Time-driven activity-based costing to identify opportunities for cost reduction in pediatric appendectomy

Cost of physiotherapy non-attendance at a metropolitan hospital in Australia: A time-driven activity-based costing study

OBJECTIVES

(1) Identify the processes, staff time and labour costs associated with non-attendance at two physiotherapy outpatient clinics using time-driven activity-based costing; (2) estimate labour cost-burden of non-attendance response scenarios.

DESIGN

A six-step time-driven activity-based costing method was used, including scenario analyses.

SETTING

Two tertiary hospital outpatient clinics.

PARTICIPANTS

Clinic non-attendance rates were determined from digital administrative records for participating clinics. Interviews and iterative discussions were conducted with 15 administrative and clinical staff to establish process maps and key parameters.

PRIMARY AND SECONDARY OUTCOME MEASURES

The primary outcome was health service labour cost associated with clinic non-attendance. Four key work processes were identified and costed (2023, A$).

RESULTS

Clinic non-attendance rates for the 2018-2021 period were 8% (Clinic 1) and 10% (Clinic 2). Complex triaging cases constituted greater costs than simple triaging cases. Projected annual costs of non-attendance were as high as A$114 827 for a single clinic. The most expensive referral and response scenario was internal referral with non-attendance that was converted to a telephone appointment (mean cost of A$113/appointment).

CONCLUSION

Non-attendance rates at participating clinics were at the lower end of values reported in prior literature; however, substantial healthcare resource waste was still evident. Findings highlighted the extent to which non-attendance at scheduled clinic appointments may not only impact patients' welfare through lost treatment opportunity, but also carry substantial opportunity cost from wasted hospital resources that could have been allocated to other referred patients. Establishing the effectiveness and cost-effectiveness of interventions to reduce non-attendance remains a priority.

Comparative Cost Analysis of Secondary Intraocular Lens Surgeries Using Time-Driven Activity-Based Costing

OBJECTIVE

To assess the economics of secondary intraocular lens (IOL) surgeries, with a focus on variations in day-of-surgery costs based on surgical approach and number of surgeons involved.

DESIGN

Retrospective, time-driven, activity-based costing study analyzing costs and reimbursement rates.

SETTING

University of Michigan Kellogg Eye Center, analyzing procedures performed between January 1, 2014, and December 31, 2023.

PARTICIPANTS

Patients undergoing secondary IOL surgeries, including both single- and multi-surgeon cases and procedures without vitrectomy, with anterior vitrectomy, and with pars plana vitrectomy (PPV).

METHODS

Data were obtained from the institution's Electronic Health Record and Revenue Department secondary IOL surgeries (Current Procedural Terminology [CPT] codes 66985 and 66986) performed over 10 years at a single academic institution. Time-driven activity-based costing was applied to calculate the costs associated with each procedure. Primary outcomes were the total cost, reimbursement, and net margins for secondary IOL surgeries. Secondary outcomes were surgical times, time-related costs, and material costs.

RESULTS

A total of 391 cases were included in this analysis over a 10-year period, including 145 without vitrectomy, 56 with anterior vitrectomy, and 190 with PPV. There was no difference in primary or secondary outcome measures between IOL insertion (CPT 66985) and IOL exchange (CPT 66986). The total day-of-surgery costs were $4248.40 to $4447.15 for secondary IOL without vitrectomy, $4245.05 to $4600.36 for secondary IOL with anterior vitrectomy, $5518.52 to $5272.21 for single-surgeon secondary IOL with PPV, and $7769.22 to $8609.39 for multiple-surgeon secondary IOL with PPV. The calculated Medicare reimbursements were $2771.67 to $2901.81 for secondary IOL without vitrectomy, $3005.66 to $3155.75 for secondary IOL with anterior vitrectomy, and $4813.26 to $4861.62 for secondary IOL with PPV. Therefore, the net margins were -($1675.48-$1347.59) for secondary IOL without vitrectomy, -($1444.60-$1239.39) for secondary IOL with anterior vitrectomy, -($704.26-$410.59) for single-surgeon secondary IOL with PPV, and -($3796.13-$2907.60) for multiple-surgeon secondary IOL with PPV.

CONCLUSIONS

All secondary IOL surgeries result in net negative margins with single-surgeon PPV cases having the most favorable reimbursement that covers 87% to 92% of day-of-surgery costs and multiple-surgeon PPV surgeries having the least favorable with only 56% to 63% of costs reimbursed. Identifying these cost-intensive procedures offers insights for potential cost-reduction strategies, supporting both economic viability and patient access to necessary eye care.

A Cost Analysis of Enucleation and Evisceration Surgeries for Treatment of Blind, Painful Eyes

PURPOSE

The purpose of this study is to assess the surgical costs of enucleations and eviscerations and their relation to current reimbursement rates using time-driven activity-based costing.

METHODS

This is a retrospective study of patients undergoing enucleation and evisceration surgeries with attachment of muscles (Current Procedural Terminology 65105 and 65093) for a diagnosis of blind, painful eye, from January 1, 2019, to December 31, 2023, at a single, tertiary level, teaching hospital. A time-driven activity-based cost analysis for day of surgery was performed. Operative reports, perioperative times, and supply costs were extracted from the electronic medical record, and average reimbursement fees were taken from Center for Medicare and Medicaid Services data.

RESULTS

In the 5-year study span, 110 patients underwent enucleation and 52 underwent evisceration for a primary indication of blind, painful eye by 10 different surgeons. The average operating room time and surgical time for enucleation was approximately 9 minutes longer compared with evisceration ( p < 0.01). Both surgeries on average resulted in a negative margin with enucleations costing on average $624 more than eviscerations. The breakeven total operating room time for enucleation and evisceration surgery was approximately 86.3 and 83.1 minutes, respectively. From the sample, approximately 79% of enucleation and 60% of evisceration surgeries resulted in a net negative margin.

