Comparison of COVID-19 hospitalization costs across care pathways: a patient-level time-driven activity-based costing analysis in a Brazilian hospital.

BACKGROUND: The COVID-19 pandemic raised awareness of the need to better understand where and how patient-level costs are incurred in health care organizations, as health managers and other decision-makers need to plan and quickly adapt to the increasing demand for health care services to meet patients' care needs. Time-driven activity-based costing offers a better understanding of the drivers of cost throughout the care pathway, providing information that can guide decisions on process improvement and resource optimization. This study aims to estimate COVID-19 patient-level hospital costs and to evaluate cost variability considering the in-hospital care pathways of COVID-19 management and the patient clinical classification. METHODS: This is a prospective cohort study that applied time-driven activity-based costing (TDABC) in a Brazilian reference center for COVID-19. Patients hospitalized during the first wave of the disease were selected for their data to be analyzed to estimate in-hospital costs. The cost information was calculated at the patient level and stratified by hospital care pathway and Ordinal Scale for Clinical Improvement (OSCI) category. Multivariable analyses were applied to identify predictors of cost variability in the care pathways that were evaluated. RESULTS: A total of 208 patients were included in the study. Patients followed five different care pathways, of which Emergency + Ward was the most followed (n = 118, 57%). Pathways which included the intensive care unit presented a statistically significant influence on costs per patient (p <  0.001) when compared to Emergency + Ward. The median cost per patient was I$2879 (IQR 1215; 8140) and mean cost per patient was I$6818 (SD 9043). The most expensive care pathway was the ICU only, registering a median cost per patient of I$13,519 (IQR 5637; 23,373) and mean cost per patient of I$17,709 (SD 16,020). All care pathways that included the ICU unit registered a higher cost per patient. CONCLUSIONS: This is one of the first microcosting study for COVID-19 that applied the TDABC methodology and demonstrated how patient-level costs vary as a function of the care pathways followed by patients. These findings can be used to develop value reimbursement strategies that will inform sustainable health policies in middle-income countries such as Brazil.

Time-Driven Activity-Based Costing in Breast Cancer Care Delivery.

BACKGROUND: Accurate measurement of healthcare costs is required to assess and improve the value of oncology care. OBJECTIVES: We aimed to determine the cost of breast cancer care provision across collaborating health care organizations. METHODS: We used time-driven activity-based costing (TDABC) to calculate the complete cost of breast cancer care-initial treatment planning, chemotherapy, radiation therapy, surgical resection and reconstruction, and ancillary services (e.g., psychosocial oncology, physical therapy)-across multiple hospital sites. Data were collected between December 2019 and February 2020. TDABC steps involved (1) developing process maps for care delivery pathways; (2) determine capacity cost rates for staff, medical equipment, and hospital space; (3) measure the time required for each process step, both manually through clinic observation and using data from the Real-Time Location System (RTLS); and (4) calculate the total cost of care delivery. RESULTS: Surgical care costs ranged from $1431 for a lumpectomy to $12,129 for a mastectomy with prepectoral implant reconstruction. Radiation therapy was costed at $1224 for initial simulation and patient education, and $200 for each additional treatment. Base costs for chemotherapy delivery were $382 per visit, with additional costs driven by chemotherapy agent(s) administered. Personnel expenses were the greatest contributor to the cost of surgical care, except in mastectomy with implant reconstruction, where device costs equated to up to 60% of the cost of surgery. CONCLUSION: The cost of complete breast cancer care depended on (1) treatment protocols; (2) patient choice of reconstruction; and (3) the need for ancillary services (e.g., physical therapy). Understanding the actual costs and cost drivers of breast cancer care delivery may better inform resource utilization to lower the cost and improve the quality of care.

Cost of cardiac stereotactic body radioablation therapy versus catheter ablation for treatment of ventricular tachycardia.

