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J Pediatr Surg. 2016 Dec;51(12):1962-1966. doi: 10.1016/j.jpedsurg.2016.09.019. Epub 2016 Sep 15.

Time-driven activity-based costing to identify opportunities for cost reduction in pediatric appendectomy.

Author information

1
Division of Pediatric Surgery, Department of Surgery, Texas Children's Hospital, and Michael E. DeBakey Department of Surgery, Baylor College of Medicine, 6701 Fannin Dr. Suite 1210, Houston, TX 77030.
2
Decision Support and Cost Accounting, Texas Children's Hospital, 1919 S. Braeswood, MB6206, Houston, TX 77030.
3
Outcomes and Impact Service, Texas Children's Hospital, 6701 Fannin Dr, Suite 650, Houston, TX 77030.
4
Department of Finance, Texas Children's Health Plan, Texas Children's Hospital, 6330 W. Loop South, Suite 800, Bellaire, TX 77401.
5
Section of Emergency Medicine, Department of Pediatrics, Texas Children's Hospital, Baylor College of Medicine, 6621 Fannin Dr. Suite A210, Houston, TX 77030.
6
Division of Pediatric Surgery, Department of Surgery, Texas Children's Hospital, and Michael E. DeBakey Department of Surgery, Baylor College of Medicine, 6701 Fannin Dr. Suite 1210, Houston, TX 77030. Electronic address: melopez@texaschildrens.org.

Abstract

PURPOSE:

As reimbursement programs shift to value-based payment models emphasizing quality and efficient healthcare delivery, there exists a need to better understand process management to unearth true costs of patient care. We sought to identify cost-reduction opportunities in simple appendicitis management by applying a time-driven activity-based costing (TDABC) methodology to this high-volume surgical condition.

METHODS:

Process maps were created using medical record time stamps. Labor capacity cost rates were calculated using national median physician salaries, weighted nurse-patient ratios, and hospital cost data. Consumable costs for supplies, pharmacy, laboratory, and food were derived from the hospital general ledger.

RESULTS:

Time-driven activity-based costing resulted in precise per-minute calculation of personnel costs. Highest costs were in the operating room ($747.07), hospital floor ($388.20), and emergency department ($296.21). Major contributors to length of stay were emergency department evaluation (270min), operating room availability (395min), and post-operative monitoring (1128min). The TDABC model led to $1712.16 in personnel costs and $1041.23 in consumable costs for a total appendicitis cost of $2753.39.

CONCLUSION:

Inefficiencies in healthcare delivery can be identified through TDABC. Triage-based standing delegation orders, advanced practice providers, and same day discharge protocols are proposed cost-reducing interventions to optimize value-based care for simple appendicitis.

LEVEL OF EVIDENCE:

II.

KEYWORDS:

Appendicitis; Cost analysis; Process improvement; Quality improvement; Time-driven activity-based costing; Value

PMID:
27697316
DOI:
10.1016/j.jpedsurg.2016.09.019
[Indexed for MEDLINE]

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