CONCLUSIONS

On average, the cost of enucleation and evisceration surgeries exceeded the reimbursement amount set by the Center for Medicare and Medicaid Services. Compared with enucleation, evisceration was more time and cost-effective by only a modest margin.

Cost Drivers of Pars Plana Vitrectomy for Retinal Detachment: Time-Driven Activity-Based Costing Analysis

Introduction: To determine drivers of day-of-surgery costs for pars plana vitrectomy (PPV) in the management of retinal detachment (RD) repair, the mainstay treatment, based on surgical complexity and intraoperative factors. Methods: Economic analysis was performed using time-driven activity-based costing methodology for patients who had standard (Current Procedural Terminology [CPT] code 67108) or complex (CPT 67113) RD repair with PPV at the University of Michigan in 2021. Data were obtained via the electronic health record and previous literature. PPV expenses were determined with time-driven activity-based costing, a cost calculation that incorporates time and key resource costs, and were analyzed using univariate and multivariate regression. Results: The analysis included 412 PPVs (270 standard and 142 complex based on CPT code). The operating room time was significantly increased in complex cases (P < .01). Univariate analysis found that complex PPV, cryopexy, staining agent use, retinectomy, simultaneous scleral buckling, perfluoro-N-octane (PFO) use, silicone oil tamponade, and perfluoropropane tamponade were associated with a statistically significant difference in costs (P < .01); use of laser retinopexy was not significantly associated (P = .7190). Multivariate analysis found that standard PPV cost an average $5132.33 and significant incremental costs were found for complex PPV (+$1185.55; P < .001), cryopexy (+$465.02; P = .032), staining (+$525.16; P = .04), PFO use (+$1089.54; P < .0001), retinectomy (+$2031.17; P < .0001), and simultaneous scleral buckling (+$916.34; P = .006). Conclusions: The intraoperative factors that increase operating room time and ultimately the incurred cost of complex PPV cases vs standard PPV were identified and economically defined. These findings can improve practice patterns by optimizing costs for effective surgical planning in the management of RD repair.

Improvements in technology and the expanding role of time-driven, activity-based costing to increase value in healthcare provider organizations: a literature review

Objective

This study evaluated the influence of technology on accurately measuring costs using time-driven activity-based costing (TDABC) in healthcare provider organizations by identifying the most recent scientific evidence of how it contributed to increasing the value of surgical care.

Methods

This is a literature-based analysis that mainly used two data sources: first, the most recent systematic reviews that specifically evaluated TDABC studies in the surgical field and, second, all articles that mentioned the use of CareMeasurement (CM) software to implement TDABC, which started to be published after the publication of the systematic review. The articles from the systematic review were grouped as manually performed TDABC, while those using CM were grouped as technology-based studies of TDABC implementations. The analyses focused on evaluating the impact of using technology to apply TDABC. A general description was followed by three levels of information extraction: the number of cases included, the number of articles published per year, and the contributions of TDABC to achieve cost savings and other improvements.

Results

Fourteen studies using real-world patient-level data to evaluate costs comprised the manual group of studies. Thirteen studies that reported the use of CM comprised the technology-based group of articles. In the manual studies, the average number of cases included per study was 160, while in the technology-based studies, the average number of cases included was 4,767. Technology-based studies, on average, have a more comprehensive impact than manual ones in providing accurate cost information from larger samples.

Conclusion

TDABC studies supported by technologies such as CM register more cases, identify cost-saving opportunities, and are frequently used to support reimbursement strategies based on value. The findings suggest that using TDABC with the support of technology can increase healthcare value.

Is it possible to automate the discovery of process maps for the time-driven activity-based costing method? A systematic review

OBJECTIVES

The main objective of this manuscript was to identify the methods used to create process maps for care pathways that utilized the time-driven activity-based costing method.

METHODS

This is a systematic mapping review. Searches were performed in the Embase, PubMed, CINAHL, Scopus, and Web of Science electronic literature databases from 2004 to September 25, 2022. The included studies reported practical cases from healthcare institutions in all medical fields as long as the time-driven activity-based costing method was employed. We used the time-driven activity-based costing method and analyzed the created process maps and a qualitative approach to identify the main fields.

RESULTS

A total of 412 studies were retrieved, and 70 articles were included. Most of the articles are related to the fields of orthopedics and childbirth-related to hospital surgical procedures. We also identified various studies in the field of oncology and telemedicine services. The main methods for creating the process maps were direct observational practices, complemented by the involvement of multidisciplinary teams through surveys and interviews. Only 33% of the studies used hospital documents or healthcare data records to integrate with the process maps, and in 67% of the studies, the created maps were not validated by specialists.

CONCLUSIONS

The application of process mining techniques effectively automates models generated through clinical pathways. They are applied to the time-driven activity-based costing method, making the process more agile and contributing to the visualization of high degrees of variations encountered in processes, thereby making it possible to enhance and achieve continual improvements in processes.

The Cost of Standard and Complex Pars Plana Vitrectomy for Retinal Detachment Repair Exceeds Its Reimbursement

OBJECTIVE

To measure the total costs and reimbursements associated with standard and complex pars plana vitrectomy using time-driven activity-based costing (TDABC).

DESIGN

Economic analysis at a single academic institution.

SUBJECTS

Patients who underwent standard or complex pars plana vitrectomy (PPV; Current Procedural Terminology codes 67108 and 67113) at the University of Michigan in the calendar year 2021.

METHODS

Process flow mapping for standard and complex PPVs was used to determine the operative components. The internal anesthesia record system was used to calculate time estimates, and financial calculations were constructed from published literature and internal sources. A TDABC analysis was used to determine the costs of standard and complex PPVs. Average reimbursement was based on Medicare rates.

MAIN OUTCOME MEASURES

The primary outcomes were the total costs for standard and complex PPVs and the resulting net margin at current Medicare reimbursement levels. The secondary outcomes were the differential in surgical times, costs, and margin for standard and complex PPV.