AIMS: To compare the cost of cardiac stereotactic body radioablation therapy (SBRT) versus catheter ablation for treating ventricular tachycardia (VT). BACKGROUND: Cardiac SBRT is a novel way of treating refractory VT that may be less costly than catheter ablation, owing to its noninvasive, outpatient nature. However, the true costs of either procedure are not well described, which could help inform a more appropriate reimbursement for cardiac SBRT than simply cross-indexing existing procedural rates. METHODS: Process maps were derived for the full patient care cycle of both procedures using time-driven activity-based costing. Step-by-step timestamps were collected prospectively from a 10-patient SBRT cohort and retrospectively from a 59-patient catheter ablation cohort. Individual costs were estimated by multiplying timestamps with capacity cost rates (CCRs) for personnel, space, equipment, consumable, and indirect resources. These were summed into total cost, which for cardiac SBRT was compared with current catheter ablation and single-fraction lung SBRT reimbursements, both potential reference rates for cardiac SBRT. RESULTS: The direct and total procedural costs of cardiac SBRT ($7549 and $10,621) were 49% and 54% less than those of VT ablation ($14,707 and $23,225). These costs were significantly different from current reimbursement for catheter ablation ($22,692) and lung SBRT ($6329). After including hospitalization expenses (≥$15,000), VT ablation costs at least $27,604 more to furnish than cardiac SBRT. CONCLUSIONS: Time-driven activity-based costing (TDABC) can be a helpful tool for assessing healthcare costs, including novel treatment approaches. In addition to its clinical benefits, cardiac SBRT may provide significant cost reduction opportunities for treatment of VT.

It's Not Just the Prices: Time-Driven Activity-Based Costing for Initiation of Veno-Venous Extracorporeal Membrane Oxygenation at Three International Sites-A Case Review.

The United States spends more for intensive care units (ICUs) than do other high-income countries. We used time-driven activity-based costing (TDABC) to analyze ICU costs for initiation of veno-venous extracorporeal membrane oxygenation (VV ECMO) for respiratory failure to estimate how much of the higher ICU costs at 1 US site can be attributed to the higher prices paid to ICU personnel, and how much is caused by the US site's use of a higher cost staffing model. We accompanied our TDABC approach with narrative review of the ECMO programs, at Cedars-Sinai (Los Angeles), Hôpital Pitié-Salpêtrière (Paris), and The Alfred Hospital (Melbourne) from 2017 to 2019. Our primary outcome was daily ECMO cost, and we hypothesized that cost differences among the hospitals could be explained by the efficiencies and skill mix of involved clinicians and prices paid for personnel, equipment, and consumables. Our results are presented relative to Los Angeles' total personnel cost per VV ECMO patient day, indexed at 100. Los Angeles' total indexed daily cost of care was 147 (personnel: 100, durables: 5, and disposables: 42). Paris' total cost was 39 (26% of Los Angeles) (personnel: 12, durables: 1, and disposables: 26). Melbourne's total cost was 53 (36% of Los Angeles) (personnel: 32, durables: 2, and disposables: 19) (rounded). The higher personnel prices at Los Angeles explained only 26% of its much higher personnel costs than Paris, and 21% relative to Melbourne. Los Angeles' higher staffing levels accounted for 49% (36%), and its costlier mix of personnel accounted for 12% (10%) of its higher personnel costs relative to Paris (Melbourne). Unadjusted discharge rates for ECMO patients were 46% in Los Angeles (46%), 56% in Paris, and 52% in Melbourne. We found that personnel salaries explained only 30% of the higher personnel costs at 1 Los Angeles hospital. Most of the cost differential was caused by personnel staffing intensity and mix. This study demonstrates how TDABC may be used in ICU administration to quantify the savings that 1 US hospital could achieve by delivering the same quality of care with fewer and less-costly mix of clinicians compared to a French and Australian site. Narrative reviews contextualized how the care models evolved at each site and helped identify potential barriers to change.

Developing a Value Framework: Utilizing Administrative Data to Assess an Enhanced Care Initiative.

