordinates contributed to the slack. In a multi-agent participative budgeting experiment, we examine the impact of two capacity reporting conditions against a condition where capacity reporting is absent. When superiors receive an aggregate signal of unused capacity and subordinates have no discretion over cost allocation input parameters, misreporting of cost budgets decreases compared to when capacity reporting is absent. However, the benefits of capacity reporting on misreporting largely vanish when subordinates have discretion over the inputs allowing them to hide their unused capacity. When discretion is absent, subordinates anticipate peers to reduce misreporting to avoid the superior's rejection of their aggregate proposal. Yet, discretion over the inputs changes subordinates' anticipation in that they expect others to misreport and hide unused capacity to appear honest. Costing system designers should thus be aware that giving employees discretion over time inputs can offset the decision-making benefits of TDABC.
Implementation of value-based initiatives depends on cost-assessment methods that can provide high-quality cost information. Time-driven activity-based costing (TDABC) is increasingly being used to ...solve the cost-information gap. This study aimed to review the use of the TDABC methodology in real-world settings and to estimate its impact on the value-based healthcare concept for inpatient management.
This systematic review was conducted by screening PubMed/MEDLINE and Scopus databases following Preferred Reporting Items for Systematic Reviews and Meta-Analyses guidelines, including all studies up to August 2019. The use of TDABC for inpatient management was the main eligibility criterion. A qualitative approach was used to analyze the different methodological aspects of TDABC and its effective contribution to the implementation of value-based initiatives.
A total of 1066 studies were retrieved, and 26 full-text articles were selected for review. Only studies focused on surgical inpatient conditions were identified. Most of the studies reported the types of activities on a macrolevel. Professional and structural cost variables were usually assessed. Eighteen studies reported that TDABC contributed to value-based initiatives, especially cost-saving findings. TDABC was satisfactorily applied to achieve value-based contributions in all the studies that used the method for this purpose.
TDABC could be a strategy for increasing cost accuracy in real-world settings, and the method could help in the transition from fee-for-service to value-based systems. The results could provide a clearer idea of the costs, help with resource allocation and waste reduction, and might support clinicians and managers in increasing value in a more accurate and transparent way.
•The greatest contributions to value-based initiatives achieved by the use of time-driven activity-based costing (TDABC) are care-cycle optimization throughout the care trajectory and the identification of care benchmarks that can facilitate health system improvement opportunities.•TDABC could be a strategy to increase cost accuracy in real-world settings, and it could help in the transition from fee-for-service to value-based systems through its capability to contribute to cost savings.•In a healthcare system that is continually marked by extensive waste, the application of innovative methods that contribute to the redesign of healthcare services delivery to make them more effective is necessary.•The health system can benefit from using cost management methods such as TDABC, because opportunities to facilitate patients’ access to the healthcare system are more effectively and safely achieved through the redesign of patients’ course of care trajectory.
Highlights • TDABC helps to address the challenge of costing conditions in health care. • TDABC applications varied but generally reflected the seven-step model. • Future TDABC Applications should ...consider the methodological recommendations in this review. • TDABC is yet to overcome challenges with allocating support department costs. • TDABC’s ability to inform bundled payment reimbursement is not well established.
Objective
This study aims to measure the costs of treating obstructive sleep apnea (OSA) in children with an adenotonsillectomy using time‐driven activity‐based costing (TDABC) and explore how this ...differs from cost estimates using traditional forms of hospital accounting.
Study Design
Prospective observational study.
Methods
A total of 53 pediatric patients with symptoms of OSA or sleep‐related breathing disorder were followed from their initial appointment through surgery to their postoperative visit at an academic medical center. Personnel timing and overhead costs were calculated for TDABC analysis.
Results
Treating OSA with an adenotonsillectomy in a pediatric patient costs $1,192.61. On average, outpatient adenotonsillectomy costs $957.74 (80.31%); $412.18 of this cost ($4.89 per minute) was attributed to the overhead cost of the operating room. Traditional hospital accounting estimates outpatient adenotonsillectomy costs $2,987, with overhead attributing $11.27 per minute or $949.23 per case. 57% ($6.38 per minute) of the hospital's estimate for overhead was actually for equipment and implants used by different hospital services and not for equipment used in adenotonsillectomies.
Conclusion
Through TDABC, we were able to highlight how traditional RVU‐based hospital accounting systems apportion all overhead costs, including items such as orthopedic implants, evenly across specialties, thus increasing the perceived cost of equipment‐light procedures such as adenotonsillectomies. We suspect that providers who perform a TDABC analysis at their home institution or practice will find their own unique insights, which will help them understand and control the different components of healthcare costs.
Level of Evidence
2
Laryngoscope, 129:1347–1353, 2019
Objectives/Hypothesis
Providing high‐value healthcare to patients is increasingly becoming an objective for providers including those at multidisciplinary aerodigestive centers. Measuring value has ...two components: 1) identify relevant health outcomes and 2) determine relevant treatment costs. Via their inherent structure, multidisciplinary care units consolidate care for complex patients. However, their potential impact on decreasing healthcare costs is less clear. The goal of this study was to estimate the potential cost savings of treating patients with laryngeal clefts at multidisciplinary aerodigestive centers.
Study Design
Retrospective chart review.
Methods
Time‐driven activity‐based costing was used to estimate the cost of care for patients with laryngeal cleft seen between 2008 and 2013 at the Massachusetts Eye and Ear Infirmary Pediatric Aerodigestive Center. Retrospective chart review was performed to identify clinic utilization by patients as well as patient diet outcomes after treatment. Patients were stratified into neurologically complex and neurologically noncomplex groups.