RESULTS

Over the 2021 calendar year, a total of 270 standard and 142 complex PPVs were included in the analysis. Complex PPVs were associated with significantly increased anesthesia time (52.28 minutes; P < 0.001), operating room time (51.28 minutes; P < 0.0001), surgery time (43.64 minutes; P < 0.0001), and postoperative time (25.95 minutes; P < 0.0001). The total day-of-surgery costs were $5154.59 and $7852.38 for standard and complex PPVs, respectively. Postoperative visits incurred an additional cost of $327.84 and $353.86 for standard and complex PPV, respectively. The institution-specific facility payments were $4505.50 and $4935.14 for standard and complex PPV, respectively. Standard PPV yielded a net negative margin of -$976.93, whereas complex PPV yielded a net negative margin of -$3271.10.

CONCLUSIONS

This analysis demonstrated that Medicare reimbursement is inadequate in covering the costs of PPV for retinal detachment, with a particularly large negative margin for more complex cases. These findings demonstrate that additional steps may be necessary to mitigate adverse economic incentives so that patients continue to have timely access to care to achieve optimal visual outcomes after retinal detachment.

FINANCIAL DISCLOSURE(S)

The authors have no proprietary or commercial interest in any materials discussed in this article.

Cost Drivers of Endothelial Keratoplasty: A Time-Driven Activity-Based Costing Analysis

PURPOSE

To determine cost drivers of endothelial keratoplasty (EK) through evaluation of surgical costs and procedure length based on type of EK, use of preloaded grafts, and performance of simultaneous cataract surgery.

DESIGN

This study was an economic analysis of EKs at a single academic institution using time-driven activity-based costing (TDABC) methodology.

PARTICIPANTS

Endothelial keratoplasty surgical cases, including Descemet membrane endothelial keratoplasty (DMEK) and Descemet stripping automated endothelial keratoplasty (DSAEK), at the University of Michigan Kellogg Eye Center from 2016 to 2018 were included in the analysis.

METHODS

Data and inputs were obtained via the electronic health record (EHR) and from prior literature. Simultaneous cataract surgeries were included and separately categorized for analysis. Endothelial keratoplasty expenses were determined with TDABC, a method for cost calculation that incorporates the time that key resources are used and each resource's associated cost rate.

MAIN OUTCOME MEASURES

Main outcome measures included surgery length (in minutes) and day-of-surgery costs.

RESULTS

There were 559 EKs included: 355 DMEKs and 204 DSAEKs. Fewer DSAEKs had simultaneous cataract extraction (47; 23%) than DMEK (169; 48%). Of the DMEKs, 196 (55%) used preloaded corneal grafts. Descemet membrane endothelial keratoplasty cost $392.31 less (95% confidence interval, $251.05-$533.57; P < 0.0001) than DSAEK and required 16.94 fewer minutes (14.16-19.73; P < 0.0001). Descemet membrane endothelial keratoplasty cases that used preloaded corneal grafts cost $460.19 less ($316.23-$604.14; P < 0.0001) and were 14.16 minutes shorter (11.39-16.93; P < 0.0001). In multivariate regression, preloaded graft use saved $457.19, DMEK (compared with DSAEK) saved $349.97, and simultaneous cataract surgery added $855.17 in day-of-surgery costs.

CONCLUSIONS

Cost analysis of TDABC identified a day-of-surgery cost and surgical time reduction associated with the use of preloaded grafts for DMEK, DMEK compared with DSAEK, and isolated EK compared with EK combined with cataract surgery. This study provides an improved understanding of surgical cost drivers and margin incentivization, which may explain trends and indirectly influence patient care decisions in cornea surgery practices.

FINANCIAL DISCLOSURE(S)

Proprietary or commercial disclosure may be found in the Footnotes and Disclosures at the end of this article.

Comparison of Incremental Costs and Medicare Reimbursement for Simple vs Complex Cataract Surgery Using Time-Driven Activity-Based Costing

Importance

Cataract surgery is one of the most commonly performed surgeries across medicine and an integral part of ophthalmologic care. Complex cataract surgery requires more time and resources than simple cataract surgery, yet it remains unclear whether the incremental reimbursement for complex cataract surgery, compared with simple cataract surgery, offsets the increased costs.

Objective

To measure the difference in day-of-surgery costs and net earnings between simple and complex cataract surgery.

Design, Setting, and Participants

This study is an economic analysis at a single academic institution using time-driven activity-based costing methodology to determine the operative-day costs of simple and complex cataract surgery. Process flow mapping was used to define the operative episode limited to the day of surgery. Simple and complex cataract surgery cases (Current Procedural Terminology codes 66984 and 66982, respectively) at the University of Michigan Kellogg Eye Center from 2017 to 2021 were included in the analysis. Time estimates were obtained using an internal anesthesia record system. Financial estimates were obtained using a mix of internal sources and prior literature. Supply costs were obtained from the electronic health record.

Main Outcomes and Measures

Difference in day-of-surgery costs and net earnings.

Results

A total of 16 092 cataract surgeries were included, 13 904 simple and 2188 complex. Time-based day-of-surgery costs for simple and complex cataract surgery were $1486.24 and $2205.83, respectively, with a mean difference of $719.59 (95% CI, $684.09-$755.09; P < .001). Complex cataract surgery required $158.26 more for costs of supplies and materials (95% CI, $117.00-$199.60; P < .001). The total difference in day-of-surgery costs between complex and simple cataract surgery was $877.85. Incremental reimbursement for complex cataract surgery was $231.01; therefore, complex cataract surgery had a negative earnings difference of $646.84 compared with simple cataract surgery.

Conclusions and Relevance

This economic analysis suggests that the incremental reimbursement for complex cataract surgery undervalues the resource costs required for the procedure, failing to cover increased costs and accounting for less than 2 minutes of increased operating time. These findings may affect ophthalmologist practice patterns and access to care for certain patients, which may ultimately justify increasing cataract surgery reimbursement.

