Time-driven activity-based costing of multivessel coronary artery bypass grafting across national boundaries to identify improvement opportunities: study protocol

Actual Cost of Extracorporeal Cardiopulmonary Resuscitation: A Time-Driven Activity-Based Costing Study

OBJECTIVES

To determine the actual cost and drivers of the cost of an extracorporeal cardiopulmonary resuscitation (E-CPR) care cycle.

PERSPECTIVE

A time-driven activity-based costing study conducted from a healthcare provider perspective.

SETTING

A quaternary care ICU providing around-the-clock E-CPR service for out-of-hospital cardiac arrest (OHCA) and in-hospital cardiac arrest (IHCA) in Australia.

METHODS

The E-CPR care cycle was defined as the time from initiating E-CPR to hospital discharge or death of the patient. Detailed process maps with discrete steps and probabilistic decision nodes accounting for the complex trajectories of E-CPR patients were developed. Data about clinical and nonclinical resources and timing of activities was collected multiple times for each process . Total direct costs were calculated using the time estimates and unit costs per resource for all clinical and nonclinical resources. The total direct costs were combined with indirect costs to obtain the total cost of E-CPR.

RESULTS

From 10 E-CPR care cycles observed during the study period, a minimum of 3 observations were obtained per process. The E-CPR care cycle's mean (95% CI) cost was $75,014 ($66,209-83,222). Initiation of extracorporeal membrane oxygenation (ECMO) and ECMO management constituted 18% of costs. The ICU management (35%) and surgical costs (20%) were the primary cost determinants. IHCA had a higher mean (95% CI) cost than OHCA ($87,940 [75,372-100,570] vs. 62,595 [53,994-71,890], p < 0.01), mainly because of the increased survival and ICU length of stay of patients with IHCA. The mean cost for each E-CPR survivor was $129,503 ($112,422-147,224).

CONCLUSIONS

Significant costs are associated with E-CPR for refractory cardiac arrest. The cost of E-CPR for IHCA was higher compared with the cost of E-CPR for OHCA. The major determinants of the E-CPR costs were ICU and surgical costs. These data can inform the cost-effectiveness analysis of E-CPR in the future.

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.

Postpandemic Evaluation of the Eco-Efficiency of Personal Protective Equipment Against COVID-19 in Emergency Departments: Proposal for a Mixed Methods Study

BACKGROUND

The COVID-19 pandemic has had a profound impact on emergency department (ED) care in Canada and around the world. To prevent transmission of COVID-19, personal protective equipment (PPE) was required for all ED care providers in contact with suspected cases. With mass vaccination and improvements in several infection prevention components, our hypothesis is that the risks of transmission of COVID-19 will be significantly reduced and that current PPE use will have economic and ecological consequences that exceed its anticipated benefits. Evidence is needed to evaluate PPE use so that recommendations can ensure the clinical, economic, and environmental efficiency (ie, eco-efficiency) of its use.

OBJECTIVE

To support the development of recommendations for the eco-efficient use of PPE, our research objectives are to (1) estimate the clinical effectiveness (reduced transmission, hospitalizations, mortality, and work absenteeism) of PPE against COVID-19 for health care workers; (2) estimate the financial cost of using PPE in the ED for the management of suspected or confirmed COVID-19 patients; and (3) estimate the ecological footprint of PPE use against COVID-19 in the ED.

METHODS

We will conduct a mixed method study to evaluate the eco-efficiency of PPE use in the 5 EDs of the CHU de Québec-Université Laval (Québec, Canada). To achieve our goals, the project will include four phases: systematic review of the literature to assess the clinical effectiveness of PPE (objective 1; phase 1); cost estimation of PPE use in the ED using a time-driven activity-based costing method (objective 2; phase 2); ecological footprint estimation of PPE use using a life cycle assessment approach (objective 3; phase 3); and cost-consequence analysis and focus groups (integration of objectives 1 to 3; phase 4).

RESULTS

The first 3 phases have started. The results of these phases will be available in 2023. Phase 4 will begin in 2023 and results will be available in 2024.

CONCLUSIONS

While the benefits of PPE use are likely to diminish as health care workers' immunity increases, it is important to assess its economic and ecological impacts to develop recommendations to guide its eco-efficient use.

