Time-Driven Activity-Based Costing Provides a Lower and More Accurate Assessment of Costs in the Field of Orthopaedic Surgery Compared With Traditional Accounting Methods

Episode-of-care costs of total knee arthroplasty: Outpatient versus inpatient postoperative care protocol

BACKGROUND

Total knee arthroplasty (TKA) is the most commonly performed joint replacement procedure in North America. Few studies have successfully evaluated the episode-of-care cost (EOCC) of common elective orthopedic procedures using an activity-based costing (ABC) framework. The objective of this study is to compare the EOCC of same-day discharge versus inpatient TKA using an activity-based costing methodology.

METHODS

An observational case-control study was conducted comparing the EOCC of 25 consecutive patients who underwent same-day discharge (SDD) TKA and 25 consecutive patients who underwent same-day admission (SDA) TKA at an academic center. The EOCC was generated using an ABC framework.

RESULTS

The median total EOCC for outpatient TKA was $7,243.26 CAD (IQR=614.12), while the median EOCC in the inpatient group was $8,303.94 CAD (IQR=1,157.77). The costs incurred secondary to the hospital admission were the main driver of the increased cost for inpatients. The mean length of stay for admitted patients was 2.45 days (SD=1,52). Patients in the outpatient group were younger (p < 0.01) and had a lower mean Charlson Comorbidity Index group (p = 0.01). There was no significant difference in gender, BMI, ASA scores, and complication rates between the two groups.

CONCLUSION

Through the application of an ABC framework, this value-based healthcare study demonstrates that outpatient procedures are a cost-effective approach to knee arthroplasty. Our findings demonstrate that the total cost of outpatient TKA was on average 15% ($1,060 CAD) lower than the cost of TKA with the standard inpatient postoperative care protocol.

Direct Variable Cost Comparison of Endoscopic Versus Open Carpal Tunnel Release: A Time-Driven Activity-Based Costing Analysis

INTRODUCTION

To improve the delivery of value-based health care, a deeper understanding of the cost drivers in hand surgery is warranted. Time-driven activity-based costing (TDABC) offers a more accurate estimation of resource utilization compared with top-down accounting methods. This study used TDABC to compare the facility costs of open carpal tunnel release (OCTR) and endoscopic carpal tunnel release (ECTR).

METHODS

We identified 845 consecutive, unilateral carpal tunnel release (516 open, 329 endoscopic) surgeries performed at an orthopaedic specialty hospital between 2015 and 2021. Itemized facility costs were calculated using a TDABC algorithm. Patient demographics, comorbidities, surgical characteristics, and itemized costs were compared between OCTR and ECTR. Multivariate regression was used to determine the independent effect of endoscopic surgery on true facility costs.

RESULTS

Total facility costs were $352 higher in ECTR compared with OCTR ($882 versus $530). ECTR cases had higher personnel costs ($499 versus $420), likely because of longer surgical time (15 versus 11 minutes) and total operating room time (35 versus 27 minutes). ECTR cases also had higher supply costs ($383 versus $110). Controlling for demographics and comorbidities, ECTR was associated with an increase in personnel costs of $35.74 (95% CI, $26.32 to $45.15), supply costs of $230.28 (95% CI, $205.17 to $255.39), and total facility costs of $265.99 (95% CI, $237.01 to $294.97) per case.

DISCUSSION

Using TDABC, ECTR was 66% more costly to the facility compared with OCTR. To reduce the costs related to endoscopic surgery, efforts to decrease surgical time and negotiate lower ECTR-specific supply costs are warranted.

LEVEL OF EVIDENCE

Economic and Decision Analysis Level II.

Predictors of Episode-of-Care Costs for Ankle Fractures

Ankle fractures are one of the most resource-consuming traumatic orthopedic injuries. Few studies have successfully evaluated the episode-of-care costs (EOCC) of common traumatic orthopedic injuries. The objective of this study was to determine the EOCC associated with the surgical management of ankle fractures. A retrospective cohort study of 105 consecutive patients who underwent open reduction internal fixation of an isolated ankle fracture at a Canadian Level-1 trauma center was conducted. Episode-of-care costs were generated using an activity-based costing framework. The median global episode-of-care cost for ankle fracture surgeries performed at the studied institution was $3,487 CAD [IQR 880] ($2,685 USD [IQR 616]). Patients aged 60 to 90 years had a significantly higher median EOCC than younger patients (p = .01). Supination-adduction injuries had a significantly higher median EOCC than other injury patterns (p = .01). The median EOCC for patients who underwent surgery within 10 days of their injury ($3,347 CAD [582], $2,577 USD [448]) was significantly lower than the cost for patients who had their surgery delayed 10 days or more after the injury ($3,634 CAD [776], $2,798 USD [598]) (p = .03). Patient sex, anesthesia type, ASA score and surgeon's fellowship training did not affect the EOCC. This study provides valuable data on predictors of EOCC in the surgical management of ankle fractures. Delaying simple ankle fracture cases due to operating time constraints can increase the total cost and burden of these fractures on the healthcare system. In addition, this study provides a framework for future episode-of-care cost analysis studies in orthopedic surgery.