Working Smarter, Not Harder: Using Data-Driven Strategies to Generate Front-End Cost Savings through Price Negotiation and Supply Chain Optimization

BACKGROUND

Supply chain optimization is an effective method of generating front-end cost savings and increasing hospital profits. Through the negotiation and renegotiation of supply chain contracts, plastic surgeons can dramatically change the price at which they purchase surgical supplies and implants. This study characterizes the potential impact of supply chain optimization and puts forth a generalizable, systematic approach for successful sourcing.

METHODS

From October of 2017 to September of 2018, the authors examined all patients taken to the operating room for either a facial fracture or a hand fracture. Cost data were collected, Supply Chain Information Management numbers were used to determine whether each item used during the study period was under contract, and cost savings based on contract negotiation were calculated. Potential cost savings were calculated using the BillOnly calculator.

RESULTS

For the 77 facial trauma cases and 63 hand trauma cases performed, a total of 330 items (70 distinct items) were used, 47 percent of which were under contract (47 percent contract use), with an average negotiated discount of 49 percent. Based on BillOnly material cost estimates, the authors' institution would need to increase its contract use to 70 percent to achieve a net savings of 19 percent, and to 90 percent to achieve a net savings of 39 percent. The authors also estimated that if contract use increased to 90 percent, net savings would increase commensurately with increases in the average discount negotiated.

CONCLUSION

Supply chain optimization offers plastic surgeons the potential to significantly decrease surgical costs while maintaining surgical quality.

The implementation of value-based healthcare: a scoping review

BACKGROUND

The aim of this study was to identify and summarize how value-based healthcare (VBHC) is conceptualized in the literature and implemented in hospitals. Furthermore, an overview was created of the effects of both the implementation of VBHC and the implementation strategies used.

METHODS

A scoping review was conducted by searching online databases for articles published between January 2006 and February 2021. Empirical as well as non-empirical articles were included.

RESULTS

1729 publications were screened and 62 were used for data extraction. The majority of the articles did not specify a conceptualization of VBHC, but only conceptualized the goals of VBHC or the concept of value. Most hospitals implemented only one or two components of VBHC, mainly the measurement of outcomes and costs or Integrated Practice Units (IPUs). Few studies examined effects. Implementation strategies were described rarely, and were evaluated even less.

CONCLUSIONS

VBHC has a high level of interpretative variability and a common conceptualization of VBHC is therefore urgently needed. VBHC was proposed as a shift in healthcare management entailing six reinforcing steps, but hospitals have not implemented VBHC as an integrative strategy. VBHC implementation and effectiveness could benefit from the interdisciplinary collaboration between healthcare and management science.

TRIAL REGISTRATION

This scoping review was registered on Open Science Framework https://osf.io/jt4u7/ (OSF | The implementation of Value-Based Healthcare: a Scoping Review).

Value in acute care surgery, Part 1: Methods of quantifying cost

BACKGROUND

With health care expenditures continuing to increase rapidly, the need to understand and provide value has become more important than ever. In order to determine the value of care, the ability to accurately measure cost is essential. The acute care surgeon leader is an integral part of driving improvement by engaging in value increasing discussions. Different approaches to quantifying cost exist depending on the purpose of the analysis and available resources. Cost analysis methods range from detailed microcosting and time-driven activity-based costing to less complex gross and expenditure-based approaches. An overview of these methods and a practical approach to costing based on the needs of the acute care surgeon leader is presented.

Lessons learned from value-based pediatric appendectomy care: A shared savings pilot model

PURPOSE

We aim to assess the healthcare value achieved from a shared savings program for pediatric appendectomy.

METHODS

All appendectomy patients covered by our health plan were included. Quality targets were 15% reduction in time to surgery, length of stay, readmission rate, and patient satisfaction. Quality targets and costs for an appendectomy episode in two 6-month performance periods (PP1, PP2) were compared to baseline.

RESULTS

640 patients were included (baseline:317, PP1:167, PP2:156). No quality targets were met in PP1. Two quality targets were met during PP2: readmission rate (-57%) and patient satisfaction. No savings were realized because the cost reduction threshold (-9%) was not met during PP1 (+1.7%) or PP2 (-0.4%).

CONCLUSIONS

Payer-provider partnerships can be a platform for testing value-based reimbursement models. Setting achievable targets, identifying affectable quality metrics, considering case mix index, and allowing sufficient time for interventions to generate cost savings should be considered in future programs.

Variation in Intraoperative and Postoperative Utilization for 3 Common General Surgery Procedures

OBJECTIVE

The aim of this study was to understand variation in intraoperative and postoperative utilization for common general surgery procedures.

SUMMARY BACKGROUND DATA

Reducing surgical costs is paramount to the viability of hospitals.

METHODS

Retrospective analysis of electronic health record data for 7762 operations from 2 health systems. Adult patients undergoing laparoscopic cholecystectomy, appendectomy, and inguinal/femoral hernia repair between November 1, 2013 and November 30, 2017 were reviewed for 3 utilization measures: intraoperative disposable supply costs, procedure time, and postoperative length of stay (LOS). Crossed hierarchical regression models were fit to understand case-mixed adjusted variation in utilization across surgeons and locations and to rank surgeons.

RESULTS

The number of surgeons performing each type of operation ranged from 20 to 63. The variation explained by surgeons ranged from 8.9% to 38.2% for supply costs, from 15.1% to 54.6% for procedure time, and from 1.3% to 7.0% for postoperative LOS. The variation explained by location ranged from 12.1% to 26.3% for supply costs, from 0.2% to 2.5% for procedure time, and from 0.0% to 31.8% for postoperative LOS. There was a positive correlation (ρ = 0.49, P = 0.03) between surgeons' higher supply costs and longer procedure times for hernia repair, but there was no correlation between other utilization measures for hernia repair and no correlation between any of the utilization measures for laparoscopic appendectomy or cholecystectomy.