TRIAL REGISTRATION

PROSPERO CRD42022302598; https://www.crd.york.ac.uk/prospero/display_record.php?RecordID=302598.

INTERNATIONAL REGISTERED REPORT IDENTIFIER (IRRID)

DERR1-10.2196/50682.

Billing And Insurance-Related Administrative Costs: A Cross-National Analysis

Billing and insurance-related costs are a significant source of wasteful health care spending in Organization for Economic Cooperation and Development nations, but these administrative burdens vary across national systems. We executed a microlevel accounting of these costs in different national settings at six provider locations in five nations (Australia, Canada, Germany, the Netherlands, and Singapore) that supplements our prior study measuring the costs in the US. We found that billing and insurance-related costs for inpatient bills range from a low of $6 in Canada to a high of $215 in the US for an inpatient surgical bill (purchasing power parity adjusted). We created a taxonomy of billing and insurance-related activities (eligibility, coding, submission, and rework) that was applied to data from the six sites and allows cross-national comparisons. Higher costs in the US and Australia are attributed to high coding costs. Much of the savings achieved in some nations is attributable to assigning tasks to people in lower-skill job categories, although most of the savings are due to more efficient billing and insurance-related processes. Some nations also reduce these costs by offering financial counseling to patients before treatment. Our microlevel approach can identify specific cost drivers and reveal national billing features that reduce coding costs. It illustrates a valuable pathway for future research in understanding and mitigating administrative costs in health care.

Adaptation of time‐driven activity‐based costing to the evaluation of the efficiency of ambulatory care provided in the emergency department

Objectives

The aim of this study was: (1) to adapt the time‐driven activity‐based costing (TDABC) method to emergency department (ED) ambulatory care; (2) to estimate the cost of care associated with frequently encountered ambulatory conditions; and (3) to compare costs calculated using estimated time and objectively measured time.

Methods

TDABC was applied to a retrospective cohort of patients with upper respiratory tract infections, urinary tract infections, unspecified abdominal pain, lower back pain and limb lacerations who visited an ED in Québec City (Canada) during fiscal year 2015–2016. The calculated cost of care was the product of the time required to complete each care procedure and the cost per minute of each human resource or equipment involved. Costing based on durations estimated by care professionals were compared to those based on objective measurements in the field.

Results

Overall, 220 care episodes were included and 3080 time measurements of 75 different processes were collected. Differences between costs calculated using estimated and measured times were statistically significant for all conditions except lower back pain and ranged from $4.30 to $55.20 (US) per episode. Differences were larger for conditions requiring more advanced procedures, such as imaging or the attention of ED professionals.

Conclusions

The greater the use of advanced procedures or the involvement of ED professionals in the care, the greater is the discrepancy between estimated‐time‐based and measured‐time‐based costing. TDABC should be applied using objective measurement of the time per procedure.

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.

Understanding the cost of care of type 2 diabetes mellitus - a value measurement perspective

OBJECTIVES

We explore the cost of care of type 2 diabetes mellitus (T2DM) using time-driven activity-based costing (TDABC) and connect that cost to resulting patient health outcomes.

DESIGN

We construct six care pathways varying from low-risk to high-risk patients over a 12-month cycle of care. We collect time, resource and cost data on activities in each care pathway and compute a time-driven estimate of cost. Use of patient outcome data highlights the health outcomes achieved.

SETTING

Primary, secondary and tertiary care.

PARTICIPANTS

Medical staff involved in the care of patients with T2DM.

PRIMARY AND SECONDARY MEASURES

Primary: resources consumed to provide T2DM care. Secondary: health outcomes for representative patient within each patient category.

RESULTS

By computing cost of T2DM care and associated complications of chronic kidney disease, active foot disease, moderate risk of active foot disease and myocardial infarction, we show that when patients develop acute complications, significant costs are incurred, as compared with the cost of maintaining a patient at low or moderate risk. Variance analysis further informs decision making by showing the need to have the right personnel doing the right tasks at the right time to control costs.

CONCLUSIONS

A TDABC approach facilitates an understanding of the drivers of cost in chronic illness care. Our paper highlights the stages in the care pathway where different settings, decision making and a more optimal use of resources could assist with achievement of better patient outcomes.

