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

Open ArchivePublished:May 26, 2020DOI:https://doi.org/10.1016/j.jval.2020.02.004

      Highlights

      • The greatest contributions to value-based initiatives achieved by the use of time-driven activity-based costing (TDABC) are care-cycle optimization throughout the care trajectory and the identification of care benchmarks that can facilitate health system improvement opportunities.
      • TDABC could be a strategy to increase cost accuracy in real-world settings, and it could help in the transition from fee-for-service to value-based systems through its capability to contribute to cost savings.
      • In a healthcare system that is continually marked by extensive waste, the application of innovative methods that contribute to the redesign of healthcare services delivery to make them more effective is necessary.
      • The health system can benefit from using cost management methods such as TDABC, because opportunities to facilitate patients’ access to the healthcare system are more effectively and safely achieved through the redesign of patients’ course of care trajectory.

      Abstract

      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.

      Keywords

      Introduction

      Rising healthcare expenditures around the world have resulted in continuous scientific advances in management and innovation.
      • Porter M.E.
      • Teisberg E.O.
      Redefining Health Care: Creating Value-Based Competition on Results.
      The value-based healthcare (VBHC) model has emerged as a promising framework for encouraging continuous improvement in the quality of care delivered to patients and for better controlling health costs.
      • Porter M.E.
      • Lee T.H.
      The strategy that wilt fix health care.
      Porter and Teisberg
      • Porter M.E.
      • Teisberg E.O.
      Redefining Health Care: Creating Value-Based Competition on Results.
      presented the VBHC concepts to ensure that the way in which organizations are reimbursed is consistent with quality improvement goals. From an economic perspective, the value of a good or service to an individual is equal to what that person would be willing to pay for it or give up in terms of time or resources to receive it.
      • Drummond M.F.
      • Sculpher M.J.
      • Claxton K.
      • Stoddart G.L.
      • Torrance G.W.
      Methods for the Economic Evaluation of Health Care Programmes.
      In healthcare, to increase value, managers must prioritize the continuous improvement of healthcare according to patients’ individual needs.
      • Porter M.E.
      • Teisberg E.O.
      Redefining Health Care: Creating Value-Based Competition on Results.
      ,
      • Husted H.
      • Kristensen B.B.
      • Andreasen S.E.
      • Skovgaard Nielsen C.
      • Troelsen A.
      • Gromov K.
      Time-driven activity-based cost of outpatient total hip and knee arthroplasty in different set-ups.
      ,
      • Lee T.H.
      The word that shall not be spoken.
      VBHC is an innovative alternative to fee-for-service payment programs.
      • Porter M.E.
      • Lee T.H.
      The strategy that wilt fix health care.
      Nevertheless, one barrier to implementation is the difficulty in determining different values for each patients’ profiles or healthcare needs. When a particular procedure is valued at a set amount, yet the amount of time, human resources, and materials needed to provide the service significantly vary from patient to patient, the provider of services who participates in complex and high-risk patient care can be financially penalized.
      • Boachie M.K.
      Healthcare provider-payment mechanisms: a review of literature.
      As a result, Lee
      • Lee T.H.
      Putting the value framework to work.
      suggested that healthcare organizations develop ways to collect data that enable it to evaluate the quality of service provided to patients and the actual costs of care. These data are essential to assess changes in the value being provided and requires advances in the technological capability of surveillance and control.
      • Tsai M.H.
      • Porter J.C.
      • Adams D.C.
      The denominator in value-based health care.
      Successful implementation of VBHC requires an assessment of real healthcare costs, by using methods that allow the evaluation of how each patient consumes resources in the healthcare system.
      • Dutta S.W.
      • Bauer-Nilsen K.
      • Sanders J.C.
      • et al.
      Time-driven activity-based cost comparison of prostate cancer brachytherapy and intensity-modulated radiation therapy.
      The cost assessment method, which is termed time-driven activity-based costing (TDABC), allows more detailed direct and indirect cost accounting and data accuracy by identifying patient-specific resource consumption over the course of the care trajectory.
      • Tsai M.H.
      • Porter J.C.
      • Adams D.C.
      The denominator in value-based health care.
      • Mericli A.F.
      • McHugh T.
      • Kruse B.
      • DeSnyder S.M.
      • Rebello E.
      • Offodile II, A.C.
      Time-driven activity-based costing to model cost utility of enhanced recovery after surgery pathways in microvascular breast reconstruction.
      TDABC was proposed as an improvement in activity-based costing because it makes accurate cost analyses faster and easier to update by using estimates of two parameters: (1) the unit cost of resource inputs and (2) the time and quantity of resources required to perform a transaction or an activity.
      • Kaplan R.S.
      • Anderson S.R.
      When properly designed and applied by following in detail the steps suggested in the literature,
      • Kaplan R.S.
      • Anderson S.R.
      ,
      • da Silva Etges A.P.B.
      • Cruz L.N.
      • Notti R.K.
      • et al.
      An 8-step framework for implementing time-driven activity-based costing in healthcare studies.
      the TDABC contributes by identifying opportunities to make patient episodes of care flow more efficiently by reducing the resources used in each activity based on real patient demand.
      • McBain R.K.
      • Jerome G.
      • Warsh J.
      • et al.
      Rethinking the cost of healthcare in low-resource settings: the value of time-driven activity-based costing.
      The method has been applied as a successful microcosting technique in medical research
      • Keel G.
      • Savage C.
      • Rafiq M.
      • Mazzocato P.
      Time-driven activity-based costing in health care: a systematic review of the literature.
      and has been suggested in the literature as a methodology that can be useful in value-based initiatives.
      • Keel G.
      • Savage C.
      • Rafiq M.
      • Mazzocato P.
      Time-driven activity-based costing in health care: a systematic review of the literature.
      ,
      • Kaplan R.S.
      • Porter M.E.
      How to solve the cost crisis in health care.
      The association of TDABC with VBHC is mentioned mostly in the articles discussing the future opportunities presented by microcosting case studies. Within this paradigm, value is defined as the health outcomes achieved for patients relative to the costs of achieving them,
      • Porter M.E.
      • Lee T.H.
      Why strategy matters now.
      requiring a detailed understanding of costs and outcomes. To appropriately apply TDABC principles, it is important to understand the methodological approaches used,
      • da Silva Etges A.P.B.
      • Cruz L.N.
      • Notti R.K.
      • et al.
      An 8-step framework for implementing time-driven activity-based costing in healthcare studies.
      the variables that are included in the analysis, and the level of cost information needed for analysis.
      • Keel G.
      • Savage C.
      • Rafiq M.
      • Mazzocato P.
      Time-driven activity-based costing in health care: a systematic review of the literature.
      In this context, this systematic review is focused on evaluating the level of heterogeneity in TDABC studies, specifically how and where this methodology contributes to the implementation and assessment of value-based initiatives in healthcare organizations. Thus, the aim of this study was to review the use of TDABC methodology in real-world settings based on existing literature and to estimate its impact on VBHC concepts in inpatient settings. The specific objectives of this review were to analyze the granularity of the cost information by examining the resources consumed per patients and type of activities and to identify how the studies affected outcomes or cost saving by the application of TDABC.