Variation in the Cost of Hip Arthroscopy for Labral Pathological Conditions: A Time-Driven Activity-Based Costing Analysis

BACKGROUND

Despite growing interest in delivering high-value orthopaedic care, the costs associated with hip arthroscopy remain poorly understood. By employing time-driven activity-based costing (TDABC), we aimed to characterize the cost composition of hip arthroscopy for labral pathological conditions and to identify factors that drive variation in cost.

METHODS

Using TDABC, we measured the costs of 890 outpatient hip arthroscopy procedures for labral pathological conditions across 5 surgeons at 4 surgery centers from 2015 to 2022. All patients were ≥18 years old and were treated by surgeons who each performed ≥20 surgeries during the study period. Costs were normalized to protect the confidentiality of internal hospital cost data. Descriptive analyses and multivariable linear regression were performed to identify factors underlying cost variation.

RESULTS

The study sample consisted of 515 women (57.9%) and 375 men (42.1%), with a mean age (and standard deviation) of 37.1 ± 12.7 years. Most of the procedures were performed in patients who were White (90.6%) or not Hispanic (93.4%). The normalized total cost of hip arthroscopy per procedure ranged from 43.4 to 203.7 (mean, 100 ± 24.2). Of the 3 phases of the care cycle, the intraoperative phase was identified as the largest generator of cost (>90%). On average, supply costs accounted for 48.8% of total costs, whereas labor costs accounted for 51.2%. A 2.5-fold variation between the 10th and 90th percentiles for total cost was attributed to supplies, which was greater than the 1.8-fold variation attributed to labor. Variation in total costs was most effectively explained by the labral management method (partial R2 = 0.332), operating surgeon (partial R2 = 0.326), osteoplasty type (partial R2 = 0.087), and surgery center (partial R2 = 0.086). Male gender (p < 0.001) and younger age (p = 0.032) were also associated with significantly increased costs. Finally, data trends revealed a shift toward labral preservation techniques over debridement during the study period (with the rate of such techniques increasing from 77.8% to 93.2%; Ptrend = 0.0039) and a strong correlation between later operative year and increased supply costs, labor costs, and operative time (p < 0.001 for each).

CONCLUSIONS

By applying TDABC to outpatient hip arthroscopy, we identified wide patient-to-patient cost variation that was most effectively explained by the method of labral management, the operating surgeon, the osteoplasty type, and the surgery center. Given current procedural coding trends, declining reimbursements, and rising health-care costs, these insights may enable stakeholders to design bundled payment structures that better align reimbursements with costs.

LEVEL OF EVIDENCE

Economic and Decision Analysis Level IV. See Instructions for Authors for a complete description of levels of evidence.

Time-Driven Activity-Based Costing Analysis Identifies Use of Consumables and Operating Room Time as Factors Associated With Increased Cost of Outpatient Primary Hip Arthroscopic Labral Repair

PURPOSE

To use time-driven, activity-based costing (TDABC) methodology to investigate drivers of cost variation and to elucidate preoperative and intraoperative factors associated with increased cost of outpatient arthroscopic hip labral repair.

METHODS

A retrospective analysis of data from January 2020 to October 2021 was performed. Patients undergoing primary hip arthroscopy for labral repair in the outpatient setting were included. Indexed TDABC data from Avant-garde Health's analytics platform were used to represent cost-of-care breakdowns. Patients in the top decile of cost were defined as high cost, and cost category variance was determined as a percent increase between high and low cost. Analyses tested for associations between preoperative and perioperative factors with total cost. Surgical procedures performed concomitantly to labral repair were included in subanalyses.