Time-driven activity-based costing as a strategy to increase efficiency: An analyses of interventional coronary procedures

Monitoring the costs is one of the key components underlying value-based health care. This study aimed to evaluate the cost-saving opportunities of interventional coronary procedures (ICPs). Data from 90 patients submitted to elective ICP were evaluated in five Brazilian hospitals. Time-driven activity-based costing, that guides the cost estimates using the time consumed and the capacity cost rates per resource as the data input, was used to assess costs and the time spent over the care pathway. Descriptive cost analyses were followed by a labour cost-saving estimate potentially achieved by the redesign of the ICP pathway. The mean cost per patient varied from $807 to $2639. The length of the procedure phase per patient was similar among the hospitals, while the post-procedure phase presented the highest variation in length. The highest direct cost saving opportunities are concentrated in the procedure phase. By comparing the benchmark service with the most expensive one, it was estimated that redesigning physician practices could decrease 51% of the procedure cost. This application is pioneered in Brazil and demonstrates how detailed cost information can contribute to driving health care management to value by identifying cost-saving opportunities.

Process mapping in healthcare: a systematic review

INTRODUCTION

Process mapping (PM) supports better understanding of complex systems and adaptation of improvement interventions to their local context. However, there is little research on its use in healthcare. This study (i) proposes a conceptual framework outlining quality criteria to guide the effective implementation, evaluation and reporting of PM in healthcare; (ii) reviews published PM cases to identify context and quality of PM application, and the reported benefits of using PM in healthcare.

METHODS

We developed the conceptual framework by reviewing methodological guidance on PM and empirical literature on its use in healthcare improvement interventions. We conducted a systematic review of empirical literature using PRISMA (Preferred Reporting Items for Systematic Reviews and Meta-Analyses) methodology. Inclusion criteria were: full text empirical study; describing the process through which PM has been applied in a healthcare setting; published in English. Databases searched are: Medline, Embase, HMIC-Health Management Information Consortium, CINAHL-Cumulative Index to Nursing and Allied Health Literature, Scopus. Two independent reviewers extracted and analysed data. Each manuscript underwent line by line coding. The conceptual framework was used to evaluate adherence of empirical studies to the identified PM quality criteria. Context in which PM is used and benefits of using PM were coded using an inductive thematic analysis approach.

RESULTS

The framework outlines quality criteria for each PM phase: (i) preparation, planning and process identification, (ii) data and information gathering, (iii) process map generation, (iv) analysis, (v) taking it forward. PM is used in a variety of settings and approaches to improvement. None of the reviewed studies (N = 105) met all ten quality criteria; 7% were compliant with 8/10 or 9/10 criteria. 45% of studies reported that PM was generated through multi-professional meetings and 15% reported patient involvement. Studies highlighted the value of PM in navigating the complexity characterising healthcare improvement interventions.

CONCLUSION

The full potential of PM is inhibited by variance in reporting and poor adherence to underpinning principles. Greater rigour in the application of the method is required. We encourage the use and further development of the proposed framework to support training, application and reporting of PM.

TRIAL REGISTRATION

Prospero ID: CRD42017082140.

A Value-Based Comparison of the Management of Ambulatory Respiratory Diseases in Walk-in Clinics, Primary Care Practices, and Emergency Departments: Protocol for a Multicenter Prospective Cohort Study

BACKGROUND

In Canada, 30%-60% of patients presenting to emergency departments are ambulatory. This category has been labeled as a source of emergency department overuse. Acting on the presumption that primary care practices and walk-in clinics offer equivalent care at a lower cost, governments have invested massively in improving access to these alternative settings in the hope that patients would present there instead when possible, thereby reducing the load on emergency departments. Data in support of this approach remain scarce and equivocal.

OBJECTIVE

The aim of this study is to compare the value of care received in emergency departments, walk-in clinics, and primary care practices by ambulatory patients with upper respiratory tract infection, sinusitis, otitis media, tonsillitis, pharyngitis, bronchitis, influenza-like illness, pneumonia, acute asthma, or acute exacerbation of chronic obstructive pulmonary disease.