      Materials and Methods

      A systematic review of the literature was performed under the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guidelines.
      • Moher D.
      • Liberati A.
      • Tetzlaff J.
      • Altman D.G.
      for the PRISMA Group
      Preferred reporting items for systematic reviews and meta-analyses: the PRISMA statement.
      We aimed to analyze how TDABC has been used as a method to increase value when applied to real-world settings. Using content analysis, a qualitative approach was conducted
      • Finfgeld-Connett D.
      Use of content analysis to conduct knowledge-building and theory-generating qualitative systematic reviews.
      to analyze the different TDABC methodological approaches and TDABC’s effective contribution to the implementation of VBHC initiatives for inpatient management.

      Literature Search Strategy

      A comprehensive literature search was conducted on PubMed/MEDLINE and Scopus. Other iterative searching techniques were also employed, including a manual search of reference lists of primary studies databases from 2009 until August 23, 2019. The search strategy used all possible variations of the phrase “time-driven activity-based costing in healthcare” that was identified through an iterative discussion among the authors.
      The search strategy included 2 different databases. First, the MEDLINE via PUBMED database search was conducted as follows: ((TDABC[Title/Abstract] OR “time driven cost”[Title/Abstract] OR “time cost”[Title/Abstract] OR “activity time cost”[Title/Abstract])) AND (health[Title/Abstract] OR healthcare[Title/Abstract]). Second, a similar search strategy was adapted for the Scopus database ((TITLE-ABS-KEY (TDABC OR “time driven cost” OR “time cost” OR “Activity time cost” AND health OR healthcare )). The results of these 2 database searches were cross-checked to locate and eliminate duplicate entries.

      Eligibility Criteria and Study Selection

      Two reviewers (A.B.E. and K.B.R.) independently screened all titles and abstracts retrieved by the electronic search. First, the reviewers reviewed all titles and abstracts in parallel and selected all papers that contained applications of TDABC in healthcare; in this phase, the researchers reviewed all abstracts of the studies that were identified and determined which studies should be subjected to a full-text review. The inclusion criteria for this systematic review were as follows: (1) keywords: “TDABC” or “time-driven activity-based costing” or “time-driven cost” or “time cost” “activity time cost” and “health” or “healthcare” in study title and abstract; (2) all study designs; (3) articles published in English; and (4) inpatient cases. Substantial agreement between reviewers was obtained in the study selection process, with a kappa score of 0.98.
      In the third phase, after a full-text reading of each article, studies containing applications of TDABC in real-world settings of inpatient cases were selected as our sample for further analysis. We found that only surgical procedures were reported for inpatient cases, and we identified no studies in which in-hospital medical (nonsurgical) patients were assessed. Articles not containing original research (letters, editorials) and all systematic reviews were excluded.

      Data Collection and Analysis

      Data collection was performed by two researchers (A.B.E. and K.B.R.). Discrepancies identified during the eligibility criteria evaluation were discussed by the reviewers, and if uncertainties persisted, a third reviewer was contacted to support the decision (R.D.U.).
      Data extraction started with the general characteristics of the studies: year of publication, sample definition, healthcare field, whether the researchers explored time analysis in the discussion, whether TDABC was applied as a method to increase value in healthcare, and whether cost activities information was presented on a microlevel or macrolevel of detail. All data were consolidated with Microsoft Office Excel 2010 software (Microsoft Corporation, Redmond, WA).
      In sequence, 2 features of the selected studies were defined to analyze the level of granularity of the cost information:
      • 1.
        The group of resources included professional costs, structure costs (fixed costs such as energy, depreciation, etc), medications, materials and supplies, examinations (imaging such as ultrasound, tomography scan, x-ray, and laboratory tests), and implantable devices.
      • 2.
        The types of activities included the following: initial office visit, surgeon office visit, preanesthesia evaluation visit, surgery admission, day of surgery, anesthesiology encounter, surgical procedure, postanesthesia care unit stay, inpatient ward stay and discharge, follow-up office visit, and antibiotic and other surgery-related therapy.
      The overall goal was to review how TDABC has been applied to increase value, and the variables suggested in the value definition, outcomes, and costs were considered.
      • Porter M.E.
      • Teisberg E.O.
      Redefining Health Care: Creating Value-Based Competition on Results.
      We searched for positive, neutral, or negative effects on outcome measures or cost saving achieved by the real-world use of TDABC. Regarding the outcomes, we searched for process improvements that could potentially affect the patient experience. Regarding the cost impact, all studies that consolidated cost reductions assessed in currency or cost saving simulated by the adoption of process improvement initiatives were classified as cost-saving studies.
      Finally, the included studies were evaluated to meet our main study objective, to analyze cost detailing and outcome impact. The group of resources and level of activities described in each study were used as criteria to analyze whether achievement of value-based results by implementing TDABC was correlated with cost granularity. The main objectives were revisited to identify the motivations behind studies that achieved value-based effects. By combining these analyses, we were able to describe TDABC use and its contribution to VBHC initiatives.

      Results

      Study Selection

      The initial search identified 1225 citations. After the duplicates were removed, 1193 studies remained. Thereafter, the inclusion criteria were applied to titles and abstracts, yielding 65 studies. Thirty-eight studies were excluded. Figure 1 shows the flow diagram of the entire review process. After full-text screening, 26 studies remained.
      Figure thumbnail gr1
      Figure 1Flowchart of study selection according to the PRISMA statement.