CONCLUSIONS

Surgeons are significant drivers of variation in surgical supply costs and procedure time, but much less so for postoperative LOS. Intraoperative and postoperative utilization profiles can be generated for individual surgeons and may be an important tool for reducing surgical costs.

Time-Driven activity-based costing identifies opportunities for process efficiency and cost optimization for robot-assisted laparoscopic pyeloplasty

BACKGROUND

Robot-assisted laparoscopic pyeloplasty (RALP) is a commonly performed procedure in children, but its actual cost implications on the healthcare ecosystem have not been adequately defined. Time-driven activity-based costing (TDABC) is a novel cost accounting method derived from value based healthcare systems that may offer one pathway to assess institutional costs.

OBJECTIVE

To determine the true cost of a robot-assisted laparoscopic pyeloplasty (RALP) in the pediatric population using TDABC, and compare it to traditional cost accounting. And to utilize TDABC to minimize cost and improve time-flow efficiency.

SUBJECTS/PATIENTS AND METHODS

The RALP care pathway was defined from patient arrival to the pre-operative suite to discharge from the post-anesthesia care unit (PACU). Process maps were created with an interdisciplinary team to survey RALP activities. Retrospective time stamps were obtained from the electronic medical record for fiscal year 2016 (FY16) RALP cases, and were validated by prospectively stopwatch timing additional RALP cases. Male and female pediatric patients undergoing a unilateral RALP during FY16 and during the prospective study period (June 2017-October 2017) were included. Procedure costs were calculated using TDABC after determining the capacity cost rate for all personnel and assets, and multiplying them with the time stamps.

RESULTS

25 RALP cases were analyzed for FY16. TDABC determined a total cost of $15 319/case, when direct, indirect and capital robot cost are included. Traditional cost accounting amounted to a total of $16 158/case. The current robot utilization rate is 22% of total capacity, effectively increasing the total RALP cost by 16%. Time stamps with the most variance were pre-operative services (115 ± 27.5 min), robotic console (142 min ±30.7 min) and PACU times (145 ± 101.1 min) (Figure) DISCUSSION: This study represents the first TDABC implementation in robot-assisted pediatric procedures. Previous TDABC in other areas of urology similarly revealed discrepancies between traditional cost accounting and TDABC. The present study demonstrates a higher total cost than previous cost accounting studies for the RALP, however, this is the first effort to include indirect costs in the final calculations. This study does convey the limitations of a retrospective analysis and those inherent to a single institution study.

CONCLUSION

TDABC defined the magnitude of cost variation based on robot utilization of a RALP. Traditional cost accounting overestimates the actual costs of a RALP. TDABC also identified high-cost and high variability loci in the RALP process map that will be targeted for process and quality improvement while further reducing assessed costs.

Advances in Value-Based Healthcare by the Application of Time-Driven Activity-Based Costing for Inpatient Management: A Systematic Review

OBJECTIVES

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.

METHODS

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.

RESULTS

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.

CONCLUSIONS

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.

Current State of Surgical Lighting

Surgical performance in the operating room (OR) is supported by effective illumination, which mitigates the inherent environmental, operational, and visual challenges associated with surgery. Three critical components are essential to optimize operating light as illumination: (1) centering on the surgeon's immediate field, (2) illuminating a wide or narrow field with high-intensity light, and (3) penetrating into a cavity or under a flap. Furthermore, optimal surgical illumination reduces shadow, glare, and artifact in visualization of the surgical site. However, achieving these principles is more complex than at first glance, requiring a detailed examination of the variables that comprise surgical illumination. In brief, efficacious surgical illumination combines sufficient ambient light with the ability to apply focused light at specific operative stages and angles. But, brighter is not always merely better; rather, a nuanced approach, cognizant of the challenges inherent in the OR theater, can provide for a thoughtful exploration of how surgical illumination can be utilized to the best of its ability, ensuring a safe and smooth surgery for all.

Using Time-Driven Activity-Based Costing to Demonstrate Value in Perioperative Care: Recommendations and Review from the Society for Perioperative Assessment and Quality Improvement (SPAQI)

A shift in healthcare payment models from volume toward value-based incentives will require deliberate input into systems development from both perioperative clinicians and administrators to ensure appropriate recognition of the value of all services provided-particularly ones that are not reimbursable in current fee-for-service payment models. Time-driven activity-based costing (TDABC) methodology identifies cost drivers and reduces inaccurate costing based on siloed budgets. Inaccurate costing also results from the fact that current costing methods use charges and there has been tremendous cost shifting throughout health care. High cost, high variability processes can be identified for process improvement. As payment models inevitably evolve towards value-based metrics, it will be critical to knowledgably participate in the coordination of these changes. This document provides 8 practical Recommendations from the Society for Perioperative Assessment and Quality Improvement (SPAQI) aimed at outlining the principles of TDABC, creating process maps for patient workflows, understanding payment structures, establishing physician alignment across service lines to create integrated practice units to facilitate development of evidence-based pathways for specific patient risk groups, establishing consistent care delivery, minimizing variability between physicians and departments, utilizing data analytics and information technology tools to track progress and obtain actionable data, and using TDABC to create costing transparency.

An 8-step framework for implementing time-driven activity-based costing in healthcare studies

Micro-costing studies still deserving for methods orientation that contribute to achieve a patient-specific resource use level of analysis. Time-driven activity-based costing (TDABC) is often employed by health organizations in micro-costing studies with that objective. However, the literature shows many deviations in the implementation of TDABC, which might compromise the accuracy of the results obtained. One reason for that can be attributed to the non-existence of a step-by-step orientation to conduct cost analytics with the TDABC specific for micro-costing studies in healthcare. This article aimed at exploring the literature and practical cases to propose an eight-step framework to apply TDABC in micro-costing studies for health care organizations. The 8-step TDABC framework is presented and detailed exploring online spreadsheets already coded to demonstrate data structure and math formula building. A list of analyses that can be performed is suggested, including an explanation about the information that each analysis can provide to increase the organization capability to orient decision making. The case study developed show that actual micro-costing of health care processes can be achieved with the 8-step TDABC framework and its use in future researches can contribute to increase the number of studies that achieve high-quality level in cost information, and consequently, in health resource evaluation.