METHODS

A multicenter prospective cohort study will be performed in Ontario and Québec. In phase 1, a time-driven activity-based costing method will be applied at each of the 15 study sites. This method uses time as a cost driver to allocate direct costs (eg, medication), consumable expenditures (eg, needles), overhead costs (eg, building maintenance), and physician charges to patient care. Thus, the cost of a care episode will be proportional to the time spent receiving the care. At the end of this phase, a list of care process costs will be generated and used to calculate the cost of each consultation during phase 2, in which a prospective cohort of patients will be monitored to compare the care received in each setting. Patients aged 18 years and older, ambulatory throughout the care episode, and discharged to home with one of the aforementioned targeted diagnoses will be considered. The estimated sample size is 1485 patients. The 3 types of care settings will be compared on the basis of primary outcomes in terms of the proportion of return visits to any site 3 and 7 days after the initial visit and the mean cost of care. The secondary outcomes measured will include scores on patient-reported outcome and experience measures and mean costs borne wholly by patients. We will use multilevel generalized linear models to compare the care settings and an overlap weights approach to adjust for confounding factors related to age, sex, gender, ethnicity, comorbidities, registration with a family physician, socioeconomic status, and severity of illness.

RESULTS

Phase 1 will begin in 2021 and phase 2, in 2023. The results will be available in 2025.

CONCLUSIONS

The end point of our program will be for deciders, patients, and care providers to be able to determine the most appropriate care setting for the management of ambulatory emergency respiratory conditions, based on the quality and cost of care associated with each alternative.

INTERNATIONAL REGISTERED REPORT IDENTIFIER (IRRID)

PRR1-10.2196/25619.

Process Mapping and Activity-Based Costing of the Intravitreal Injection Procedure

PURPOSE/AIM OF THE STUDY

To quantify the cost of performing an intravitreal injection (IVI) utilizing activity-based costing (ABC), which allocates a cost to each resource involved in a manufacturing process.

MATERIALS AND METHODS

A prospective, observational cohort study was performed at an urban, multi-specialty ophthalmology practice affiliated with an academic institution. Fourteen patients scheduled for an IVI-only visit with a retina ophthalmologist were observed from clinic entry to exit to create a process map of time and resource utilization. Indirect costs were allocated with ABC and direct costs were estimated based on process map observations, internal accounting records, employee interviews, and nationally-reported metrics. The primary outcome measure was the cost of an IVI procedure in United States dollars. Secondary outcomes included operating income (cost subtracted from revenue) of an IVI and patient-centric time utilization for an IVI.

RESULTS

The total cost of performing an IVI was $128.28; average direct material, direct labor, and overhead costs were $2.14, $97.88, and $28.26, respectively. Compared to the $104.40 reimbursement set by the Centers for Medicare and Medicaid Services for Current Procedural Terminology code 67028, this results in a negative operating income of -$23.88 (-22.87%). The median clinic resource-utilizing time to complete an IVI was 32:58 minutes (range [19:24-1:28:37]); the greatest bottleneck was physician-driven electronic health record documentation.

CONCLUSIONS

Our study provides an objective and accurate cost estimate of the IVI procedure and illustrates how ABC may be applied in a clinical context. Our findings suggest that IVIs may currently be undervalued by payors.

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.

Are cost advantages from a modern Indian hospital transferable to the United States?

Background

Multiple modern Indian hospitals operate at very low cost while meeting US-equivalent quality accreditation standards. Though US hospitals face intensifying pressure to lower their cost, including proposals to extend Medicare payment rates to all admissions, the transferability of Indian hospitals’ cost advantages to US peers remains unclear.

Methods

Using time-driven activity-based costing methods, we estimate the average cost of personnel and space for an elective coronary artery bypass graft (CABG) surgery at two American hospitals and one Indian hospital (NH). All three hospitals are Joint Commission accredited and have reputations for use of modern performance management methods. Our case study applies several analytic steps to distinguish transferable from non-transferable sources of NH’s cost savings.

Results

After removing non-transferable sources of efficiency, NH’s residual cost advantage primarily rests on shifting tasks to less-credentialed and/or less-experienced personnel who are supervised by highly-skilled personnel when perceived risk of complications is low. NH’s high annual CABG volume facilitates such supervised work “downshifting.” The study is subject to limitations inherent in case studies, does not account for the younger age of NH’s patients, or capture savings attributable to NH’s negligible frequency of re-admission or post-acute care facility placement.