      Characteristics of the Studies

      The characteristics of the included studies are shown in Table 1. Publication years ranged from 2013 to 2019. In 26 studies, surgical procedures were elective and included a bone marrow transplant study, which we classified as “surgical” because it describes the transplant that occurred in the operating room. Regarding procedure complexity, 8 studies included procedures that were classified as major surgeries, 6 as medium surgeries, and 13 as minor surgeries. Most studies were performed in the United States (18), followed by the United Kingdom (2), and 1 study from each of the following countries: Australia, Belgium, Brazil, Denmark, Haiti, Rwanda, and Turkey.
      Table 1Characteristics of studies included in the systematic review.
      StudyTitleStudy subobjectYearSurgical complexity
      • Mandigo M.
      • O’Neill K.
      • Mistry B.
      • et al.
      A time-driven activity-based costing model to improve health-care resource use in Mirebalais Haiti.
      A time-driven activity-based costing model to improve healthcare resources used in Mirebalais, HaitiObstetric care and breast cancer care2015Medium
      • Simmonds J.C.
      • Hollis R.J.
      • Tamberino R.K.
      • Vecchiotti M.A.
      • Scott A.R.
      Comparing the real and perceived cost of adenotonsillectomy using time-driven activity-based costing.
      Comparison of the real and perceived cost of adenotonsillectomy using time-driven activity-based costingAdenotonsillectomy2019Minor
      • Özyapıcı H.
      • Tanış V.N.
      Comparison of cost determination of both resource consumption accounting and time-driven activity-based costing systems in a healthcare setting.
      Comparison of the cost determination of both resource consumption accounting and time-driven activity-based costing systems in a healthcare setting.Gall bladder surgeries2017Minor
      • Crott R.
      • Lawson G.
      • Nollevaux M.-C.
      • Castiaux A.
      • Krug B.
      Comprehensive cost analysis of sentinel node biopsy in solid head and neck tumors using a time-driven activity-based costing approach.
      Comprehensive cost analysis of sentinel node biopsy in solid head and neck tumors using a time-driven activity-based costing approachNode biopsy, head and neck tumors2016Medium
      • Sabharwal S.
      • Carter A.W.
      • Rashid A.
      • Darzi A.
      • Reilly P.
      • Gupte C.M.
      Cost analysis of the surgical treatment of fractures of the proximal humerus: an evaluation of the determinants of cost and comparison of the institutional cost of treatment with the national tariff.
      Cost analysis of the surgical treatment of fractures of the proximal humerus: an evaluation of the determinants of cost and comparison of the institutional cost of treatment with the national tariffSurgical treatment of fractures of the proximal humerus2016Minor
      • Hamid K.S.
      • Matson A.P.
      • Nwachukwu B.U.
      • Scott D.J.
      • Mather R.C.
      • DeOrio J.K.
      Determining the cost-savings threshold and alignment accuracy of patient-specific instrumentation in total ankle replacements.
      Determining the cost-saving threshold and alignment accuracy of patient-specific instrumentation in total ankle replacementsAnkle replacement2017Minor
      • Koehler D.M.
      • Balakrishnan R.
      • Lawler E.A.
      • Shah A.S.
      Endoscopic versus open carpal tunnel release: a detailed analysis using time-driven activity-based costing at an academic medical center.
      Endoscopic versus open carpal tunnel release: a detailed analysis using time-driven activity-based costing at an academic medical centerEndoscopic carpal tunnel release2019Minor
      • Odhiambo J.
      • Ruhumuriza J.
      • Nkurunziza T.
      • et al.
      Health facility cost of cesarean delivery at a rural district hospital in Rwanda using time-driven activity-based costing.
      Health facility cost of cesarean delivery in a rural district hospital in Rwanda using time-driven activity-based costingCesarean2019Medium
      • Donovan C.J.
      • Hopkins M.
      • Kimmel B.M.
      • Koberna S.
      • Montie C.A.
      How Cleveland Clinic used TDABC to improve value.
      How the Cleveland Clinic used TDABC to improve valueHeart valve surgery2014Major
      • Kaplan A.L.
      • Agarwal N.
      • Setlur N.P.
      • et al.
      Measuring the cost of care in benign prostatic hyperplasia using time-driven activity-based costing (TDABC).
      Measuring the cost of care in benign prostatic hyperplasia using time-driven activity-based costing (TDABC)Care in benign prostatic hyperplasia2015Minor
      • Laviana A.A.
      • Tan H.-J.
      • Hu J.C.
      • Weizer A.Z.
      • Chang S.S.
      • Barocas D.A.
      Retroperitoneal versus transperitoneal robotic-assisted laparoscopic partial nephrectomy: a matched-pair, bicenter analysis with cost comparison using time-driven activity-based costing.
      Retroperitoneal versus transperitoneal robotic-assisted laparoscopic partial nephrectomy: a matched-pair, bicenter analysis with cost comparison using time-driven activity-based costingRetroperitoneal versus transperitoneal robotic-assisted laparoscopic partial nephrectomy2018Medium
      • Balakrishnan R.
      • Koehler D.M.
      • Shah A.S.
      TDABC: lessons from an Application in healthcare.
      TDABC: Lessons from an application in healthcareEndoscopic carpal tunnel release2018Minor
      • Palsis J.A.
      • Brehmer T.S.
      • Pellegrini V.D.
      • Drew J.M.
      • Sachs B.L.
      The cost of joint replacement: comparing two approaches to evaluating costs of total hip and knee arthroplasty.
      The cost of joint replacement, comparing 2 approaches to evaluating costs of total hip and knee arthroplastyHip and knee arthroplasty2018Major
      • Chen A.
      • Sabharwal S.
      • Akhtar K.
      • Makaram N.
      • Gupte C.M.
      Time-driven activity based costing of total knee replacement surgery at a London teaching hospital.
      Time-driven activity-based costing of total knee replacement surgery at a London teaching hospitalKnee replacement2015Minor
      • Husted H.
      • Kristensen B.B.
      • Andreasen S.E.
      • Skovgaard Nielsen C.
      • Troelsen A.
      • Gromov K.
      Time-driven activity-based cost of outpatient total hip and knee arthroplasty in different set-ups.
      Time-driven activity-based cost of outpatient total hip and knee arthroplasty in different setupsHip and knee arthroplasty2018Major
      • McCreary D.L.
      • White M.
      • Vang S.
      • Plowman B.
      • Cunningham B.P.
      Time-driven activity-based costing in fracture care: is this a more accurate way to prepare for alternative payment models?.
      Time-driven activity-based costing in fracture care: Is this a more accurate way to prepare for alternative payment models?Surgical treatment of isolated ankle fractures2018Minor
      • Akhavan S.
      • Ward L.
      • Bozic K.J.
      Time-driven activity-based costing more accurately reflects costs in arthroplasty surgery.
      Time-driven activity-based costing more accurately reflects costs in arthroplasty surgeryArthroplasty surgery2016Medium
      • Erhun F.
      • Mistry B.
      • Platchek T.
      • Milstein A.
      • Narayanan V.G.
      • Kaplan R.S.
      Time-driven activity-based costing of multivessel coronary artery bypass grafting across national boundaries to identify improvement opportunities: study protocol.
      Time-driven activity-based costing of multivessel coronary artery bypass grafting across national boundaries to identify improvement opportunities: study protocolMultivessel coronary artery bypass2015Major
      • Yangyang R.Y.
      • Abbas P.I.
      • Smith C.M.
      • et al.
      Time-driven activity-based costing to identify opportunities for cost reduction in pediatric appendectomy.
      Time-driven activity-based costing to identify opportunities for cost reduction in pediatric appendectomyAppendicitis surgery2016Minor
      • Basto J.
      • Chahal R.
      • Riedel B.
      Time-driven activity-based costing to model the utility of parallel induction redesign in high-turnover operating lists.
      Time-driven activity-based costing to model the utility of parallel induction redesign in high-turnover operating listsSurgery, anesthesia, breast or melanoma2019Medium
      • McLaughlin N.
      • Burke M.A.
      • Setlur N.P.
      • et al.
      Time-driven activity-based costing: a driver for provider engagement in costing activities and redesign initiatives.
      Time-driven activity-based costing: a driver for provider engagement in costing activities and redesign initiativesNeurosurgery and urology2014Major
      • Yangyang R.Y.
      • Abbas P.I.
      • Smith C.M.
      • et al.
      Time-driven activity-based costing: a dynamic value assessment model in pediatric appendicitis.
      Time-driven activity-based costing: a dynamic value assessment model in pediatric appendicitisPediatric appendicitis2017Minor
      • Martin J.A.
      • Mayhew C.R.
      • Morris A.J.
      • Bader A.M.
      • Tsai M.H.
      • Urman R.D.
      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.
      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 proceduresColonoscopy, aortic valve replacement, and carpal tunnel release procedures2018Major
      • Popat K.
      • Gracia K.A.
      • Guzman A.B.
      • Feeley T.W.
      Using time-driven activity-based costing to model the costs of various process-improvement strategies in acute pain management.
      Using time-driven activity-based costing to model the costs of various process-improvement strategies in acute pain managementThoracic surgery2018Major
      • Waters P.M.
      Value in pediatric orthopaedic surgery health care: the role of time-driven activity-based cost accounting (TDABC) and standardized clinical assessment and management plans (SCAMPs).
      Value in pediatric orthopedic surgery healthcare: the role of time-driven activity-based cost accounting (TDABC) and standardized clinical assessment and management plans (SCAMPS)Pediatric orthopedic surgery2015Minor
      • da Silva Etges A.P.B.
      • Cruz L.N.
      • Notti R.K.
      • et al.
      An 8-step framework for implementing time-driven activity-based costing in healthcare studies.
      An 8-step framework for implementing time-driven activity-based costing in healthcare studiesBone marrow transplant2019Major
      In 10 of the studies, orthopedic surgeries were the primary surgical procedure, and in 4 studies, other surgery types were assessed as follows: adenotonsillectomy (1), cholecystectomy (1), cesarean section (1), heart surgery (2), appendicectomy (1), and thoracic surgery (1). Three studies focused on oncologic treatment, which included surgeries along with the patient episode of care, and one study was specific to preoperative care.
      We observed that since 2015, there has been a steady number of published studies on TDABC. Regarding the methodological aspects, a critical issue that emerged was the definition of the research sample used in these studies. Among the reviewed papers, 12 studies did not present or define a sample, 13 justified the sample by the period of data collection, and 2 studies did not explain how the sample was selected.
      While analyzing the excluded studies, we identified that there was a considerable number of studies that evaluated outpatient procedures or home care, and 21 studies from the analyzed sample were excluded because we specifically focused on inpatient settings. During the study selection process, an important finding was the nonexistence of TDABC cost analysis for in-hospital medical patients. Surgery was the main episode of care in most studies, and the application of TDABC focused on 4 perioperative phases—preoperative evaluation, surgical intraoperative procedure, postanesthesia care unit stay, and inpatient ward—thus reducing the complexity of the TDABC methodology.