BACKGROUND: There remains no tool to quantify the total value of comparative processes in health care. Hospital administrative data sets are emerging as valuable sources to evaluate performance. Thus, we use a framework to simultaneously assess multiple domains of value associated with an enhanced recovery initiative using national administrative data. MATERIALS AND METHODS: Risk-stratified clinical pathways for patients undergoing pancreatic surgery were implemented in 2016 at our institution. We used a national administrative database to characterize changes in value associated with this initiative. Value metrics assessed included in-hospital mortality, complication rates, length of stay (LOS), 30-day readmission rates, and institutional costs. We compared our performance with other hospitals both before and after implementation of the pathways. Metrics were graphed on radar charts to assess overall value. RESULTS: 22,660 cases were assessed. Comparing 75 cases at our institution and 5520 cases at all other hospitals before pathway implementation, mean in-hospital LOS was 9.6 versus 10.8 d, in-hospital mortality was 0.0% versus 1.9%, mean costs were $23,585 versus $21,387, 30-day readmission rates were 1.3% versus 7.4%, and complication rates were 8.0% versus 11.2%, respectively. Comparing 334 cases at our institution and 16,731 cases at all other hospitals after pathway implementation, mean in-hospital LOS was 7.7 versus 10.3 d, in-hospital mortality was 0.3% versus 1.6%, mean costs were $19,428 versus $22,032, 30-day readmission rates were 6.6% versus 7.5%, and complication rates were 6.3% versus 10.3%, respectively. Notably, LOS and institutional costs were reduced at our institution after implementation of the enhanced clinical care pathways. Our costs were higher than comparators before implementation, but lower than comparators after implementation. CONCLUSIONS: Herein, we used an analytic framework and used national administrative data to assess the value of an enhanced care initiative as benchmarked with data from other hospitals. We thus illustrate how to identify and measure opportunities for targeted improvements in health care delivery. We also recognize the limitations of the use of administrative data in a comprehensive assessment of value in health care.

Time-Driven Activity-Based Costing of Emergency Department Postdischarge Nurse Calls.

EXECUTIVE SUMMARY: Postdischarge telephone calls by nurses can decrease patient return rates to healthcare systems. To date, call program costs have not been compared with patient return rates to determine cost-effectiveness. We used time-driven activity-based costing to determine the costs associated with such programs. We developed process maps for a postdischarge nurse call program in the emergency department of an urban, quaternary care, academic, Level 1 trauma center. Our primary outcome was the total cost of calls, which is based on the length of the calls (after 8 hours of observation) and the total capacity rate cost based on national registered nurse salary and space costs. Seven-day return rate differences between patients reached and those not reached from July 2018 to March 2019 were determined with a Z-test. We observed 113 postdischarge calls for 79 patients. The mean (SD) length of calls for patients reached was 4.3 minutes (1.8) compared with 2.6 minutes (0.6) for those not reached. The total capacity rate cost for calls was $1.09/minute, or $4.69 per patient reached and $2.83 per patient not reached. A retrospective analysis of 6,698 patients reached and 6,519 patients not reached showed hospital return rates of 3.5% and 6.3% (p < .0001), respectively. The study findings show that postdischarge calls were associated with decreased return rates to the emergency department and a savings of $134.89 per prevention of one return. In deciding whether to use postdischarge call programs, healthcare systems should also consider the effects on specific demographics and the potential benefits of greater patient satisfaction and increased treatment adherence.

Extracorporeal Membrane Oxygenation Appropriateness: An Interdisciplinary Consensus-Based Approach.

We describe a quality improvement initiative aimed at achieving interdisciplinary consensus about the appropriate delivery of extracorporeal membrane oxygenation (ECMO). Interdisciplinary rounds were implemented for all patients on ECMO and addressed whether care was consistent with a patient's minimally acceptable outcome, maximally acceptable burden, and relative likelihood of achieving either. The rounding process was associated with decreased days on venoarterial ECMO, from a median of 6 days in 2014 (first quartile [Q1]-third quartile [Q3], 3-10) to 5 days in 2015 (Q1-Q3, 2.5-8) and in 2016 (Q1-Q3, 1-8). Our statistical methods do not allow us to conclude that this change was due to our intervention, and it is possible that the observed decreases would have occurred whether or not the rounding process was implemented.