RESULTS

Data from 151 patients were analyzed. Consumables made up 61% of total outpatient cost with surgical personnel costs (30%) being the second largest category. The average total cost was 19% higher for patients in the top decile of cost compared to the remainder of the cohort. Factors contributing to this difference were implants (36% higher), surgical personnel (20% higher), and operating room (OR) consumables (15% higher). Multivariate linear regression modeling indicated that OR time (Standardized β = 0.504; P < .001) and anchor quantity (standardized β = 0.443; P < .001) were significant predictors of increased cost. Femoroplasty (Unstandardized β = 15.274; P = .010), chondroplasty (Unstandardized β = 8.860; P = .009), excision of os acetabuli (unstandardized β = 13.619; P = .041), and trochanteric bursectomy (Unstandardized β = 21.176; P = .009) were also all independently associated with increasing operating time.

CONCLUSIONS

TDABC analysis showed that OR consumables and implants were the largest drivers of cost for the procedure. OR time was also shown to be a significant predictor of increased costs.

LEVEL OF EVIDENCE

Level IV, economic analysis.

Monthly multidisciplinary complex spine conference: a cost-analysis utilizing time-driven activity-based costing

PURPOSE

To understand costs and provide an initial framework associated with conference implementation as it pertains to complication prevention.

METHODS

Team members' time spent on conference preparation, presentation, and follow-up tasks was recorded and averaged to determine the time required to prepare and present one patient. Using 2022 hourly wage rates based on our urban hospital setting, wage values were calculated for each personnel type and applied to their time spent. The total cost of the conference was annualized and calculated from the time spent in the three phases of the conference multiplied by the wage rate. Published data on complication rates and associated costs before and after conference implementation were used to calculate total cost reduction.

RESULTS

With 3 active spine surgeons and 108 patients per year, the total time investment was 104.04 min per patient, costing $21,791 annually. Total RN equivalent value per patient was 5.25 for all three phases. Using a historical model, this multidisciplinary approach for adult spinal deformity reduced complications by 51% at 30 days, resulting in cost savings of $418,518 per year. Thus, the model demonstrates that implementation of this approach resulted in a potential total savings of $396,726/year.

CONCLUSION

Implementing a cost-saving tool for managing complex spinal disorders is a responsibility of the spine team, who should lead a multidisciplinary conference. The combination of TDABC and lean methodology can effectively demonstrate the variable costs associated with this multidisciplinary effort and models provide evidence of potential cost-savings when applied to a multidisciplinary adult spinal deformity conference. These findings should encourage clinicians and administrators to allocate resources to improve patient care by reducing complications and costs.

Are Orthopaedic Trauma Surgeons Appropriately Compensated for Treating Acetabular Fractures? An Analysis of Operative Times and Relative Value Units

OBJECTIVES

To evaluate the work relative value units (RVUs) attributed per minute of operative time (wRVU/min) in fixation of acetabular fractures, evaluate surgical factors that influence wRVU/min, and compare wRVU/min with other procedures.

METHODS

DESIGN

Retrospective.

SETTING

Level 1 academic center.

PATIENT SELECTION CRITERIA

Two hundred fifty-one operative acetabular fractures (62 A, B, C) from 2015 to 2021.

OUTCOME MEASURES AND COMPARISONS

Work relative value unit per minute of operative time for each acetabular current procedural terminology (CPT) code. Surgical approach, patient positioning, total room time, and surgeon experience were collected. Comparison wRVU/min were collected from the literature.

RESULTS

The mean wRVU per surgical minute for each CPT code was (1) CPT 27226 (isolated wall fracture): 0.091 wRVU/min, (2) CPT 27227 (isolated column or transverse fracture): 0.120 wRVU/min, and (3) CPT 27228 (associated fracture types): 0.120 wRVU/min. Of fractures with single approaches, anterior approaches generated the least wRVU/min (0.091 wRVU/min, P = 0.0001). Average nonsurgical room time was 82.1 minutes. Surgeon experience ranged from 3 to 26 years with operative time decreasing as surgeon experience increased ( P = 0.03). As a comparison, the wRVU/min for primary and revision hip arthroplasty have been reported as 0.26 and 0.249 wRVU/min, respectively.

CONCLUSIONS

The wRVUs allocated per minute of operative time for acetabular fractures is less than half of other reported hip procedures and lowest for isolated wall fractures. There was a significant amount of nonsurgical room time that should be accounted for in compensation models. This information should be used to ensure that orthopaedic trauma surgeons are being appropriately supported for managing these fractures.