      Cost Detailing Information

      Using TDABC to drive improvement programs requires a detailed understanding of the processes of care and resources consumed.
      • Cooper R.
      • Kaplan R.S.
      Measure costs right: make the right decisions.
      Cost granularity information was retrieved from the articles that identified resource groups and activity types. Table 2 presents information on the included studies.
      Table 2Expanded cost and activities data in included studies.
      StudyResourcesMacro activities used
      Professional CostsStructure costsMedicationMaterialsExamsProsthesisFirst visitOrthopedic visitPre anesthesia visitPreoperative evaluationSurgical procedurePostanesthesia care unitInpatient wardFollow up visitAdministering antibiotics
      • Mandigo M.
      • O’Neill K.
      • Mistry B.
      • et al.
      A time-driven activity-based costing model to improve health-care resource use in Mirebalais Haiti.
      YesYesYesYesYesYesYesYesYesYes
      • Simmonds J.C.
      • Hollis R.J.
      • Tamberino R.K.
      • Vecchiotti M.A.
      • Scott A.R.
      Comparing the real and perceived cost of adenotonsillectomy using time-driven activity-based costing.
      YesYesYesYesYesYesYesYesYesYesYesYesYes
      • Özyapıcı H.
      • Tanış V.N.
      Comparison of cost determination of both resource consumption accounting and time-driven activity-based costing systems in a healthcare setting.
      YesYesYesYesYesYesYesYes
      • Crott R.
      • Lawson G.
      • Nollevaux M.-C.
      • Castiaux A.
      • Krug B.
      Comprehensive cost analysis of sentinel node biopsy in solid head and neck tumors using a time-driven activity-based costing approach.
      YesYesYesYesYesYesYesYes
      • Sabharwal S.
      • Carter A.W.
      • Rashid A.
      • Darzi A.
      • Reilly P.
      • Gupte C.M.
      Cost analysis of the surgical treatment of fractures of the proximal humerus: an evaluation of the determinants of cost and comparison of the institutional cost of treatment with the national tariff.
      YesYesYesYesYesYesYesYesYesYesYesYesYesYes
      • Hamid K.S.
      • Matson A.P.
      • Nwachukwu B.U.
      • Scott D.J.
      • Mather R.C.
      • DeOrio J.K.
      Determining the cost-savings threshold and alignment accuracy of patient-specific instrumentation in total ankle replacements.
      YesYesYesYesYesYesYesYesYes
      • Koehler D.M.
      • Balakrishnan R.
      • Lawler E.A.
      • Shah A.S.
      Endoscopic versus open carpal tunnel release: a detailed analysis using time-driven activity-based costing at an academic medical center.
      YesYesYesYesYesYesYesYesYes
      • Odhiambo J.
      • Ruhumuriza J.
      • Nkurunziza T.
      • et al.
      Health facility cost of cesarean delivery at a rural district hospital in Rwanda using time-driven activity-based costing.
      YesYesYesYesYesYesYesYesYes
      • Donovan C.J.
      • Hopkins M.
      • Kimmel B.M.
      • Koberna S.
      • Montie C.A.
      How Cleveland Clinic used TDABC to improve value.
      YesYesYesYesYesYesYesYesYesYesYes
      • Kaplan A.L.
      • Agarwal N.
      • Setlur N.P.
      • et al.
      Measuring the cost of care in benign prostatic hyperplasia using time-driven activity-based costing (TDABC).
      YesYesYesYesYesYesYesYesYesYesYesYes
      • Laviana A.A.
      • Tan H.-J.
      • Hu J.C.
      • Weizer A.Z.
      • Chang S.S.
      • Barocas D.A.
      Retroperitoneal versus transperitoneal robotic-assisted laparoscopic partial nephrectomy: a matched-pair, bicenter analysis with cost comparison using time-driven activity-based costing.
      YesYesYes
      • Balakrishnan R.
      • Koehler D.M.
      • Shah A.S.
      TDABC: lessons from an Application in healthcare.
      YesYesYesYesYesYesYesYes
      • Palsis J.A.
      • Brehmer T.S.
      • Pellegrini V.D.
      • Drew J.M.
      • Sachs B.L.
      The cost of joint replacement: comparing two approaches to evaluating costs of total hip and knee arthroplasty.
      YesYesYesYesYesYesYesYesYes
      • Chen A.
      • Sabharwal S.
      • Akhtar K.
      • Makaram N.
      • Gupte C.M.
      Time-driven activity based costing of total knee replacement surgery at a London teaching hospital.
      YesYesYesYesYesYesYesYesYesYesYesYesYesYes
      • Husted H.
      • Kristensen B.B.
      • Andreasen S.E.
      • Skovgaard Nielsen C.
      • Troelsen A.
      • Gromov K.
      Time-driven activity-based cost of outpatient total hip and knee arthroplasty in different set-ups.
      YesYesYesYesYesYesYesYesYes
      • McCreary D.L.
      • White M.
      • Vang S.
      • Plowman B.
      • Cunningham B.P.
      Time-driven activity-based costing in fracture care: is this a more accurate way to prepare for alternative payment models?.
      YesYesYesYesYesYesYesYesYesYes
      • Akhavan S.
      • Ward L.
      • Bozic K.J.
      Time-driven activity-based costing more accurately reflects costs in arthroplasty surgery.
      YesYesYesYesYesYesYesYesYesYes
      • Erhun F.
      • Mistry B.
      • Platchek T.
      • Milstein A.
      • Narayanan V.G.
      • Kaplan R.S.
      Time-driven activity-based costing of multivessel coronary artery bypass grafting across national boundaries to identify improvement opportunities: study protocol.
      YesYesYesYesYesYesYesYes
      • Yangyang R.Y.
      • Abbas P.I.
      • Smith C.M.
      • et al.
      Time-driven activity-based costing to identify opportunities for cost reduction in pediatric appendectomy.
      YesYesYesYesYesYesYesYes
      • Basto J.
      • Chahal R.
      • Riedel B.
      Time-driven activity-based costing to model the utility of parallel induction redesign in high-turnover operating lists.
      YesYes
      • McLaughlin N.
      • Burke M.A.
      • Setlur N.P.
      • et al.
      Time-driven activity-based costing: a driver for provider engagement in costing activities and redesign initiatives.
      YesYesYes
      • Yangyang R.Y.
      • Abbas P.I.
      • Smith C.M.
      • et al.
      Time-driven activity-based costing: a dynamic value assessment model in pediatric appendicitis.
      YesYesYesYesYesYesYes
      • Martin J.A.
      • Mayhew C.R.
      • Morris A.J.
      • Bader A.M.
      • Tsai M.H.
      • Urman R.D.
      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.
      YesYesYesYesYesYesYesYes
      • Popat K.
      • Gracia K.A.
      • Guzman A.B.
      • Feeley T.W.
      Using time-driven activity-based costing to model the costs of various process-improvement strategies in acute pain management.
      YesYesYesYesYes
      • Waters P.M.
      Value in pediatric orthopaedic surgery health care: the role of time-driven activity-based cost accounting (TDABC) and standardized clinical assessment and management plans (SCAMPs).
      YesYesYesYesYesYes
      • da Silva Etges A.P.B.
      • Cruz L.N.
      • Notti R.K.
      • et al.
      An 8-step framework for implementing time-driven activity-based costing in healthcare studies.
      YesYesYesYesYesYesYesYesYesYesYesYesYes
      Professional cost estimates were assessed by all studies. The cost of structure (fixed costs such as capital expenditures, depreciation, utilities, building maintenance) was the second most frequently described cost group. Other cost groups, such as materials, medications, and implantable devices (ie, prosthesis) had only associated acquisition costs (or prices) and did not include profit margins. Regarding laboratory and imagining tests, some studies detailed related activities and time, whereas other studies used payment or reimbursement costs, especially when they were provided by an external source. When the authors explored opportunities for improvement in the processes and for lowering costs, all results were achieved by optimizing professionals’ times to perform specific activities and, consequently, by reducing the time in the operating room (structure) or the patient’s length of hospital stay.
      The types of activities focused on the pathways for surgical patients, including hospital admission, surgical procedure, postanesthesia care unit stay, inpatient ward stay, and the discharge process (Table 2). Pre- and postprocedure physician follow-up visits were assessed by only a few studies, which presented the physician follow-up visits as a complex activity for monitoring in microcosting studies in the methods section. One study explored preanesthesia activities but did not consider surgery costs.
      • French K.E.
      • Albright H.W.
      • Frenzel J.C.
      • et al.
      Measuring the value of process improvement initiatives in a preoperative assessment center using time-driven activity-based costing.
      With respect to the time information analyses, most studies (22 studies) discussed the opportunity for cost saving and time reduction by process optimization. One study estimated the opportunity costs of performing more surgeries by adopting improvements in the surgery room schedule process by using the time information generated by the TDABC project.
      • French K.E.
      • Albright H.W.
      • Frenzel J.C.
      • et al.
      Measuring the value of process improvement initiatives in a preoperative assessment center using time-driven activity-based costing.