Hospital Charges for Urologic Surgery Episodes of Care Are Rising Despite Declining Costs

OBJECTIVE

To investigate the temporal relationship of hospital charges relative to recorded costs for surgical episodes of care.

PATIENTS AND METHODS

This retrospective cohort study selected individuals who underwent any of 8 index urologic surgical procedures at 392 unique institutions from January 1, 2005, through December 31, 2015. For each surgical encounter, cost and charge data reported by hospitals were extracted and adjusted to 2016 US dollars. Trend analysis and multivariable logistic regression modeling were used to assess outcomes. The primary outcome was trend in median charge and cost. Secondary outcomes consisted of hospital characteristics associated with membership in the highest quartile of institutional charge-to-cost ratio.

RESULTS

Cohort-level median cost per encounter trended down from $6824 in 2005 to $5586 in 2015 (P for trend<.001), and charges increased from $20,210 to $25,773 during the same period (P for trend<.001). Hospitals in the highest quartile of institutional charge-to-cost ratio were more likely to be safety net, nonteaching, urban, lower surgical volume, smaller, and located outside the Midwest (P<.001 for each characteristic).

CONCLUSION

The pricing trends shown herein could indicate some success in cost-containment for surgical episodes of care, although higher hospital charges may be increasingly used to bolster reimbursement from third-party payers and to compensate for escalating costs in other areas.

Time-driven activity-based costing of total knee replacements in Karachi, Pakistan

INTRODUCTION

Osteoarthritis of the knee has been identified as the most common disability in Pakistan. Total knee replacement (TKR) surgery is the curative treatment for advanced osteoarthritis of the knee; however, cost remains one of the barriers to effective and timely service delivery.

OBJECTIVE

We conducted a time-driven activity-based costing (TDABC) analysis of TKR to identify major cost drivers and areas for process improvement.

METHODS AND ANALYSIS

We performed a prospective TDABC analysis of patients who underwent bilateral TKR at The Indus Hospital (TIH) during a 14-month period from October 2015 to December 2016. Detailed process maps were developed for each phase of the care cycle. Time durations and costs were allocated to each resource utilised and aggregated across the care cycle, including personnel, direct and indirect costs.

RESULTS

We identified seven care phases for a complete TKR care cycle and created their detailed process maps. Major time contributors were ward stay and discharge (20 160 min), TKR surgery (563 min) and surgical admission (333 min). Overall, 92.10% of time is spent during the ward stay and discharge phase of care. Patients remain hospitalised for an average of 14 days postoperatively. Overall institutional cost of a TKR at TIH was US$4360.51 (Pakistani rupees 456 981.17) per bilateral TKR surgery. The overall primary cost drivers for the full bundle of care were consumables used during TKR surgery itself, consumables utilised in the wards and personnel costs contributing 57.64%, 27.45% and 12.03% of total costs, respectively.

CONCLUSION

Utilising TDABC allowed us to obtain a granular analysis of time and cost that was subsequently used to inform quality process improvement initiatives. In low-resource settings, such as Pakistan, TDABC has the potential to be a useful tool to guide resource allocation and process improvement.

A combined modelling of fuzzy logic and Time-Driven Activity-based Costing (TDABC) for hospital services costing under uncertainty

Hospital traditional cost accounting systems have inherent limitations that restrict their usefulness for measuring the exact cost of healthcare services. In this regard, new approaches such as Time Driven-Activity based Costing (TDABC) provide appropriate information on the activities needed to provide a quality service. However, TDABC is not flawless. This system is designed for conditions of relatively accurate information that can accurately estimate the cost of services provided to patients. In this study, the fuzzy logic in the TDABC model is used to resolve the inherent ambiguity and uncertainty and determine the best possible values for cost, capacity, and time parameters to provide accurate information on the costs of the healthcare services. This approach has not yet been tested and used in determining the costs of services of a healthcare setting. Therefore, the aim of this study is to present a new Fuzzy Logic-TDABC (FL-TDABC) model for estimating healthcare service costs based on uncertainty conditions in hospitals. The proposed model is implemented in a sample of the hospital laboratory section and the results are compared with the TDABC system. The TDABC model, by allocating the activity costs including fixed costs and not considering the uncertainty regarding the cost, capacity, and time required for each patient, often estimates the unused capacity and costs with a higher margin of error. The results show that the maximum difference in the prescribed costs was 4.75%, 3.72%, and 2.85% in blood bank, microbiology, and hematology tests, respectively, mostly due to uncertainty in the costs of consumables, equipment and manpower (on average 4.54%, 3.8%, and 3.59%, respectively). Also, The TDABC system, in comparison with the proposed system, estimates the unused capacity of the resource with more error. Cost of unused capacity derived using FL-TDABC were 80% of costs derived using TDABC. In conditions where the information is ambiguous, using the new system in hospitals can lead to a more accurate estimate of the cost compared to the TDABC system. Moreover, it helps hospital managers to make appropriate decisions about the use of capacity, capital budgeting, cost control, and etc.

Improving the value of care for appendectomy through an individual surgeon-specific approach

PURPOSE

Standardized care via a unified surgeon preference card for pediatric appendectomy can result in significant cost reduction. The purpose of this study was to evaluate the impact of cost and outcome feedback to surgeons on value of care in an environment reluctant to adopt a standardized surgeon preference card.

METHODS

Prospective observational study comparing operating room (OR) supply costs and patient outcomes for appendectomy in children with 6-month observation periods both before and after intervention. The intervention was real-time feedback of OR supply cost data to individual surgeons via automated dashboards and monthly reports.