LEVEL OF EVIDENCE

Economic Level IV. See Instructions for Authors for a complete description of levels of evidence.

Do Orthopaedic Virtual Clinic Visits Demonstrate Cost and Time Efficiencies Compared With In-person Visits?

BACKGROUND

There are numerous reasons for the increased use of telemedicine in orthopaedic surgery, one of which is the perception that virtual visits are more cost-effective than in-person visits. However, to our knowledge, no studies have compared the cost and time investment of virtual versus in-person visits using the time-driven activity-based costing (TDABC) method. Unlike methods that estimate cost based on charges for services rendered, TDABC provides a more precise measurement of costs, which is essential for assessing cost-effective innovations and moving to value-based healthcare.

QUESTIONS/PURPOSES

(1) Are virtual visits less costly than analogous in-person visits, as measured by TDABC? (2) Does TDABC yield cost estimates that are lower or higher than the ratio of costs to charges (RCC), which is a simple, frequently used costing method? (3) Do the total time commitments of healthcare personnel, and that of the surgeon specifically, vary between the virtual and in-person settings?

METHODS

Patients for this prospective, observational study were recruited from the practices of the highest-volume virtual-visit surgeons of three subspecialties (joints, hand, and sports) in a multihospital, tertiary-care academic institution in a metropolitan area in the Midwestern United States. Each surgeon had at least 10 years of clinical practice. Between June 2021 and September 2021, we analyzed both in-person and virtual return visits with patients who had an established relationship with the surgeon, because this represented the most frequent type of virtual visits and enabled a direct comparison between the two settings. New patients were not included in the study because of the limited availability of new-patient virtual visits; such patients often benefit from in-person physical examinations and on-site imaging. Additionally, patients seen for routine postoperative care were excluded because they were primarily seen in person by a physician assistant. Data were acquired during this period until 90 in-person and 90 virtual visits were collected according to selection criteria; no patients were lost to follow-up. Distinct process maps, which represent the steps involved in a clinic visit used to measure healthcare personnel time invested, were constructed for in-person and virtual clinic visits and used to compare total personnel and surgeon time spent. To calculate TDABC-derived costs, time allocated by personnel to complete each step was measured and used to calculate cost based on each personnel member's yearly salary. From the accounting department of our hospital, we acquired RCC cost data according to the level of service for a return visit.

RESULTS

The total median cost, as measured by TDABC, was USD 127 (IQR USD 111 to 163) for an in-person visit and USD 140 (IQR USD 113 to 205) for a virtual visit (median difference USD 13; p = 0.16). RCC overestimated TDABC-calculated direct variable cost in five of six service levels (in-person levels 3, 4, and 5 and virtual levels 3 and 5) by a range of USD 25 to 88. Additionally, we found that virtual visits consumed 4 minutes less of total personnel time (in-person: 17 minutes [IQR 13.5 to 23.5 minutes], virtual: 13 minutes [IQR 11 to 19 minutes]; p < 0.001); however, this difference in personnel time did not equate to cost savings because surgeons spent 2 minutes longer on virtual visit activities than they did on in-person activities (in-person: 6 minutes [IQR 4.5 to 9.5 minutes], virtual: 8 minutes [IQR 5.5 to 13 minutes]; p = 0.003).

CONCLUSION

Orthopaedic virtual visits did not deliver cost savings compared with in-person visits because surgeons spent more time on virtual visits and participated in virtual visits at the clinical site. Additionally, as anticipated, RCC overestimated costs as calculated by TDABC. These findings suggest that cost is not a primary advantage of transitioning to virtual visits, and that factors such as patient preference and satisfaction should be considered instead.

LEVEL OF EVIDENCE

Level II, economic and decision analysis.

Determinants of High Facility Costs in Total Joint Arthroplasty Patients: A Time-driven Activity-based Costing Analysis

INTRODUCTION

Although several studies identify risk factors for high-cost patients in an episode of care for total hip (THA) and knee arthroplasty (TKA), few have looked at cost outliers from a facility perspective. The purpose of this study was to use time-driven activity-based costing (TDABC) to identify characteristics of high-cost patients.

METHODS

We reviewed a consecutive series of primary THA and TKA patients by 22 different surgeons at two hospitals between 2015 and 2020. Facility costs were calculated using a TDABC algorithm for their entire hospital stay. Patients in the top decile of costs were considered to be high-cost patients. Multivariate regression was done to identify independent patient factors that predicted high costs.