      TDABC and Value-Based Management Processes

      We identified 17 studies exemplifying how TDABC could contribute to value management initiatives in healthcare. We detail some examples in Table 3 and describe whether the contribution was to clinical outcomes or cost results. Negative or neutral effects were not identified in this review.
      Table 3TDABC applied in value-oriented initiatives in healthcare: a summary of key studies using TDABC in real-world settings and its impact on VBHC.
      StudyUse of TDABC in real-world settings and its impact on VBHCValue-based effectResults measured to support the impact on VBHCVariable with the highest value impact
      • Mandigo M.
      • O’Neill K.
      • Mistry B.
      • et al.
      A time-driven activity-based costing model to improve health-care resource use in Mirebalais Haiti.
      Optimized the use of resources and, consequently, cost savings. The sterilization process and adoption of teamwork were focused on determining cost savings. In addition, the budget process was redesigned using data provided by the TDABC study, contributing improved decision-making processes.Cost savingDid not measure total or potential cost savings.
      • Simmonds J.C.
      • Hollis R.J.
      • Tamberino R.K.
      • Vecchiotti M.A.
      • Scott A.R.
      Comparing the real and perceived cost of adenotonsillectomy using time-driven activity-based costing.
      Compared TDABC with RVU and identified opportunities to optimize internal processes of care and cost savings.Cost savingEstimated that 57% of the overhead costs attributed to the adenotonsillectomy procedures by the RVU system were actually from equipment and implants used by different hospital services.Overhead costs distribution
      • Sabharwal S.
      • Carter A.W.
      • Rashid A.
      • Darzi A.
      • Reilly P.
      • Gupte C.M.
      Cost analysis of the surgical treatment of fractures of the proximal humerus: an evaluation of the determinants of cost and comparison of the institutional cost of treatment with the national tariff.
      Optimized the use of resources and, consequently, cost saving along the clinical pathway. Authors concluded that TDABC allows the assessment of cost information with higher data accuracy, contributing to the establishment of new reimbursement policies.Cost savingMeasured that the national reimbursement does not represent the real cost of the procedure.