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.

Drivers of the Variation in Prosthetic Implant Purchase Prices for Total Knee and Total Hip Arthroplasties.

BACKGROUND: Previous studies have documented wide variation in health care spending and prices; however, the causes for the variation in supply purchase prices across providers are not well understood. The purpose of this study was to determine the drivers of variation in prosthetic implant purchase prices for primary total knee and hip arthroplasties (TKA and THA, respectively) across providers. METHODS: We obtained retrospective data from 27 hospitals on the average prosthetic implant purchase prices for primary TKAs and THAs over the 12 months ending September 30, 2013, as well as data on a range of independent potential explanatory variables. Each hospital performed at least 200 primary total joint arthroplasties per year. The multivariate seemingly unrelated regression approach was used to evaluate the impact of the variables on purchase price for each type of implant. RESULTS: The average purchase price at the hospital at the 90th percentile was 2.1 times higher for TKAs and 1.7 times higher for THAs than that at the hospital at the 10th percentile. The use of a hospital-physician committee for implant vendor selection and negotiation was associated with 17% and 23% lower implant purchase prices (P < .05) for TKAs and THAs, respectively, relative to hospitals that did not have this collaborative approach. CONCLUSION: The use of a joint hospital-physician committee is a potential strategy for achieving lower average purchase prices for prosthetic implants. Policies to increase hospital-physician collaboration may lead to lower average purchase prices in this market.

How to Pay for Health Care.

The United States stands at a crossroads in how to pay for health care. Fee for service, the dominant payment model in the U.S. and many other countries, is now widely recognized as perhaps the single biggest obstacle to improving health care delivery. A battle is currently raging, outside of the public eye, between the advocates of two radically different payment approaches: capitation and bundled payments. The stakes are high, and the outcome will define the shape of the health care system for many years to come, for better or for worse. In this article, the authors argue that although capitation may deliver modest savings in the short run, it brings significant risks and will fail to fundamentally change the trajectory of a broken system. The bundled payment model, in contrast, triggers competition between providers to create value where it matters--at the individual patient level--and puts health care on the right path. The authors provide robust proof-of-concept examples of bundled payment initiatives in the U.S. and abroad, address the challenges of transitioning to bundled payments, and respond to critics' concerns about obstacles to implementation.

Time-driven activity-based costing: a driver for provider engagement in costing activities and redesign initiatives.

OBJECT: To date, health care providers have devoted significant efforts to improve performance regarding patient safety and quality of care. To address the lagging involvement of health care providers in the cost component of the value equation, UCLA Health piloted the implementation of time-driven activity-based costing (TDABC). Here, the authors describe the implementation experiment, share lessons learned across the care continuum, and report how TDABC has actively engaged health care providers in costing activities and care redesign. METHODS: After the selection of pilots in neurosurgery and urology and the creation of the TDABC team, multidisciplinary process mapping sessions, capacity-cost calculations, and model integration were coordinated and offered to engage care providers at each phase. RESULTS: Reviewing the maps for the entire episode of care, varying types of personnel involved in the delivery of care were noted: 63 for the neurosurgery pilot and 61 for the urology pilot. The average cost capacities for care coordinators, nurses, residents, and faculty were $0.70 (range $0.63-$0.75), $1.55 (range $1.28-$2.04), $0.58 (range $0.56-$0.62), and $3.54 (range $2.29-$4.52), across both pilots. After calculating the costs for material, equipment, and space, the TDABC model enabled the linking of a specific step of the care cycle (who performed the step and its duration) and its associated costs. Both pilots identified important opportunities to redesign care delivery in a costconscious fashion. CONCLUSIONS: The experimentation and implementation phases of the TDABC model have succeeded in engaging health care providers in process assessment and costing activities. The TDABC model proved to be a catalyzing agent for cost-conscious care redesign.