RESULTS

Of the 8,647 patients we identified, 60.5% underwent THA and 39.5% underwent TKA. Implant purchase price accounted for 49.5% of total inpatient costs (mean $2,880), followed by intraoperative (15.9%, mean $925) and postoperative personnel costs (16.8%, mean $980). Implant price demonstrated the highest variation between high-cost and low-cost groups (4.4 times). Patient-related factors associated with high costs were female sex (OR = 1.332), Hispanic ethnicity (OR = 1.409), American Society of Anesthesiology score (OR = 1.658), need for transfusion (OR = 2.008), and lower preoperative HOOS/KOOS Jr (OR = 1.009).

CONCLUSION

This study identifies several variables for patients at risk to have high facility costs after primary THA and TKA. From the hospital's perspective, efforts to reduce implant purchase prices may translate into substantial cost savings. At the patient level, multidisciplinary initiatives to optimize medical comorbidities, decrease transfusion risk, and control medication expenses in high-risk patients may narrow the existing variation in costs.

Prospective Evaluation of the Cost of Performing Breast Imaging Examinations Using a Time-Driven Activity-Based Costing Method: A Single-Center Study

OBJECTIVE

Measuring the cost of performing breast imaging is difficult in healthcare systems. The purpose of our study was to evaluate this cost using time-driven activity-based costing (TDABC) and to evaluate cost drivers for different exams.

METHODS

An IRB-approved, single-center prospective study was performed on 80 female patients presenting for breast screening, diagnostic or biopsy exams from July 2020 to April 2021. Using TDABC, data were collected for each exam type. Included were full-field digital mammography (FFDM), digital breast tomosynthesis (DBT), contrast-enhanced mammography (CEM), US and MRI exams, and stereotactic, US-guided and MRI-guided biopsies. For each exam type, mean cost and relative contributions of equipment, personnel and supplies were calculated.

RESULTS

Screening MRI, CEM, US, DBT, and FFDM costs were $249, $120, $83, $28, and $30. Personnel was the major contributor to cost (60.0%-87.0%) for all screening exams except MRI where equipment was the major contributor (62.2%). Diagnostic MRI, CEM, US, and FFDM costs were $241, $123, $70, and $43. Personnel was the major contributor to cost (60.5%-88.6%) for all diagnostic exams except MRI where equipment was the major contributor (61.8%). Costs of MRI-guided, stereotactic and US-guided biopsy were $1611, $826, and $356. Supplies contributed 40.5%-49.8% and personnel contributed 30.7%-55.6% to the total cost of biopsies.

CONCLUSION

TDABC provides assessment of actual costs of performing breast imaging. Costs and contributors varied across screening, diagnostic and biopsy exams and modalities. Practices may consider this methodology in understanding costs and making changes directed at cost savings.

A Model for Evaluating Total Costs of Care and Cost Savings of Specialty Condition-Based Care for Hip and Knee Osteoarthritis in an Integrated Practice Unit

OBJECTIVES

The viability of specialty condition-based care via integrated practice units (IPUs) requires a comprehensive understanding of total costs of care. Our primary objective was to introduce a model to evaluate costs and potential costs savings using time-driven activity-based costing comparing IPU-based nonoperative management with traditional nonoperative management and IPU-based operative management with traditional operative management for hip and knee osteoarthritis (OA). Secondarily, we assess drivers of incremental cost differences between IPU-based care and traditional care. Finally, we model potential cost savings through diverting patients from traditional operative management to IPU-based nonoperative management.

METHODS

We developed a model to evaluate costs using time-driven activity-based costing for hip and knee OA care pathways within a musculoskeletal IPU compared with traditional care. We identified differences in costs and drivers of cost differences and developed a model to demonstrate potential cost savings through diverting patients from operative intervention.

RESULTS

Weighted average costs of IPU-based nonoperative management were lower than traditional nonoperative management and lower in IPU-based operative management than traditional operative management. Key drivers of incremental cost savings included care led by surgeons in partnership with associate providers, modified physical therapy programs with self-management, and judicious use of intra-articular injections. Substantial savings were modeled by diverting patients toward IPU-based nonoperative management.

CONCLUSIONS

Costing models involving musculoskeletal IPUs demonstrate favorable costs and cost savings compared with traditional management of hip or knee OA. More effective team-based care and utilization of evidence-based nonoperative strategies can drive the financial viability of these innovative care models.

