Comparing the real and perceived cost of adenotonsillectomy using time‐driven activity‐based costing

Abstract

Objective This study aims to measure the costs of treating obstructive sleep apnea (OSA) in children with an adenotonsillectomy using time‐driven activity‐based costing (TDABC) and explore how this differs from cost estimates using traditional forms of hospital accounting. Study Design Prospective observational study. Methods A total of 53 pediatric patients with symptoms of OSA or sleep‐related breathing disorder were followed from their initial appointment through surgery to their postoperative visit at an academic medical center. Personnel timing and overhead costs were calculated for TDABC analysis. Results Treating OSA with an adenotonsillectomy in a pediatric patient costs $1,192.61. On average, outpatient adenotonsillectomy costs $957.74 (80.31%); $412.18 of this cost ($4.89 per minute) was attributed to the overhead cost of the operating room. Traditional hospital accounting estimates outpatient adenotonsillectomy costs $2,987, with overhead attributing $11.27 per minute or $949.23 per case. 57% ($6.38 per minute) of the hospital's estimate for overhead was actually for equipment and implants used by different hospital services and not for equipment used in adenotonsillectomies. Conclusion Through TDABC, we were able to highlight how traditional RVU‐based hospital accounting systems apportion all overhead costs, including items such as orthopedic implants, evenly across specialties, thus increasing the perceived cost of equipment‐light procedures such as adenotonsillectomies. We suspect that providers who perform a TDABC analysis at their home institution or practice will find their own unique insights, which will help them understand and control the different components of healthcare costs. Level of Evidence 2 Laryngoscope, 129:1347–1353, 2019

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

“…Nevertheless, it is not possible to accurately attribute the real cost per patient, which can be achieved by the TDABC bottom-up orientation. 20 For surgical episodes, our results suggest that the main activities that may be considered to provide a better level of detail in a microcosting study are preoperative evaluation, surgical procedures, postanesthesia care unit stay, and inpatient ward. By using RVU cost systems, it is not possible to understand patient surgical costs by providing this level of detail.…”

“…11 As the method suggests, understanding how patients consume resources along the course of their care trajectory can help clinicians working in any practice use the described methodologies and realize previously unforeseen costsaving opportunities. 20,42 For example, in a study performed in an academic medical center, the costs of pediatric surgeries assessed by TDABC and relative value unit (RVU)-based hospital accounting were compared. 45 The results presented in this review showed that by applying TDABC, it was possible to highlight how traditional cost systems allocate overhead costs by having them evenly distributed across specialties.…”

“…The scarce data on other more complex and less predictable medical conditions limit conclusions on the capability of TDABC methodology to contribute to the most accurate cost information that is widely applicable. The literature presents some clear limitations of TDABC that need to acknowledged: the method relies on observational data, such as the timing of how long each patient spends with the staff at a hospital, 12,20 and there is a lack of agreed-upon standardized ways of conducting TDABC studies, making it more difficult to compare the results. 49 We believe that given the higher variability in the therapies employed and the involvement of multiple clinical teams from different hospital units, cost analysis of medical inpatients can be even more complex.…”

An alternative model in the provision of CPAP in sleep apnea: a comparative cost analysis

“…One of the key reasons for choosing this type of partial economic evaluation analysis is that a change in the acquisition system does not mean an alteration in the effectiveness of the treatment, since the patient receives the same device in both forms of management and is not affected by how it is acquired. Therefore, our analysis is based on a detailed description of the activity carried out to identify and assess each assigned resource that is called the activity-based cost system [ 13 ]. This analysis is especially appropriate for estimating costs in the health field, given that the activities generators of the uses, consumption or wear of productive factors are applied to each patient depending on the specific requirements of each diagnostic-therapeutic process and each clinical condition [ 14 ].…”

An Alternative Model in The Provision of CPAP in Sleep Apnea: A Comparative Cost Analysis

“…Therefore, our analysis is based on a detailed description of the activity carried out to identify and assess each assigned resource that is called the activity-based cost system [13]. This analysis is especially appropriate for estimating costs in the health eld, given that the activities generators of the uses, consumption or wear of productive factors are applied to each patient depending on the speci c requirements of each diagnostic-therapeutic process and each clinical condition [14].…”