Using time-driven activity-based costing to identify value improvement opportunities in healthcare.

As healthcare providers cope with pricing pressures and increased accountability for performance, they should be rededicating themselves to improving the value they deliver to their patients: better outcomes and lower costs. Time-driven activity-based costing offers the potential for clinicians to redesign their care processes toward that end. This costing approach, however, is new to healthcare and has not yet been systematically implemented and evaluated. This article describes early time-driven activity-based costing work at several leading healthcare organizations in the United States and Europe. It identifies the opportunities they found to improve value for patients and demonstrates how this costing method can serve as the foundation for new bundled payment reimbursement approaches.

How not to cut health care costs.

Health care providers in much of the world are trying to respond to the tremendous pressure to reduce costs--but evidence suggests that many of their attempts are counterproductive, raising costs and sometimes decreasing the quality of care. Kaplan and Haas reached this conclusion after conducting field research with more than 50 health care provider organizations. Administrators looking for cuts typically work from the line-item expense categories on their P&Ls, they found. This may appear to generate immediate results, but it usually does not reflect the optimal mix of resources needed to efficiently deliver excellent care. The authors describe five common mistakes: (1) Reducing support staff. This often lowers the productivity of clinicians, whose time is far more expensive. (2) Underinvesting in space and equipment. The costs of these are consistently an order of magnitude smaller than personnel costs, so cuts here are short-sighted if they lower people's productivity. (3) Focusing narrowly on procurement prices and neglecting to examine how individual clinicians actually consume supplies. (4) Maximizing patient throughput. Physicians achieve greater overall productivity by spending more time with fewer patients. (5) Failing to benchmark and standardize. Administrators, in collaboration with clinicians, should examine all the costs of treating patients' conditions. This will uncover multiple opportunities to improve processes in ways that lower total costs and deliver better care.

Improving value with TDABC.

Time-driven activity-based costing: Traces the path of a patient throughout the continuum of care for a specific medical condition. Identifies the actual cost of each resource used, such as personnel, space, consumables, and equipment, in both inpatient and outpatient settings. Documents the amount of time the patient spends with each resource. Supports the ability to aggregate cost information across multiple organizations that deliver care to a patient throughout a defined episode of care.

A Cost Model for a Low-Threshold Clinic Treating Opioid Use Disorder.

The US fee-for-service payment system under-reimburses clinics offering access to comprehensive treatments for opioid use disorder (OUD). The funding shortfall limits a clinic's ability to expand and improve access, especially for socially marginalized patients with OUD. New payment models, however, should reflect the high variation in cost for using a clinic's clinical and voluntary psychosocial and recovery support services. The authors applied time-driven activity-based costing, a patient-level, micro-costing approach, to estimate the cost at an outpatient clinic that delivers medication for opiate used disorder (MOUD) and voluntary psychosocial and recovery support services. Much of the cost variation could be explained by classifying patients into three archetypes: (1) light touch (1-3 visits): no significant co-occurring psychiatric illness, stable housing, and easy to connect for ongoing OUD treatment in a traditional outpatient setting; (2) standard (average of 8 visits): initially requires an integrated team-based care model but soon stabilizes for transition to community-based outpatient care; (3) quad morbidity (> 20 visits): multiple co-occurring substance use disorders, unhoused, co-occurring medical and psychiatric complexity, and limited social supports. With the cost of the initial visit set at an indexed value of 100, an average light touch patient had a cost of 352, a standard patient was 718, and a quad morbidity patient was 1701. The cost structure revealed by this analysis provides the foundation for alternative payment models that would enable new MOUD clinics, staffed with multi-disciplinary care teams, and located for convenient access by high-risk patients, to be established and sustained.