Operating room efficiency after the implementation of MAKO robotic-assisted total knee arthroplasty

INTRODUCTION

The aim of this study was to examine if robotic-assisted total knee arthroplasty (RATKA) is cost- and time-effective in terms of implant stock and perioperative parameters, as optimizing perioperative efficiency may contribute to value-based care.

MATERIALS AND METHODS

Four hundred thirty-two consecutive patients who received primary total knee arthroplasties (TKAs) from May 2017 to March 2020 in a regional hospital were included in this study. Operating room time (OR time), surgical time, number of trays, insert thickness, and length of stay (LOS) were assessed and compared for a cohort group with navigation-assisted procedures to a group with robotic-assisted procedures (MAKO, Stryker, USA). Prediction of implant size was assessed for the robotic-assisted group. The Mann-Whitney U test was used for comparisons between groups when the normality assumption was not met. Categorical variables were assessed using the Fisher's exact test. p < 0.05 was considered statistically significant.

RESULTS

In the RATKA group, we noticed a significant mean reduction of 11 min in total OR time (p < 0.001), the use of thinner insert (p < 0.001), and a shorter mean length of stay of 1 day (p < 0.001). Compared to the navigation group, surgical time was not significantly longer, nor clinically relevant (0.238). In 76.9% of the robotic-assisted cases, the estimated implant size was equal to the final size and in all other cases, the preoperative implant size was oversized.

CONCLUSION

The introduction of the MAKO robotic-assisted total knee arthroplasty resulted in a gain in operating room time, a thinner and more predictable insert thickness, a shorter length of stay in hospital, and less instrumentation compared to navigation-assisted procedures. Level of evidence Level III, Retrospective cohort study.

Identifying High Direct Variable Costs of Open Carpal Tunnel Release Patients Using Time-Driven Activity-Based Costing

PURPOSE

To improve value in health care delivery, a deeper understanding of the cost drivers in hand surgery is necessary. Time-driven activity-based costing (TDABC) more accurately reflects true resource use compared with traditional accounting methods. This study used TDABC to explore the facility cost of carpal tunnel release and identify preoperative characteristics of high-cost patients.

METHODS

Using TDABC, we calculated the facility costs of 516 consecutive patients undergoing open carpal tunnel release at an orthopedic specialty hospital between 2015 and 2021. Patients in the top decile cost were defined as high-cost patients. Multivariable logistic regression was used to determine preoperative characteristics (age, sex, body mass index, race, ethnicity, Elixhauser comorbidity index, American Society of Anesthesiology score, preoperative Disabilities of the Arm, Shoulder and Hand score, Short-Form 12, and anesthesia type) independently associated with high-cost patients.

RESULTS

Surgery-related personnel costs were the main driver (38.0%) of total facility costs, followed by preoperative personnel costs (21.3%). There was a 1.8-fold variation in facility cost between patients in the 90th and 10th percentiles ($774.69 vs $431.35), with the widest cost variations belonging to medication costs ($17.67 vs $1.85; variation, 9.6-fold) and other supply costs ($213.56 vs $65.56; variation, 3.3-fold). Using multivariable regression, predictors of high cost were patient age and use of general anesthesia. Total facility costs correlated strongly with the total operating room time and incision to closure time.

CONCLUSIONS

Efforts to decrease operating room time may translate into reduced personnel costs and greater cost savings. Multidisciplinary initiatives to control medication expenses for patients at risk of high costs may narrow the existing variation in costs.

TYPE OF STUDY/LEVEL OF EVIDENCE

Economic and Decision Analysis II.

What Is the Inpatient Cost of Hip Replacement? A Time-Driven Activity Based Costing Pilot Study in an Italian Public Hospital

The emphasis on value-based payment models for primary total hip replacement (THA) results in a greater need for orthopaedic surgeons and hospitals to better understand actual costs and resource use. Time-Driven Activity-Based Costing (TDABC) is an innovative approach to measure expenses more accurately and address cost challenges. It estimates the quantity of time and the cost per unit of time of each resource (e.g., equipment and personnel) used across an episode of care. Our goal is to understand the true cost of a THA using the TDABC in an Italian public hospital and to comprehend how the adoption of this method might enhance the process of providing healthcare from an organizational and financial standpoint. During 2019, the main activities required for total hip replacement surgery, the operators involved, and the intraoperative consumables were identified. A process map was produced to identify the patient's concrete path during hospitalization and the length of stay was also recorded. The total inpatient cost of THA, net of all indirect costs normally included in a DRG-based reimbursement, was about EUR 6000. The observation of a total of 90 patients identified 2 main expense items: the prosthetic device alone represents 50.4% of the total cost, followed by the hospitalization, which constitutes 41.5%. TDABC has proven to be a precise method for determining the cost of the healthcare delivery process for THA, considering facilities, equipment, and staff employed. The process map made it possible to identify waste and redundancies. Surgeons should be aware that the choice of prosthetic device and that a lack of pre-planning for discharge can exponentially alter the hospital expenditure for a patient undergoing primary THA.