Results
The cost of care for patients requiring surgical intervention was five and three times as expensive of the cost of care for patients not requiring surgery for neurologically noncomplex and complex patients, respectively. Following treatment, 50% and 55% of complex and noncomplex patients returned to normal diet, whereas 83% and 87% of patients experienced improved diets, respectively. Additionally, multidisciplinary team‐based care for children with laryngeal clefts potentially achieves 20% to 40% cost savings.
Conclusions
These findings demonstrate how time‐driven activity‐based costing can be used to estimate and compare patient costs in multidisciplinary aerodigestive centers.
Level of Evidence
2c. Laryngoscope, 127:2152–2158, 2017
Although studies have compared the claims costs of simultaneous and staged bilateral total hip arthroplasty (THA) and total knee arthroplasty (TKA), whether a simultaneous procedure is cost-effective ...to the facility remains unknown. This study aimed to compare facility costs and perioperative outcomes of simultaneous vs staged bilateral THA and TKA.
We reviewed a consecutive series of 560 bilateral THA (170 staged and 220 simultaneous) and 777 bilateral TKA (163 staged and 451 simultaneous). Itemized facility costs were calculated using time-driven activity-based costing. Ninety-day outcomes were compared. Margin was standardized to unadjusted Medicare Diagnosis Related Group payments (simultaneous, $18,523; staged, $22,386). Multivariate regression was used to determine the independent association between costs/clinical outcomes and treatment strategy (staged vs simultaneous).
Simultaneous bilateral patients had significantly lower personnel, supply, and total facility costs compared with staged patients with no difference in 90-day complications between the groups. Multivariate analyses showed that overall facility costs were $1,210 lower in simultaneous bilateral THA (P < .001) and $704 lower in TKA (P < .001). Despite lower costs, margin for the facility was lower in the simultaneous group ($6,569 vs $9,225 for THA; $6,718 vs $10,067 for TKA; P < .001).
Simultaneous bilateral TKA and THA had lower facility costs than staged procedures because of savings associated with a single hospitalization. With the increased Medicare reimbursement for 2 unilateral procedures, however, margin was higher for staged procedures. In the era of value-based care, policymakers should not penalize facilities for performing cost-effective simultaneous bilateral arthroplasty in appropriately selected patients.
Background
Stem Cell Mobilization and Collection Unit at Istituto Europeo di Oncologia (IEO; Milan, Lombardia) provides extracorporeal photopheresis (ECP) therapy to treat graft‐vs‐host disease ...(GvHD) using offline procedures. ECP can be administered via an integrated single device (online procedure). Total cost of performing ECP at IEO vs an integrated device was assessed using a micro‐costing approach.
Methods
Ten offline ECP procedures for GvHD were monitored using Time‐Driven Activity‐Based Costing methodology, which utilized costs of resources, and time spent by patients/healthcare personnel with each resource. Details of ECP steps were recorded (pre−/post‐treatment clinical evaluations, biological sampling, cannulation, apheresis, irradiation, reinfusion time). Time and cost comparisons between offline (combination of equipment/devices) and online technologies (THERAKOS™ CELLEX™ Photopheresis System) were performed. Cost variables: consumables, personnel, equipment, and laboratory tests. Personnel costs for online procedures were calculated using published time estimates and IEO hourly rates. Costs recorded in 2018 euros.
Results
Median duration of IEO offline ECP procedures (296 minutes) was greater than that reported for CELLEX ECP delivery (120 minutes). Total cost of offline ECP (€1134.57 $1314.57/procedure) was greater than that reported for online delivery (€1063.95 $1232.74/procedure). IEO performs ~84 ECP procedures/y, which would require ~412 hours/y vs 168 hours/y for online procedures; suggesting €5932.08 $6873.72/y savings with online procedures.
Conclusions
This assessment highlights potential resource time savings with online procedures. Time saved could allow increased activity with the same resources, at a department level. Potential non‐monetary benefits include reduced time burden on patients, increased availability of hospital staff and improved patient safety.
Implementation strategies increase the adoption of evidence-based practices, but they require resources. Although information about implementation costs is critical for decision-makers with budget ...constraints, cost information is not typically reported in the literature. This is at least partly due to a need for clearly defined, standardized costing methods that can be integrated into implementation effectiveness evaluation efforts.
We present a pragmatic approach to systematically estimating detailed, specific resource use and costs of implementation strategies that combine time-driven activity-based costing (TDABC), a business accounting method based on process mapping and known for its practicality, with a leading implementation science framework developed by Proctor and colleagues, which guides specification and reporting of implementation strategies. We illustrate the application of this method using a case study with synthetic data.
This step-by-step method produces a clear map of the implementation process by specifying the names, actions, actors, and temporality of each implementation strategy; determining the frequency and duration of each action associated with individual strategies; and assigning a dollar value to the resources that each action consumes. The method provides transparent and granular cost estimation, allowing a cost comparison of different implementation strategies. The resulting data allow researchers and stakeholders to understand how specific components of an implementation strategy influence its overall cost.
TDABC can serve as a pragmatic method for estimating resource use and costs associated with distinct implementation strategies and their individual components. Our use of the Proctor framework for the process mapping stage of the TDABC provides a way to incorporate cost estimation into implementation evaluation and may reduce the burden associated with economic evaluations in implementation science.
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