RESULTS

Two hundred sixteen children underwent laparoscopic appendectomy for non-perforated appendicitis (110 pre-intervention and 106 post-intervention). Median supply cost significantly decreased after intervention: $884 (IQR $705-$1025) to $388 (IQR $182-$776), p<0.001. No significant change was detected in median OR duration (47min [IQR 36-63] to 50min [IQR 38-64], p=0.520) or adverse events (1 [0.9%] to 6 [4.7%], p=0.062). OR supply costs for individual surgeons significantly decreased during the intervention period for 6 of 8 surgeons (87.5%).

CONCLUSION

Approaching value measurement with a surgeon-specific (rather than group-wide) approach can reduce OR supply costs while maintaining excellent clinical outcomes.

LEVEL OF EVIDENCE

Level II.

Understanding Costs of Care in the Operating Room

Importance

Increasing value requires improving quality or decreasing costs. In surgery, estimates for the cost of 1 minute of operating room (OR) time vary widely. No benchmark exists for the cost of OR time, nor has there been a comprehensive assessment of what contributes to OR cost.

Objectives

To calculate the cost of 1 minute of OR time, assess cost by setting and facility characteristics, and ascertain the proportion of costs that are direct and indirect.

Design, Setting, and Participants

This cross-sectional and longitudinal analysis examined annual financial disclosure documents from all comparable short-term general and specialty care hospitals in California from fiscal year (FY) 2005 to FY2014 (N = 3044; FY2014, n = 302). The analysis focused on 2 revenue centers: (1) surgery and recovery and (2) ambulatory surgery.

Main Outcomes and Measures

Mean cost of 1 minute of OR time, stratified by setting (inpatient vs ambulatory), teaching status, and hospital ownership. The proportion of cost attributable to indirect and direct expenses was identified; direct expenses were further divided into salary, benefits, supplies, and other direct expenses.

Results

In FY2014, a total of 175 of 302 facilities (57.9%) were not for profit, 78 (25.8%) were for profit, and 49 (16.2%) were government owned. Thirty facilities (9.9%) were teaching hospitals. The mean (SD) cost for 1 minute of OR time across California hospitals was $37.45 ($16.04) in the inpatient setting and $36.14 ($19.53) in the ambulatory setting (P = .65). There were no differences in mean expenditures when stratifying by ownership or teaching status except that teaching hospitals had lower mean (SD) expenditures than nonteaching hospitals in the inpatient setting ($29.88 [$9.06] vs $38.29 [$16.43]; P = .006). Direct expenses accounted for 54.6% of total expenses ($20.40 of $37.37) in the inpatient setting and 59.1% of total expenses ($20.90 of $35.39) in the ambulatory setting. Wages and benefits accounted for approximately two-thirds of direct expenses (inpatient, $14.00 of $20.40; ambulatory, $14.35 of $20.90), with nonbillable supplies accounting for less than 10% of total expenses (inpatient, $2.55 of $37.37; ambulatory, $3.33 of $35.39). From FY2005 to FY2014, expenses in the OR have increased faster than the consumer price index and medical consumer price index. Teaching hospitals had slower growth in costs than nonteaching hospitals. Over time, the proportion of expenses dedicated to indirect costs has increased, while the proportion attributable to salary and supplies has decreased.

Conclusions and Relevance

The mean cost of OR time is $36 to $37 per minute, using financial data from California's short-term general and specialty hospitals in FY2014. These statewide data provide a generalizable benchmark for the value of OR time. Furthermore, understanding the composition of costs will allow those interested in value improvement to identify high-yield targets.

Using Time-Driven Activity-Based Costing as a Key Component of the Value Platform: A Pilot Analysis of Colonoscopy, Aortic Valve Replacement and Carpal Tunnel Release Procedures

Background

Time-driven activity-based costing (TDABC) is a methodology that calculates the costs of healthcare resources consumed as a patient moves along a care process. Limited data exist on the application of TDABC from the perspective of an anesthesia provider. We describe the use of TDABC, a bottom-up costing strategy and financial outcomes for three different medical-surgical procedures.

Methods

In each case, a multi-disciplinary team created process maps describing the care delivery cycle for a patient encounter using the TDABC methodology. Each step in a process map delineated an activity required for delivery of patient care. The resources (personnel, equipment and supplies) associated with each step were identified. A per minute cost for each resource expended was generated, known as the capacity cost rate, and multiplied by its time requirement. The total cost for an episode of care was obtained by adding the cost of each individual resource consumed as the patient moved along a clinical pathway.

Results

We built process maps for colonoscopy in the gastroenterology suite, calculated costs of an aortic valve replacement by comparing surgical aortic valve replacement (SAVR) versus transcatheter aortic valve replacement (TAVR) techniques, and determined the cost of carpal tunnel release in an operating room versus an ambulatory procedure room.

Conclusions

TDABC is central to the value-based healthcare platform. Application of TDABC provides a framework to identify process improvements for health care delivery. The first case demonstrates cost-savings and improved wait times by shifting some of the colonoscopies scheduled with an anesthesiologist from the main hospital to the ambulatory facility. In the second case, we show that the deployment of an aortic valve via the transcatheter route front loads the costs compared to traditional, surgical replacement. The last case demonstrates significant cost savings to the healthcare system associated with re-organization of staff required to execute a carpal tunnel release.

Association of Same-Day Discharge With Hospital Readmission After Appendectomy in Pediatric Patients

Importance

Appendectomy is the most common abdominal operation performed in pediatric patients in the United States. Studies in adults have suggested that same-day discharge (SDD) after appendectomy is safe and does not result in higher-than-expected hospital readmissions.

Objective

To evaluate the influence of SDD on 30-day readmission rates following appendectomy for acute appendicitis in pediatric patients.

Design, Setting, and Participants

This retrospective cohort study used the American College of Surgeons National Surgical Quality Improvement Program-Pediatric database to evaluate 30-day readmission rates among pediatric patients who underwent an appendectomy for acute, nonperforated appendicitis. The database provides high-quality surgical outcomes data from more than 80 participating US hospitals, including free-standing pediatric facilities, children's hospitals, specialty centers, children's units within adult hospitals, and general acute care hospitals with a pediatric wing. Patients selected for inclusion (n = 22 771) were between ages 0 and 17 years and underwent appendectomy for uncomplicated appendicitis between January 1, 2012, and December 31, 2015. Patients excluded were those discharged more than 2 days after surgery.

