The Cost of Hip and Knee Revision Arthroplasty by Diagnosis-Related Groups: Comparing Time-Driven Activity-Based Costing and Traditional Accounting

Time-Driven Activity-Based Cost Analysis to Decrease Financial Burden of Manipulation Under Anesthesia after Total Knee Arthroplasty

BACKGROUND

Despite total knee arthroplasty (TKA) being considered one of the most successful orthopaedic procedures, stiffness may lead to dissatisfaction. Manipulation under anesthesia (MUA) is a first-line treatment option for stiffness after TKA. Since patients who have stiffness following TKA often have higher costs, there is a need to understand the cost to the hospital of an MUA. We sought to use Time-Driven Activity-Based Costing (TDABC) to accurately determine MUA hospital costs.

METHODS

Previously collected financial data of 510 knees in 479 patients who underwent MUA after TKA at a single institution between January 07, 2015, and May 23, 2023, were retrospectively reviewed. Demographics, history of TKA, length of stay, and discharge disposition were included to assess for patient-specific risk factors related to increased cost of MUA. The TDABC costs, including all personnel and supply costs, were calculated and compared to the hospital reimbursement for each patient.

RESULTS

The average total cost of an MUA was 1,749.72 dollars ($). Personnel costs accounted for 71.4% of total costs. Commercial insurance plans were associated with a higher cost of MUA (P = 0.048), but age (P = 0.081), sex (P = 0.18), body mass index (P = 0.11), or American Society of Anesthesiologists score (P = 0.88) were not. Mean hospital reimbursement was $1,909.18, and mean hospital revenue was $159.46.

CONCLUSION

The MUAs have substantial hospital costs, with most expenses coming from preoperative testing and procedural personnel costs. The majority of MUAs occurred within the 90-day TKA global payment period, which is important to consider for hospital reimbursement policies.

Patient-Level Value Analysis in Total Hip Arthroplasty: Optimizing the Value of Care Delivery

BACKGROUND

Value is defined as the ratio of patient outcomes to the cost of care. One method to assess value is through patient-level value analysis (PLVA). To our knowledge, this tool has not previously been implemented in the setting of total hip arthroplasty (THA). The purposes of this study were to perform PLVA for a 1-year episode of care among patients undergoing primary THA and to identify characteristics that affect value in a metropolitan health-care system.

METHODS

The patient-reported outcome (PRO) measure database of the institution was queried for all primary THAs from 2018 to 2019. The PRO measure that was utilized was the Hip disability and Osteoarthritis Outcome Score, Joint Replacement (HOOS-JR). Cost was evaluated with use of time-driven activity-based costing (TDABC) for a 1-year episode of care (consisting of the day of surgery, inpatient stay, discharge facility, postoperative appointments, and physical therapy). The primary outcome was the 1-year value quotient, or the ratio of the 1-year change in HOOS-JR to the cost of the episode of care (VHOOS). The value quotient was compared among all included patients and evaluated for variables that may affect the overall value of the episode of care.

RESULTS

In total, 480 patients were included in the analysis. The mean improvement in the HOOS-JR was +34.9 ± 16.1 (95% confidence interval [CI]: 33.5, 36.3). The mean cost was $13,835 ± $3,471 (95% CI: $13,524, $14,146). The largest contributor to cost was implants (39.0%), followed by post-recovery care (i.e., inpatient stay and specialized nursing facilities; 24.1%). Change in the HOOS-JR was poorly correlated with the cost of care (r = -0.06; p = 0.19). THAs performed at an ambulatory surgery center (ASC) with discharge to home demonstrated higher value (VHOOS = 0.42) than THAs performed at a hospital with discharge to a rehabilitation facility (VHOOS = 0.15; analysis of variance F-test, p < 0.01).

CONCLUSIONS

Our study found that PROs did not correlate with costs in the setting of primary THA. Implants were the largest cost driver. Surgical setting (an ASC versus a hospital) and discharge destination influenced value as well. PLVA is a value measurement tool that can be utilized to optimize components of the care delivery pathway.

LEVEL OF EVIDENCE

Therapeutic Level III. See Instructions for Authors for a complete description of levels of evidence.

Improvements in technology and the expanding role of time-driven, activity-based costing to increase value in healthcare provider organizations: a literature review

Objective

This study evaluated the influence of technology on accurately measuring costs using time-driven activity-based costing (TDABC) in healthcare provider organizations by identifying the most recent scientific evidence of how it contributed to increasing the value of surgical care.