Conclusions

Most transferable bases for a modern Indian hospital’s cost advantage would require more flexible American states’ hospital and health professional licensing regulations, greater family participation in inpatient care, and stronger support by hospital executives and clinicians for substantially lowering the cost of care via regionalization of complex surgeries and weekend use of costly operating rooms.

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.

A time-driven, activity-based costing methodology for determining the costs of red blood cell transfusion in patients with beta thalassaemia major

OBJECTIVES

To describe the methodology to estimate the total cost of administration of a single unit of red blood cells (RBC) in adults with beta thalassaemia major in an Australian specialist haemoglobinopathy centre.

BACKGROUND

Beta thalassaemia major is a genetic disorder of haemoglobin associated with multiple end-organ complications and typically requiring lifelong RBC transfusion therapy. New therapeutic agents are becoming available based on advances in understanding of the disorder and its consequences. Assessment of the true total cost of transfusion, incorporating both product and activity costs, is required in order to evaluate the benefits and costs of these new therapies.

METHODS

We describe the bottom-up, time-driven, activity-based costing methodology used to develop process maps to provide a step-by-step outline of the entire transfusion pathway. Detailed flowcharts for each process are described. Direct observations and timing of the process maps document all activities, resources, staff, equipment and consumables in detail. The analysis will include costs associated with performing these processes, including resources and consumables. Sensitivity analyses will be performed to determine the impact of different staffing levels, timings and probabilities associated with performing different tasks.

RESULTS

Thirty-one process maps have been developed, with over 600 individual activities requiring multiple timings. These will be used for future detailed cost analyses.

CONCLUSIONS

Detailed process maps using bottom-up, time-driven, activity-based costing for determining the cost of RBC transfusion in thalassaemia major have been developed. These could be adapted for wider use to understand and compare the costs and complexities of transfusion in other settings.

Administrative Costs Associated With Physician Billing and Insurance-Related Activities at an Academic Health Care System

Importance

Administrative costs in the US health care system are an important component of total health care spending, and a substantial proportion of these costs are attributable to billing and insurance-related activities.

Objective

To examine and estimate the administrative costs associated with physician billing activities in a large academic health care system with a certified electronic health record system.

Design, Setting, and Participants

This study used time-driven activity-based costing. Interviews were conducted with 27 health system administrators and 34 physicians in 2016 and 2017 to construct a process map charting the path of an insurance claim through the revenue cycle management process. These data were used to calculate the cost for each major billing and insurance-related activity and were aggregated to estimate the health system's total cost of processing an insurance claim.

Exposures

Estimated time required to perform billing and insurance-related activities, based on interviews with management personnel and physicians.

Main Outcomes and Measures

Estimated billing and insurance-related costs for 5 types of patient encounters: primary care visits, discharged emergency department visits, general medicine inpatient stays, ambulatory surgical procedures, and inpatient surgical procedures.

Results

Estimated processing time and total costs for billing and insurance-related activities were 13 minutes and $20.49 for a primary care visit, 32 minutes and $61.54 for a discharged emergency department visit, 73 minutes and $124.26 for a general inpatient stay, 75 minutes and $170.40 for an ambulatory surgical procedure, and 100 minutes and $215.10 for an inpatient surgical procedure. Of these totals, time and costs for activities carried out by physicians were estimated at a median of 3 minutes or $6.36 for a primary care visit, 3 minutes or $10.97 for an emergency department visit, 5 minutes or $13.29 for a general inpatient stay, 15 minutes or $51.20 for an ambulatory surgical procedure, and 15 minutes or $51.20 for an inpatient surgical procedure. Of professional revenue, professional billing costs were estimated to represent 14.5% for primary care visits, 25.2% for emergency department visits, 8.0% for general medicine inpatient stays, 13.4% for ambulatory surgical procedures, and 3.1% for inpatient surgical procedures.

Conclusions and Relevance

In a time-driven activity-based costing study in a large academic health care system with a certified electronic health record system, the estimated costs of billing and insurance-related activities ranged from $20 for a primary care visit to $215 for an inpatient surgical procedure. Knowledge of how specific billing and insurance-related activities contribute to administrative costs may help inform policy solutions to reduce these expenses.

Patient level cost of diabetes self-management education programmes: an international evaluation

OBJECTIVES

The objective of this study was to examine the value of time-driven activity-based costing (TDABC) in understanding the process and costs of delivering diabetes self-management education (DSME) programmes in a multicountry comparative study.