      Evaluated that the redundant staff members in the operating room represent an additional opportunity cost of £15 per minute, which represents, on average, a potential net loss of £1000 per additional or delayed surgery hour.
      Labor costs and operating room structural costs
      • Koehler D.M.
      • Balakrishnan R.
      • Lawler E.A.
      • Shah A.S.
      Endoscopic versus open carpal tunnel release: a detailed analysis using time-driven activity-based costing at an academic medical center.
      Identified opportunities to optimize the resources used inside operating rooms. As a way to achieve this, a better arrangement of multidisciplinary teams inside the operating rooms was explored.Cost savingThe endoscopic carpal tunnel release was 44% more expensive than the open surgery, being the most justified by the physician labor costs and procedure duration, which can be improved by better planning of multidisciplinary teams.Labor costs and operating room structural costs
      • Donovan C.J.
      • Hopkins M.
      • Kimmel B.M.
      • Koberna S.
      • Montie C.A.
      How Cleveland Clinic used TDABC to improve value.
      TDABC allowed managers to better distribute costs and correctly identify codes that may be billed. The authors also identified opportunities to improve clinical processes to achieve a better performance on bundled pricing.Cost savingReported 10% reduction in costs through TDABC compared with traditional RVU hospital accounting in heart valve surgery.-
      • Kaplan A.L.
      • Agarwal N.
      • Setlur N.P.
      • et al.
      Measuring the cost of care in benign prostatic hyperplasia using time-driven activity-based costing (TDABC).
      Compared care strategies, and the results achieved were used by the internal value-design team to redesign clinical pathways based on a strategy to decrease costs.Cost savingIdentified that invasive diagnostic testing can increase surgical costs by 150% compared with the standalone urology clinic visit and that a 400% cost discrepancy exists between the most and least expensive surgical alternative procedures for benign prostatic hyperplasia.Labor costs
      • Balakrishnan R.
      • Koehler D.M.
      • Shah A.S.
      TDABC: lessons from an Application in healthcare.
      The TDABC application was useful for obtaining cost information with a higher data accuracy. The authors also identified opportunities to improve clinical processes and achieve a better performance on bundled pricing.Cost savingMeasured the difference of labor physician costs. The estimates of $1191 for the open palm and $1412 for the endoscopic approach under the traditional method decreased to $230.72 and $328.19, respectively, when using TDABC.Physician labor costs
      • Palsis J.A.
      • Brehmer T.S.
      • Pellegrini V.D.
      • Drew J.M.
      • Sachs B.L.
      The cost of joint replacement: comparing two approaches to evaluating costs of total hip and knee arthroplasty.
      Identified opportunities to redesign activities and understand the individual patient-level use of healthcare providers. A better understanding of the entire episode of care helped with strategic resource allocation decisions to optimize operating margin.Cost savingThe traditional accounting method resulted in higher cost estimates. The total cost per hip replacement was $22 076 (2014 USD) using traditional accounting and was $12 957 using TDABC. The total cost per knee replacement was $29 488 using traditional accounting and was $16 981 using TDABC. The differences are most explained by the physician overhead costs.Physician labor costs
      • Erhun F.
      • Mistry B.
      • Platchek T.
      • Milstein A.
      • Narayanan V.G.
      • Kaplan R.S.
      Time-driven activity-based costing of multivessel coronary artery bypass grafting across national boundaries to identify improvement opportunities: study protocol.
      Compared processes of care and costs among hospitals and, consequently, oriented improvement opportunities toward identifying best care practices in the sample of hospitals.Cost savingDid not measure total or potential cost-savings but exemplified how it is possible to use multiple sites to identify benchmarks of care to guide improvement actions for specific procedures in healthcare.-
      • Yangyang R.Y.
      • Abbas P.I.
      • Smith C.M.
      • et al.
      Time-driven activity-based costing to identify opportunities for cost reduction in pediatric appendectomy.
      The study used TDABC to identify inefficiencies and, consequently, cost-saving opportunities. Modifications in the sequence of activities and the professionals involved in patient care were identified and contributed to the patient experience.Cost saving; outcome measures improveReported 17% reduction in costs through TDABC compared with traditional RVU hospital accounting in simple appendicitis management. Identified extra ultrasound examinations and investigated why patients are being submitted to unnecessary exams. Implemented a standard same-day discharge protocol, which will contribute to reducing costs and increasing patient satisfaction.Unnecessary exams and labor costs
      • Basto J.
      • Chahal R.
      • Riedel B.
      Time-driven activity-based costing to model the utility of parallel induction redesign in high-turnover operating lists.
      Surgery time and patient waiting time on the list for surgery were reduced.Cost saving; outcome measures improveUnder a parallel induction design, projected operating list duration was reduced by 55 min at marginal increase (1.6%) in personnel costs.Labor costs
      • McLaughlin N.
      • Burke M.A.
      • Setlur N.P.
      • et al.
      Time-driven activity-based costing: a driver for provider engagement in costing activities and redesign initiatives.
      Providers were educated to identify the processes of care-optimization opportunities. The authors affirmed that TDABC was essential in aligning everyone to understand and agree upon the care delivery process and to realize the true costs of the resources needed to perform each activity.Cost saving; outcome measures improveAt the resource level, TDABC provided clarity regarding unused and overused personnel, space, and equipment from a provider perspective. In the preoperative clinic setting, redesign strategies included engaging medical assistants and nurse practitioners to work at the highest level of their role, enabling the physician to dedicate his or her time to do what only he or she can do: discuss the medical condition, review management options, and establish a patient-centered plan. In the in-hospital setting, multidisciplinary teams have been initiating care-redesign strategies around specific care points such as pain management, urination, and mobilization.Labor costs
      • Yangyang R.Y.
      • Abbas P.I.
      • Smith C.M.
      • et al.
      Time-driven activity-based costing: a dynamic value assessment model in pediatric appendicitis.
      Improvement projects were implemented and achieved reduction in time and costs.Cost savingReduced duration and costs in the emergency department (−41 min, −$23) and preoperative floor (−57 min, −$18). Same-day discharge protocol eliminated postoperative floor costs (−$306). All 3 interventions reduced total direct costs by 11% ($2753.39 to $2447.68) and duration of hospitalization by 51%.Labor and structural costs
      • Martin J.A.
      • Mayhew C.R.
      • Morris A.J.
      • Bader A.M.
      • Tsai M.H.
      • Urman R.D.
      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.
      Opportunities for cost saving and patient waiting time were identified. The first case achieved these improvements by shifting some of the colonoscopies scheduled with an anesthesiologist from the main hospital to the ambulatory facility. In a second case, the authors showed that the deployment of an aortic valve via the transcatheter route frontloads the costs compared with traditional surgical replacement. The last case demonstrated significant cost savings for the healthcare system associated with the reorganization of staff that was required to execute a carpal tunnel release.Cost savingHelped to reveal the opportunity to decrease operating costs in the preoperative evaluation clinic and procedure wait times by shifting more volume to the ambulatory facility. Estimated that shifting 50% to 75% of colonoscopy volume from the hospital to the ambulatory facility could produce annual savings of $68 000 or $102 000, respectively, and reduce the wait times from 3 mo to 6 or 3 wk, respectively. In addition, it was possible to measure that open carpal tunnel release performed in the procedure room costs 31.6% less per case than in the operating room.Labor and structural costs
      • Popat K.
      • Gracia K.A.
      • Guzman A.B.
      • Feeley T.W.
      Using time-driven activity-based costing to model the costs of various process-improvement strategies in acute pain management.
      The study identified that placing epidurals in the preoperative holding room can reduce costs when compared with placing the epidural inside the operating room. The method also supported professionals’ education about the optimization of care processes.Cost savingMean cost-saving opportunity of 18% by placing epidurals in the preoperative holding room. Reduced anesthesiology unnecessary duties by 30%. Personnel reallocation and workflow changes resulted in mean cost reductions of 14% with epidurals in the holding room and 7% cost reductions with epidurals in the operating room.Labor costs
      • Waters P.M.
      Value in pediatric orthopaedic surgery health care: the role of time-driven activity-based cost accounting (TDABC) and standardized clinical assessment and management plans (SCAMPs).
      Cost-saving opportunities associated with the adoption of standardized clinical assessment and management plans in orthopedic surgeries were assessed.Cost savingReduced surgery costs in 14% based on resource utilization review.Labor costs
      RVU indicates relative value unit; TDABC, time-driven activity-based costing; VBHC, value-based healthcare.
      Most studies achieved results that contributed to value-based management focused on cost savings. Patient-related outcome measures were associated with waiting time and educational contribution to providers through their involvement in a patient-centered exercise when the TDABC was applied. One study
      • McLaughlin N.
      • Burke M.A.
      • Setlur N.P.
      • et al.
      Time-driven activity-based costing: a driver for provider engagement in costing activities and redesign initiatives.
      mentioned that TDABC was essential for gathering all stakeholders at the same table, so that all could understand and agree upon the care delivery processes and realize the true costs of the resources needed to perform each activity.
      An important common finding in 13 of the studies was improvement opportunities identified inside the operating room, such as process reviews and the professional time involved in each activity.
      In analyzing the 17 studies that used TDABC as a trigger to sustain value-based initiatives, we identified 13 studies that presented the results on a macrolevel of activities, and most were considered cost variables: professionals, structure, materials, and medication. This suggests that the level of cost detailing might not play a central role in TDABC’s being particularly useful in value-based initiatives.
      The main objectives of 11 of 17 studies were to use TDABC to identify improvement opportunities in the episode of the care cycle or to support value-based initiatives. Five studies described cost data accuracy comparisons between TDABC and traditional cost systems or between real-cost information and the reimbursement policy. In addition, 2 studies explored the opportunity to educate providers on cost methods and the importance of cost information. On the other hand, among the studies that were not classified as valuable for value-based contributions, a frequent research aim was to assess the costs of healthcare procedures. This finding suggests that when the method is applied intentionally to support value-based initiatives, it is achieved frequently and confirmed by the cost-saving opportunities assessed.