Methods

This is a literature-based analysis that mainly used two data sources: first, the most recent systematic reviews that specifically evaluated TDABC studies in the surgical field and, second, all articles that mentioned the use of CareMeasurement (CM) software to implement TDABC, which started to be published after the publication of the systematic review. The articles from the systematic review were grouped as manually performed TDABC, while those using CM were grouped as technology-based studies of TDABC implementations. The analyses focused on evaluating the impact of using technology to apply TDABC. A general description was followed by three levels of information extraction: the number of cases included, the number of articles published per year, and the contributions of TDABC to achieve cost savings and other improvements.

Results

Fourteen studies using real-world patient-level data to evaluate costs comprised the manual group of studies. Thirteen studies that reported the use of CM comprised the technology-based group of articles. In the manual studies, the average number of cases included per study was 160, while in the technology-based studies, the average number of cases included was 4,767. Technology-based studies, on average, have a more comprehensive impact than manual ones in providing accurate cost information from larger samples.

Conclusion

TDABC studies supported by technologies such as CM register more cases, identify cost-saving opportunities, and are frequently used to support reimbursement strategies based on value. The findings suggest that using TDABC with the support of technology can increase healthcare value.

Hospital episode-of-care costs for hip fractures: an activity-based costing analysis

Background

Despite the large impact of hip fracture care on hospital budgets, accurate episode-of-care costs (EOCC) calculations for this injury remains a challenge. The objective of this article was to assess EOCC for geriatric patients with hip fractures using an activity-based costing methodology and identify intraoperative, perioperative, and patient-specific factors associated with higher EOCC.

Material and Methods

This is a retrospective cohort study involving a total of 109 consecutive patients with hip fracture treated surgically at a Canadian level-1 trauma center from April 2018 to February 2019. Clinical and demographic data were extracted through the institution's centralized data warehouse. Data acquisition also included direct and indirect costs per episode of care, adverse events, and precise temporal data.

Results

The median total EOCC was $13,113 (interquartile range 6658), excluding physician fees. Out of the total cost, 75% was attributed to direct costs, which represented a median expenditure of $9941. The median indirect cost of the EOCC was $3322. Based on the multivariate analysis, patients not operated within the 48 hours guidelines had an increased length of stay by 5.7 days (P = 0.003), representing an increase in EOCC of close to 5000$. Higher American Society of Anesthesiology (ASA) scores were associated with elevated EOCC.

Conclusion

The cost of managing a patient with geriatric hip fracture from arrival in the emergency department to discharge from surgical ward represented $13,113. Main factors influencing the EOCC included adherence to the 48-hour benchmark surgical delay and ASA score. High-quality costing data are vital in assessing health care spending, conducting cost effectiveness analyses, and ultimately in guiding policy decisions.

Level of Evidence

Level III (3), retrospective cohort study.

Do Orthopaedic Virtual Clinic Visits Demonstrate Cost and Time Efficiencies Compared With In-person Visits?

BACKGROUND

There are numerous reasons for the increased use of telemedicine in orthopaedic surgery, one of which is the perception that virtual visits are more cost-effective than in-person visits. However, to our knowledge, no studies have compared the cost and time investment of virtual versus in-person visits using the time-driven activity-based costing (TDABC) method. Unlike methods that estimate cost based on charges for services rendered, TDABC provides a more precise measurement of costs, which is essential for assessing cost-effective innovations and moving to value-based healthcare.

QUESTIONS/PURPOSES

(1) Are virtual visits less costly than analogous in-person visits, as measured by TDABC? (2) Does TDABC yield cost estimates that are lower or higher than the ratio of costs to charges (RCC), which is a simple, frequently used costing method? (3) Do the total time commitments of healthcare personnel, and that of the surgeon specifically, vary between the virtual and in-person settings?

METHODS

Patients for this prospective, observational study were recruited from the practices of the highest-volume virtual-visit surgeons of three subspecialties (joints, hand, and sports) in a multihospital, tertiary-care academic institution in a metropolitan area in the Midwestern United States. Each surgeon had at least 10 years of clinical practice. Between June 2021 and September 2021, we analyzed both in-person and virtual return visits with patients who had an established relationship with the surgeon, because this represented the most frequent type of virtual visits and enabled a direct comparison between the two settings. New patients were not included in the study because of the limited availability of new-patient virtual visits; such patients often benefit from in-person physical examinations and on-site imaging. Additionally, patients seen for routine postoperative care were excluded because they were primarily seen in person by a physician assistant. Data were acquired during this period until 90 in-person and 90 virtual visits were collected according to selection criteria; no patients were lost to follow-up. Distinct process maps, which represent the steps involved in a clinic visit used to measure healthcare personnel time invested, were constructed for in-person and virtual clinic visits and used to compare total personnel and surgeon time spent. To calculate TDABC-derived costs, time allocated by personnel to complete each step was measured and used to calculate cost based on each personnel member's yearly salary. From the accounting department of our hospital, we acquired RCC cost data according to the level of service for a return visit.