Cost and Cost Driver Analysis of Anterior Cruciate Ligament Reconstruction Using Time-Driven Activity-Based Costing: Bone-Tendon-Bone Autograft Versus Hamstring Autograft

As health care transitions toward value-based care, orthopaedics has started to implement time-driven activity-based costing (TDABC) to understand costs and cost drivers. TDABC has not previously been used to study cost drivers in anterior cruciate ligament reconstruction (ACLR). The purpose of this study was to use TDABC to (1) calculate bone-tendon-bone (BTB) and hamstring ACLR total costs of care and (2) evaluate the impact of graft choice and other factors on ACLR costs.

Methods

Data were collected from electronic medical records for primary ACLR from the institutional patient-reported outcome registry between 2009 and 2016 in 1 ambulatory surgery center. Patients receiving allograft, revision ACLR, or concomitant meniscal repair or ligament reconstruction were excluded. The total cost of care was determined using TDABC. Multivariate regression analysis was conducted between ACLR cost and group characteristics.

Results

A total of 328 patients were included; 211 (64.3%) received BTB autograft and 117 (35.7%) received hamstring autograft. The mean cost was $2,865.01 ± $263.45 (95% confidence interval: $2,829.26, $2,900.77) for BTB ACLR versus $3,377.44 ± $320.12 ($3,318.82, $3,436.05) for hamstring ACLR (p < 0.001). Operative time was 103.1 ± 25.1 (99.7, 106.5) minutes for BTB ACLR versus 113.1 ± 27.9 (108.0, 118.2) minutes for hamstring ACLR (p = 0.001). The total implant cost was $270.32 ± $97.08 ($257.15, $283.50) for BTB ACLR versus $587.36 ± $108.78 ($567.44, $607.28) for hamstring ACLR (p < 0.001). Hamstring graft (p = 0.006) and suspensory fixation on the femoral side (p = 0.011) were associated with increased costs.

Conclusions

The mean cost of care and operative time for BTB autograft ACLR are less than those for hamstring autograft ACLR. Operative time, implant choice, and graft choice were identified as modifiable cost drivers that can empower surgeons to manage primary ACLR costs while maximizing the value of the procedure.

Level of Evidence

Economic and Decision Analysis Level IV. See Instructions for Authors for a complete description of levels of evidence.

Time-Driven Activity-Based Costing Accurately Determines Bundle Cost for Rotator Cuff Repair

PURPOSE

The purpose of this study was to determine the cost of the episode of care for primary rotator cuff repair (RCR) from day of surgery to 90 days postoperatively using the time-driven activity-based costing (TDABC) method. The secondary purpose of this study was to identify the main drivers of cost for both phases of care.

METHODS

This retrospective case series study used the TDABC method to determine the bundled cost of care for an RCR. First, a process map of the RCR episode of care was constructed in order to determine drivers of fixed (i.e., rent, power), direct variable (i.e., healthcare personnel), and indirect costs (i.e., marketing, building maintenance). The study was performed at a Midwestern tertiary care medical system, and patients were included in the study if they underwent an RCR from January 2018 to January 2019 with at least 90 days of postoperative follow-up. In this article, all costs were included, but we did not account for fees to provider and professional groups.

RESULTS

The TDABC method calculated a cost of $10,569 for a bundled RCR, with 76% arising from the operative phase and 24% from the postoperative phase. The main driver of cost within the operative phase was the direct fixed costs, which accounted for 35% of the cost in this phase, and the largest contributor to cost within this category was the cost of implants, which accounted for 55%. In the postoperative phase of care, physical therapy visits were the greatest contributor to cost at 59%.

CONCLUSION

In a bundled cost of care for RCR, the largest cost driver occurs on the day of surgery for direct fixed costs, in particular, the implant. Physical therapy represents over half of the costs of the episode of care. Better understanding the specific cost of care for RCR will facilitate optimization with appropriately designed payment models and policies that safeguard the interests of the patient, physician, and payer.