Exposures

Same-day discharge after appendectomy or discharge 1 or 2 days after surgery.

Main Outcomes and Measures

The primary outcome was 30-day readmission. Secondary outcomes included surgical-site infections and other wound complications.

Results

Of the 20 981 patients, 4662 (22.2%) had SDD and 16 319 (77.8%) were discharged within 1 or 2 days after surgery. The patient cohort included 12 860 boys (61.3%) and 8121 girls (38.7%), with a mean (SD) age of 11.0 (3.56) years. There was no difference in the odds of readmission for patients with SDD compared with those discharged within 2 days (adjusted odds ratio [aOR], 0.82; 95% CI, 0.51-1.04; P = .06; readmission rate, 1.89% vs 2.33%). There was no significant difference in reason for readmission on the basis of discharge timing. Likewise, there was no difference in wound complication rate between patients with SDD and those discharged 1 or 2 days after surgery (aOR 0.75; 95% CI, 0.56-1.01; P = .06).

Conclusions and Relevance

In pediatric patients with acute appendicitis undergoing appendectomy, SDD is not associated with an increase in 30-day hospital readmission rates or wound complications when compared with discharge 1 or 2 days after surgery. Same-day discharge may be an applicable quality metric for the provision of safe and efficient care for pediatric patients with acute, nonperforated appendicitis.

Comparison of two surgical suture techniques in uvulopalatopharyngoplasty and expansion sphincter pharyngoplasty

BACKGROUND

Uvulopalatopharyngoplasty (UPPP) and expansion sphincter pharyngoplasty (ESP) are two standard surgical procedures for treatment of snoring and sleep apnea. In a prospective clinical trial, we compared a standard simple interrupted suture technique for closure of the tonsillar pillars with a running locked suture.

METHODS

Each suture technique was randomly assigned either to the left or the right tonsillar pillars in 28 patients. During the first week, patients were daily checked for suture dehiscence and again on days 10 and 21, the end of followup. Time to perform the sutures was measured intraoperative and surgical complications were recorded.

RESULTS

During followup, suture dehiscence was observed in 15/28 interrupted and 16/28 running sutures (p > 0.5). If a dehiscence occurred during the observation period, the median day of dehiscence was 10 (1 and 3 quartile: 5.75 and 17) days for the interrupted suture and 10 (5-11) days for the running locked suture technique (p > 0.05). The mean (± SD) surgical time for the interrupted suture was 5.2 ± 1.9 and 3.5 ± 1.8 min for the running locked suture (p < 0.001). Postoperative bleedings occurred in 4/28 running sutures and 2/28 interrupted sutures.

CONCLUSION

The running locked suture technique is an equally safe and time saving way of wound closure in UPPP and ESP.

A prospective same day discharge protocol for pediatric appendicitis: Adding value to a common surgical condition

PURPOSE

Standardized clinical pathways for simple appendicitis decrease length of stay and result in cost savings. We performed a prospective cohort study to assess a same day discharge (SDD) protocol for children with simple appendicitis.

METHODS

All children undergoing laparoscopic appendectomy for simple appendicitis after protocol implementation (February 2016 to January 2017) were assessed. Length of stay (LOS), 30-day resource utilization (ED visits and hospital readmissions), patient satisfaction, and hospital accounting costs for SDD were compared to non-SDD patients.

RESULTS

Of 602 children treated at our institution, 185 (31%) were successfully discharged per protocol. SDD patients had longer median PACU duration (3.0 vs. 1.0h, p<0.001), but postoperative LOS (4.4 vs. 17.4h, p<0.001) and overall LOS (17.1 vs. 31.2h, p<0.001) were significantly shorter. Complication rates (1.6% vs. 3.1%), ED visits (4.3% vs. 6.0%), and readmissions (0.5% vs. 2.4%) were not significantly different for SDD compared to non-SDD patients. However, SDD decreases total cost of an appendectomy episode ($8073 vs $8424, p=0.002), and patients report high satisfaction with their hospital experience (mean 9.4 out of 10).

CONCLUSIONS

Safe and satisfactory outpatient management of pediatric simple appendicitis is achievable with appropriate patient selection. An SDD protocol can lead to significant generation of value to the healthcare system.

LEVEL OF EVIDENCE

Prognosis study, Level II.

Time-driven activity-based costing: A dynamic value assessment model in pediatric appendicitis

OBJECTIVES

Healthcare reform policies are emphasizing value-based healthcare delivery. We hypothesize that time-driven activity-based costing (TDABC) can be used to appraise healthcare interventions in pediatric appendicitis.

METHODS

Triage-based standing delegation orders, surgical advanced practice providers, and a same-day discharge protocol were implemented to target deficiencies identified in our initial TDABC model. Post-intervention process maps for a hospital episode were created using electronic time stamp data for simple appendicitis cases during February to March 2016. Total personnel and consumable costs were determined using TDABC methodology.

RESULTS

The post-intervention TDABC model featured 6 phases of care, 33 processes, and 19 personnel types. Our interventions reduced duration and costs in the emergency department (-41min, -$23) and pre-operative floor (-57min, -$18). While post-anesthesia care unit duration and costs increased (+224min, +$41), the same-day discharge protocol eliminated post-operative floor costs (-$306). Our model incorporating all three interventions reduced total direct costs by 11% ($2753.39 to $2447.68) and duration of hospitalization by 51% (1984min to 966min).

CONCLUSION

Time-driven activity-based costing can dynamically model changes in our healthcare delivery as a result of process improvement interventions. It is an effective tool to continuously assess the impact of these interventions on the value of appendicitis care.

LEVEL OF EVIDENCE

II, Type of study: Economic Analysis.