RESULTS

The total median cost, as measured by TDABC, was USD 127 (IQR USD 111 to 163) for an in-person visit and USD 140 (IQR USD 113 to 205) for a virtual visit (median difference USD 13; p = 0.16). RCC overestimated TDABC-calculated direct variable cost in five of six service levels (in-person levels 3, 4, and 5 and virtual levels 3 and 5) by a range of USD 25 to 88. Additionally, we found that virtual visits consumed 4 minutes less of total personnel time (in-person: 17 minutes [IQR 13.5 to 23.5 minutes], virtual: 13 minutes [IQR 11 to 19 minutes]; p < 0.001); however, this difference in personnel time did not equate to cost savings because surgeons spent 2 minutes longer on virtual visit activities than they did on in-person activities (in-person: 6 minutes [IQR 4.5 to 9.5 minutes], virtual: 8 minutes [IQR 5.5 to 13 minutes]; p = 0.003).

CONCLUSION

Orthopaedic virtual visits did not deliver cost savings compared with in-person visits because surgeons spent more time on virtual visits and participated in virtual visits at the clinical site. Additionally, as anticipated, RCC overestimated costs as calculated by TDABC. These findings suggest that cost is not a primary advantage of transitioning to virtual visits, and that factors such as patient preference and satisfaction should be considered instead.

LEVEL OF EVIDENCE

Level II, economic and decision analysis.

Determinants of High Facility Costs in Total Joint Arthroplasty Patients: A Time-driven Activity-based Costing Analysis

INTRODUCTION

Although several studies identify risk factors for high-cost patients in an episode of care for total hip (THA) and knee arthroplasty (TKA), few have looked at cost outliers from a facility perspective. The purpose of this study was to use time-driven activity-based costing (TDABC) to identify characteristics of high-cost patients.

METHODS

We reviewed a consecutive series of primary THA and TKA patients by 22 different surgeons at two hospitals between 2015 and 2020. Facility costs were calculated using a TDABC algorithm for their entire hospital stay. Patients in the top decile of costs were considered to be high-cost patients. Multivariate regression was done to identify independent patient factors that predicted high costs.

RESULTS

Of the 8,647 patients we identified, 60.5% underwent THA and 39.5% underwent TKA. Implant purchase price accounted for 49.5% of total inpatient costs (mean $2,880), followed by intraoperative (15.9%, mean $925) and postoperative personnel costs (16.8%, mean $980). Implant price demonstrated the highest variation between high-cost and low-cost groups (4.4 times). Patient-related factors associated with high costs were female sex (OR = 1.332), Hispanic ethnicity (OR = 1.409), American Society of Anesthesiology score (OR = 1.658), need for transfusion (OR = 2.008), and lower preoperative HOOS/KOOS Jr (OR = 1.009).

CONCLUSION

This study identifies several variables for patients at risk to have high facility costs after primary THA and TKA. From the hospital's perspective, efforts to reduce implant purchase prices may translate into substantial cost savings. At the patient level, multidisciplinary initiatives to optimize medical comorbidities, decrease transfusion risk, and control medication expenses in high-risk patients may narrow the existing variation in costs.

A Bibliometric Analysis of Diagnosis Related Groups from 2013 to 2022

Purpose

As an important management method of the global healthcare system, diagnosis related groups (DRGs) classify patients into different cost groups and pay more attention to the equitable distribution of medical resources and the quality of medical services. At present, most countries have used DRGs to help medical institutions and doctors to treat patients more accurately, avoid the waste of medical resources, and improve treatment efficiency.

Methods

The Web of Science database was searched to collect all relevant literature on DRGs from 2013 to 2022. The literature information was imported into CiteSpace, Vosviewer, and Histcite for data analysis and visualization of the results. Analyze the cooperative relationship among the countries, institutions, journals, and authors. The usage trend of keywords; Highlight the content of the cited articles.

Results

The number of articles published in this decade was stable, and the number of citations in 2014 was the highest. The United States and Germany, as the first countries to use the DRGs system, are ahead of other countries in terms of the number and quality of articles. We have carried out content research on the articles with high citations, and summarized the application range of DRGs; classification method; advantages and disadvantages of the application. In general, the development trend of DRGs in foreign countries is to continuously optimize the classification method, expand the scope of application, and improve the application effect. These provide support and reference for the improvement of medical services and the perfection of the medical insurance system.