LEVEL OF EVIDENCE

IV, therapeutic case series.

A Time-Driven Activity-Based Costing Analysis of Simultaneous Versus Staged Bilateral Total Hip Arthroplasty and Total Knee Arthroplasty

BACKGROUND

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.

METHODS

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).

RESULTS

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).

CONCLUSION

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.

Robotic-Assisted Versus Manual Unicompartmental Knee Arthroplasty: A Time-Driven Activity-Based Cost Analysis

BACKGROUND

The cost-effectiveness of robotic-assisted unicompartmental knee arthroplasty (RA-UKA) remains unclear. Time-driven activity-based costing (TDABC) has been shown to accurately reflect true resource utilization. This study aimed to compare true facility costs between RA-UKA and conventional UKA.

METHODS

We identified 265 consecutive UKAs (133 RA, 132 conventional) performed at a specialty hospital in 2016-2020. Itemized facility costs were calculated using TDABC. Separate analyses including and excluding implant costs were performed. Multiple regression was performed to determine the independent effect of robotic assistance on facility costs.

RESULTS

Due to longer operative time, RA-UKA patients had higher personnel costs and total facility costs ($2,270 vs $1,854, P < .001). Controlling for demographics and comorbidities, robotic assistance was associated with an increase in personnel costs of $399.25 (95% confidence interval [CI] $343.75-$454.74, P < .001), reduction in supply costs of $55.03 (95% CI $0.56-$109.50, P = .048), and increase in total facility costs of $344.27 (95% CI $265.24-$423.31, P < .001) per case. However, after factoring in implant costs, robotic assistance was associated with a reduction in total facility costs of $235.87 (95% CI $40.88-$430.85, P < .001) per case.

CONCLUSION

Using TDABC, overall facility costs were lower in RA-UKA despite a longer operative time. To facilitate wider adoption of this technology, implant manufacturers may negotiate lower implant costs based on volume commitments when robotic assistance is used. These supply cost savings appear to offset a portion of the increased costs. Nonetheless, further research is needed to determine if RA-UKA can improve clinical outcomes and create value in arthroplasty.

Process, resource and success factors associated with chimeric antigen receptor T-cell therapy for multiple myeloma

Background: Chimeric antigen receptor T-cell (CAR-T) therapy represents a new frontier in multiple myeloma. It is important to understand critical success factors (CSFs) that may optimize its use in this therapeutic area. Methods: We estimated the CAR-T process using time-driven activity-based costing. Information was obtained through interviews at four US oncology centers and with payer representatives, and through publicly available data. Results: The CAR-T process comprises 13 steps which take 177 days; it was estimated to include 46 professionals and ten care settings. CSFs included proactive collaboration, streamlined reimbursement and CAR-T administration in alternative settings when possible. Implementing CSFs may reduce episode time and costs by 14.4 and 13.2%, respectively. Conclusion: Our research provides a blueprint for improving efficiencies in CAR-T therapy, thereby increasing its sustainability for multiple myeloma.

Editorial Commentary: The Value of Time-Driven, Activity-Based Costing in Health Care Delivery

Time-driven activity-based costing (TDABC) provides a powerful approach to more targeted cost accounting based on resources actually used by patients during a cycle of care. Since its introduction in 2004 by Kaplan and Anderson, TDABC has gained increasing popularity in defining the actual costs of care for various orthopaedic processes and pathways. TDABC may demonstrate lower costs of care compared with traditional cost accounting methods, including ratio of costs to charges and relative value units. Weaknesses of traditional methods include approaching costs through the lens of charges, revenue, processes and procedures, adopting a "top-down" approach, and potentially overestimating costs. In contrast, TDABC builds costs from the individual level, taking a front-line, condition-focused, and patient-centered view. Existing organizational decision-making is oriented around revenue metrics (relative value units and ratio of costs to charges) rather than cost metrics, yet alternative payment models are shifting toward fixed revenues for certain conditions or procedures. The variability, including both financial upside and loss, will primarily be a function of the cost of care-a number that is profoundly opaque in most health care settings. We view TDABC as an approach that sheds light on variation, offers a more granular differentiation of costs compared with traditional approaches, mitigates risk, and sparks opportunities for increasing operational efficiency and waste reduction. The goal is to identify and provide the greatest-value orthopaedic care.