      Discussion

      This systematic review focused on evaluating the level of heterogeneity in TDABC studies and on determining precisely how and where this methodology contributes to the implementation and assessment of value-based initiatives in healthcare organizations. We identified that costing estimates differed in several respects (Table 2), such as cost group and the types of activities considered, but these do not seem to be related to the value-based results obtained. All of the studies that applied the TDABC methodology to quality improvement initiatives and/or increasing the operational efficiency in healthcare organizations achieved their initial goal by assessing cost-saving opportunities (Table 3). Surprisingly, when we considered only inpatient studies, it was not possible to identify nonsurgical inpatient studies, which resulted in our analysis being focused on in-hospital surgical patients. Of the patients, most underwent elective procedures of low and middle complexity (Table 1).
      TDABC provides the most accurate form of healthcare accounting, allowing managers and researchers to understand the real components of costs.
      • Kaplan R.S.
      • Anderson S.R.
      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 cost-saving opportunities.
      • Simmonds J.C.
      • Hollis R.J.
      • Tamberino R.K.
      • Vecchiotti M.A.
      • Scott A.R.
      Comparing the real and perceived cost of adenotonsillectomy using time-driven activity-based costing.
      ,
      • Waters P.M.
      Value in pediatric orthopaedic surgery health care: the role of time-driven activity-based cost accounting (TDABC) and standardized clinical assessment and management plans (SCAMPs).
      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.
      • Chatfield S.C.
      • Volpicelli F.M.
      • Adler N.M.
      • et al.
      Bending the cost curve: time series analysis of a value transformation programme at an academic medical centre.
      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. Nevertheless, it is not possible to accurately attribute the real cost per patient, which can be achieved by the TDABC bottom-up orientation.
      • Simmonds J.C.
      • Hollis R.J.
      • Tamberino R.K.
      • Vecchiotti M.A.
      • Scott A.R.
      Comparing the real and perceived cost of adenotonsillectomy using time-driven activity-based costing.
      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.
      With the continually evolving healthcare reform set to shift the industry away from fee-for-service reimbursement to bundled or pay-for-performance payments models, the need for a costing system that can provide more accurate patient-level costs by medical condition was highlighted in the studies conducted at the MD Anderson Cancer Center (Houston, Texas),
      • Kaplan R.S.
      • Porter M.E.
      How to solve the cost crisis in health care.
      Mayo Clinic (Rochester, Minnesota),
      • Haas D.A.
      • Helmers R.A.
      • Rucci M.
      • Brady M.
      • Kaplan R.S.
      The Mayo Clinic model for running a value-improvement program.
      and other hospitals in the United States (Table 3). Given the level of cost information accuracy that TDABC can provide, in terms of the bottom-up costs and process analysis as suggested by the methodology, the application of TDABC to medical inpatient conditions might enable payers and providers to design, evaluate, and expand value-based initiatives.
      • Kaplan R.S.
      • Porter M.E.
      How to solve the cost crisis in health care.
      ,
      • Erhun F.
      • Mistry B.
      • Platchek T.
      • Milstein A.
      • Narayanan V.G.
      • Kaplan R.S.
      Time-driven activity-based costing of multivessel coronary artery bypass grafting across national boundaries to identify improvement opportunities: study protocol.
      ,
      • Feeley T.W.
      • Mohta N.S.
      Transitioning payment models: fee-for-service to value-based care.
      This review allowed us to conclude that the highest contributions to value-based initiatives achieved by the use of TDABC are the episode of care-cycle optimization throughout the care trajectory and the identification of care benchmarks. Care benchmarks can identify the most efficient services that can facilitate health system improvement opportunities. Healthcare strategies oriented toward value can generate a positive impact on patients and providers, contributing to a more efficient health system.
      • Porter M.E.
      • Lee T.H.
      Why strategy matters now.
      Among the possible contributions of the TDABC methodology are cost savings achieved by improved schedule management of operating rooms,
      • Sabharwal S.
      • Carter A.W.
      • Rashid A.
      • Darzi A.
      • Reilly P.
      • Gupte C.M.
      Cost analysis of the surgical treatment of fractures of the proximal humerus: an evaluation of the determinants of cost and comparison of the institutional cost of treatment with the national tariff.
      ,
      • Basto J.
      • Chahal R.
      • Riedel B.
      Time-driven activity-based costing to model the utility of parallel induction redesign in high-turnover operating lists.
      better education of professionals in patient-centered care achieved by the providers’ engagement in the design of the patient care trajectory,
      • McLaughlin N.
      • Burke M.A.
      • Setlur N.P.
      • et al.
      Time-driven activity-based costing: a driver for provider engagement in costing activities and redesign initiatives.
      the redesign and optimization of clinical and administrative activities during the entire perioperative process,
      • Palsis J.A.
      • Brehmer T.S.
      • Pellegrini V.D.
      • Drew J.M.
      • Sachs B.L.
      The cost of joint replacement: comparing two approaches to evaluating costs of total hip and knee arthroplasty.
      ,
      • Yangyang R.Y.
      • Abbas P.I.
      • Smith C.M.
      • et al.
      Time-driven activity-based costing to identify opportunities for cost reduction in pediatric appendectomy.
      the identification of care benchmarks when the method is applied in multiple centers,
      • Erhun F.
      • Mistry B.
      • Platchek T.
      • Milstein A.
      • Narayanan V.G.
      • Kaplan R.S.
      Time-driven activity-based costing of multivessel coronary artery bypass grafting across national boundaries to identify improvement opportunities: study protocol.
      and the reduction in time spent in the postanesthesia care unit. These are some of the examples that were identified in the sample of studies reviewed.
      In a healthcare system that is continually marked by a significant waste of already limited resources,

      Shrank WH, Rogstad TL, Parekh N. Waste in the US health care system: estimated costs and potential for savings [e-pub ahead of print]. JAMA. https://doi.org/10.1001/jama.2019.13978. Accessed November, 2019.

      innovative methods to redesign healthcare service delivery are necessary and, as the literature has shown, can achieve significant cost savings. Payment models that incentivize organizations to better control costs and improve outcomes, such as VBHC programs, are a way to slow down continuing increases in healthcare expenditures.
      • Lee T.H.
      Putting the value framework to work.
      ,

      Shrank WH, Rogstad TL, Parekh N. Waste in the US health care system: estimated costs and potential for savings [e-pub ahead of print]. JAMA. https://doi.org/10.1001/jama.2019.13978. Accessed November, 2019.

