Time-Driven Activity-Based Costing: A Better Way to Understand the Cost of Caring for Hip Fractures

Abstract

Geriatric hip fractures are a common and costly injury. They are expected to surge in incidence and economic burden as the population ages. With an increasing financial strain on the healthcare system, payors and providers are looking toward alternative, value-based models to contain costs. Value in healthcare is the ratio of outcomes achieved over costs incurred, and can be improved by reducing cost while maintaining or improving outcomes, or by improving outcomes while maintaining or reducing costs. Therefore, an understanding of cost, the denominator of the value equation, is essential to value-based healthcare. Because traditional hospital accounting methods do not link costs to conditions, there has been little research to date on the costs of treating geriatric hip fractures over the entire cycle of care. The aim of this article is to summarize existing costing methodologies, and in particular, to review the strengths and limitations of Time-Driven Activity-Based Costing (TDABC) in orthopaedic trauma, especially as it pertains to the needs and challenges unique to hip fracture care. TDABC determines costs at the patient-level over the entire care cycle, allowing for population variability, while simultaneously identifying cost drivers that might inform risk-stratification for future alternative payment models. Through process mapping, TDABC also reveals areas of variation or inefficiency that can be targeted for optimization, and empowers physicians by focusing on costs in the control of the provider. Although barriers remain, TDABC is well-positioned to provide transparent costing and targets to improve the value of hip fracture care

Formulation of Tour Service Price With Activity-Cost Plus Pricing Method (Case Study at Pt. Airlangga Global Traveling)

“…In a study using radiology department subjects, Laurila et al (2020) also found that compared to traditional costing methods, activity-based costing was more precise in allocating overhead costs. Similar studies in the health unit also found the same thing, as conducted by Blaschke et al (2020), Suthummanon et al (2005, Claesson and Edgren (2001).…”

“…(Nota et al, 2020 ;Raab et al, 2010;Bagherpour et al,2013). In service companies themselves, often the research subjects used are health services such as hospitals (Laurila et al,2020;Blaschke et al,2020, andShah, 2018), restaurant (Raab et al, 2010), library (Siguenza-Guzman et al,2014). There are still very few studies that use research subjects in the form of travel service companies.…”

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

“…2 Aside from procedural-level insights, which are well discussed in the review, TDABC is versatile enough to provide clinical insights, involving the evaluation of pathways, teams, and patients of different medical complexities across different subspecialties and conditions. 8 Furthermore, it can provide transparency around cost implications of process variations, including the addition of digital health tools and use of external services. 2 The review by Koolmees et al, along with several others, highlights variation in costs and thus the potential to inform clinicians and administrators ways to more effectively optimize resource allocation and waste reduction.…”

Is Time-Driven Activity-Based Costing Coming out on Top? A Comparison with Activity-Based Costing in the Health Field

“…Similarly, most of the reviews carried out in the field have this departmental focus [ 36 ]. They are centred on a specific health area, such as surgery [ 39 ], oncology [ 1 ], obstetrics [ 40 ], or orthopaedics [ 41 , 42 ]. These reviews mainly focus on how the different methods (including ABC or TDABC) have measured a specific aspect within the study area [ 1 ], the variations in the use of the cost method itself, with the conclusion that it lacks standardization [ 42 ], or the comparison of profitability between different techniques [ 40 ].…”