SETTING

Outpatient settings in five European countries (Austria, Denmark, Germany, Ireland, UK) and two countries outside Europe, Taiwan and Israel.

PARTICIPANTS

Providers of DSME programmes across participating countries (N=16) including healthcare professionals, administrators and patients taking part in DSME programmes.

PRIMARY AND SECONDARY MEASURES

Primary measure: time spent by providers in the delivery of DSME and resources consumed in order to compute programme costs. Secondary measures: self-report measures of behavioural self-management and diabetes disease/health-related outcomes.

RESULTS

We found significant variation in costs and the processes of how DSME programmes are provided across and within countries. Variations in costs were driven by a combination of price variances, mix of personnel skill and efficiency variances. Higher cost programmes were not found to have achieved better relative outcomes. The findings highlight the value of TDABC in calculating a patient level cost and potential of the methodology to identify process improvements in guiding the optimal allocation of scarce resources in diabetes care, in particular for DSME that is often underfunded.

CONCLUSIONS

This study is the first to measure programme costs using estimates of the actual resources used to educate patients about managing their medical condition and is the first study to map such costs to self-reported behavioural and disease outcomes. The results of this study will inform clinicians, managers and policy makers seeking to enhance the delivery of DSME programmes. The findings highlight the benefits of adopting a TDABC approach to understanding the drivers of the cost of DSME programmes in a multicountry study to reveal opportunities to bend the cost curve for DSME.

Variation in the cost of care for primary total knee arthroplasties

BACKGROUND

The study examined the cost variation across 29 high-volume US hospitals and their affiliated orthopaedic surgeons for delivering a primary total knee arthroplasty without major complicating conditions. The hospitals had similar patient demographics, and more than 80% of them had statistically-similar Medicare risk-adjusted readmission and complication rates.

METHODS

Hospital and physician personnel costs were calculated using time-driven activity-based costing. Consumable supply costs, such as the prosthetic implant, were calculated using purchase prices, and postacute care costs were measured using either internal costs or external claims as reported by each hospital.

RESULTS

Despite having similar patient demographics and readmission and complication rates, the average cost of care for total knee arthroplasty across the hospitals varied by a factor of about 2 to 1. Even after adjusting for differences in internal labor cost rates, the hospital at the 90th percentile of cost spent about twice as much as the one at the 10th percentile of cost.

CONCLUSIONS

The large variation in costs among sites suggests major and multiple opportunities to transfer knowledge about process and productivity improvements that lower costs while simultaneously maintaining or improving outcomes.

Dissecting Costs of CT Study: Application of TDABC (Time-driven Activity-based Costing) in a Tertiary Academic Center

RATIONALE AND OBJECTIVES

The lack of understanding of the real costs (not charge) of delivering healthcare services poses tremendous challenges in the containment of healthcare costs. In this study, we applied an established cost accounting method, the time-driven activity-based costing (TDABC), to assess the costs of performing an abdomen and pelvis computed tomography (AP CT) in an academic radiology department and identified opportunities for improved efficiency in the delivery of this service.

MATERIALS AND METHODS

The study was exempt from an institutional review board approval. TDABC utilizes process mapping tools from industrial engineering and activity-based costing. The process map outlines every step of discrete activity and duration of use of clinical resources, personnel, and equipment. By multiplying the cost per unit of capacity by the required task time for each step, and summing each component cost, the overall costs of AP CT is determined for patients in three settings, inpatient (IP), outpatient (OP), and emergency departments (ED).

RESULTS

The component costs to deliver an AP CT study were as follows: radiologist interpretation: 40.1%; other personnel (scheduler, technologist, nurse, pharmacist, and transporter): 39.6%; materials: 13.9%; and space and equipment: 6.4%. The cost of performing CT was 13% higher for ED patients and 31% higher for inpatients (IP), as compared to that for OP. The difference in cost was mostly due to non-radiologist personnel costs.

CONCLUSIONS

Approximately 80% of the direct costs of AP CT to the academic medical center are related to labor. Potential opportunities to reduce the costs include increasing the efficiency of utilization of CT, substituting lower cost resources when appropriate, and streamlining the ordering system to clarify medical necessity and clinical indications.