      In a recent study that reported 7.7% of adjusted cost decreases by the adoption of a hospital value-based management program, the authors suggested that a critical reason for this positive impact was that the program continually focused the initiatives on achieving value, not cost reduction, thus gaining increased support from frontline clinicians.
      • Chatfield S.C.
      • Volpicelli F.M.
      • Adler N.M.
      • et al.
      Bending the cost curve: time series analysis of a value transformation programme at an academic medical centre.
      As a confirmation of the project result, a rigorous cost-accounting system allowed the project managers to capture accurate costs and revenues that were meaningful to clinicians, helping to measure, with a financial metric, the cost savings estimated and the hospital process outcome opportunities that could be achieved.
      • Chatfield S.C.
      • Volpicelli F.M.
      • Adler N.M.
      • et al.
      Bending the cost curve: time series analysis of a value transformation programme at an academic medical centre.
      Regarding the impact on outcomes, there is evidence that the TDABC methodology can help decrease patient waiting time for undergoing a procedure. Successful healthcare organizations are able to close the gap between the organizational strategy and its implementation, exploring ways to measure what matters, and manage the organizations to improve their performance.
      • Porter M.E.
      • Teisberg E.O.
      Redefining Health Care: Creating Value-Based Competition on Results.
      For patients, the use of cost management methods such as TDABC can help reduce the patient’s length of time spent along their course of care trajectory. For example, Yangyang et al
      • Yangyang R.Y.
      • Abbas P.I.
      • Smith C.M.
      • et al.
      Time-driven activity-based costing: a dynamic value assessment model in pediatric appendicitis.
      used TDABC to identify improvement opportunities projects, which reduced hospitalization time by 51%.
      The focus of this analysis was on surgical procedures rather than on in-hospital medical patients. 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,
      • da Silva Etges A.P.B.
      • Cruz L.N.
      • Notti R.K.
      • et al.
      An 8-step framework for implementing time-driven activity-based costing in healthcare studies.
      ,
      • Simmonds J.C.
      • Hollis R.J.
      • Tamberino R.K.
      • Vecchiotti M.A.
      • Scott A.R.
      Comparing the real and perceived cost of adenotonsillectomy using time-driven activity-based costing.
      and there is a lack of agreed-upon standardized ways of conducting TDABC studies, making it more difficult to compare the results.
      • Pathak S.
      • Snyder D.
      • Kroshus T.
      • et al.
      What are the uses and limitations of time-driven activity-based costing in total joint replacement?.
      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. According to the previous systematic reviews that studied TDABC in healthcare,
      • Keel G.
      • Savage C.
      • Rafiq M.
      • Mazzocato P.
      Time-driven activity-based costing in health care: a systematic review of the literature.
      ,
      • Pathak S.
      • Snyder D.
      • Kroshus T.
      • et al.
      What are the uses and limitations of time-driven activity-based costing in total joint replacement?.
      our results highlight that there is enormous variability in how the methodology has been employed.
      Nonetheless, some issues about our systematic review and previous studies need to be addressed, such as the nonfrequent exploration of the limitations associated with the use of TDABC. The most frequent limitation described is the difficulty with collecting accurate time data, the time-consuming observation processes, and the need for better support from information technology systems to facilitate TDABC implementation.
      • Tsai M.H.
      • Porter J.C.
      • Adams D.C.
      The denominator in value-based health care.
      ,
      • da Silva Etges A.P.B.
      • Cruz L.N.
      • Notti R.K.
      • et al.
      An 8-step framework for implementing time-driven activity-based costing in healthcare studies.
      ,
      • Najjar P.A.
      • Strickland M.
      • Kaplan R.S.
      Time-driven activity-based costing for surgical episodes.
      The development of innovative mobile solutions to collect activity-based time data in the complex hospital setting is an alternative that should be explored further. Regarding the time needed to implement this methodology, only one study reported that TDABC initiative design and implementation took 8 weeks for one specific procedure or clinical pathway.
      • McLaughlin N.
      • Burke M.A.
      • Setlur N.P.
      • et al.
      Time-driven activity-based costing: a driver for provider engagement in costing activities and redesign initiatives.
      All studies that used TDABC to support a VBHC program by exploring cost-saving opportunities and resulting in improvement of outcomes (Table 3) suggested extending these approaches to other hospital units and clinical procedures. This would require access to real-time location-tracking systems linked to information technology systems
      • Lee T.H.
      Putting the value framework to work.
      ,
      • Tsai M.H.
      • Porter J.C.
      • Adams D.C.
      The denominator in value-based health care.
      ,
      • Najjar P.A.
      • Strickland M.
      • Kaplan R.S.
      Time-driven activity-based costing for surgical episodes.
      but could provide useful and more accurate cost information to support healthcare decision making.
      • Porter M.E.
      • Teisberg E.O.
      Redefining Health Care: Creating Value-Based Competition on Results.
      ,
      • Sabharwal S.
      • Carter A.W.
      • Rashid A.
      • Darzi A.
      • Reilly P.
      • Gupte C.M.
      Cost analysis of the surgical treatment of fractures of the proximal humerus: an evaluation of the determinants of cost and comparison of the institutional cost of treatment with the national tariff.

      Study Limitations

      The focus of this systematic review was on exploring how the TDABC methodology has been applied to guide healthcare management toward improved value rather than to assess its effect on specific interventions. Thus, the scientific quality of studies was not assessed. Nevertheless, as we did not consider the quality in the analysis, there is a possibility that we included articles with methodological deficits or incorrectly described results.
      This systematic review included only studies published in the English language, and we did not identify studies with negative results (worse outcomes and/or increases in cost) associated with the use of the TDABC method. Thus, there is a potential publication bias toward positive results in this field.

      Conclusions

      Our systematic review suggests that TDABC can be an effective technique to support value-based initiatives when it is defined as the objective of studies that use this method. The authors who proposed using the TDABC to orient improvement opportunities for the patient care trajectory showed that the method is satisfactory in all cases, achieved by cost savings and sometimes care redesign improvements. Based on these findings, we suggest that the TDABC methodology should be viewed as a gold standard to achieve better cost accuracy, understand healthcare resource allocation, reduce waste, and improve transparency in real-world settings. This is critical as we continue to transition from fee-for-service to value-based systems.
      The validation of positive results in health systems is discussed more as an opportunity rather than measured in the study’s results. Thus, advances in assessing the contribution of these innovative methods to the reduction of waste in health systems should be the focus of more research, including research on the expansion of TDABC use for in-hospital medical patients.

      Acknowledgments

      This study was supported by the National Institute of Science and Technology for Health Technology Assessment (IATS/INCT, CNPq, project: 465518/2014-1) and the Coordenação de Aperfeiçoamento de Pessoal de Nível Superior (CAPES).

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