Conclusion

The application of DRGs can improve the quality and efficiency of medical services, and reduce the waste of medical expenses. It can also promote the rational allocation of medical resources and the equity of medical services. In the future, DRGs will pay more attention to the personalized diagnosis and treatment and fine management of patients, and the sharing and standardization of medical data, to promote the development of medical informatization.

Protocol for improving the costs and outcomes of assistive reproductive technology fertility care pathways: a study using cost measurement and process mining

INTRODUCTION

Value-based healthcare suggests that care outcomes should be evaluated in relation to the costs of delivering that care from the perspective of the provider. However, few providers achieve this because measuring cost is considered complex and elaborate and, further, studies routinely omit cost estimates from 'value' assessments due to lacking data. Consequently, providers are currently unable to steer towards increased value despite financial and performance pressures. This protocol describes the design, methodology and data collection process of a value measurement and process improvement study in fertility care featuring complex care paths with both long and non-linear patient journeys.

METHODS AND ANALYSIS

We employ a sequential study design to calculate total costs of care for patients undergoing non-surgical fertility care treatments. In doing so, we identify process improvement opportunities and cost predictors and will reflect on the benefits of the information generated for medical leaders. Time-to-pregnancy will be viewed in relation to total costs to determine value. By combining time-driven, activity-based costing with observations and process mining, we trial a method for measuring care costs for large cohorts using electronic health record data. To support this method, we create activity and process maps for all relevant treatments: ovulation induction, intrauterine insemination, in vitro fertilisation (IVF), IVF with intracytoplasmic sperm injection and frozen embryo transfer after IVF. Our study design, by showing how different sources of data can be combined to enable cost and outcome measurements, can be of value to researchers and practitioners looking to measure costs for care paths or entire patient journeys in complex care settings.

ETHICS AND DISSEMINATION

This study was approved by the ESHPM Research Ethics Review Committee (ETH122-0355) and the Reinier de Graaf Hospital (2022-032). Results will be disseminated through seminars, conferences and peer-reviewed publications.

A Multi-Disciplinary Review of Time-Driven Activity-Based Costing: Practical Considerations for Spine Surgery

STUDY DESIGN

A multi-disciplinary review.

OBJECTIVES

To provide a roadmap for implementing time-driven activity-based costing (TDABC) for spine surgery. This is achieved by organizing and scrutinizing publications in the spine, neurosurgical, and orthopedic literature which utilize TDABC and related methodologies.

METHODS

PubMed and Google Scholar were searched for relevant articles. The articles were selected by two independent researchers. After article selection, data was extracted and summarized into research domains. Preferred reporting items for systematic reviews and meta-analyses (PRISMA) systematic review process was followed.

RESULTS

Of the 524 articles screened, thirty-five articles met the inclusion criteria. Each included article was examined and reviewed to define the primary research question and objective. Comparing different procedures was the most common primary objective. Direct observation along with one other strategy (surveys, interviews, surgical database, or EMR) was most commonly employed during process map development. Across all surgical subspecialties (spine, neurologic, and orthopedic surgery), costs were divided into direct cost, indirect cost, cost to patient, and total costs. The most commonly calculated direct costs included personnel and supply costs. Facility costs, hospital overhead costs, and utilities were the most commonly calculated indirect costs. Transportation costs and parental lost wages were considered when calculating cost to patient. The total cost was a sum of direct costs, indirect costs, and costs to the patient.

CONCLUSION

TDABC provides a common platform to accurately estimate costs of care delivery. Institutions embarking on TDABC for spine surgery should consider the breadth of methodologies highlighted in this review to determine which type of calculations are appropriate for their practice.

Cost measurement in value-based healthcare: a systematic review

OBJECTIVE

Although value-based healthcare (VBHC) views accurate cost information to be crucial in the pursuit of value, little is known about how the costs of care should be measured. The aim of this review is to identify how costs are currently measured in VBHC, and which cost measurement methods can facilitate VBHC or value-based decision making.

DESIGN

Two reviewers systematically search the PubMed/MEDLINE, Embase, EBSCOhost and Web of Science databases for publications up to 1 January 2022 and follow Preferred Reporting Items for Systematic Reviews and Meta-Analyses guidelines to identify relevant studies for further analysis.

ELIGIBILITY CRITERIA

Studies should measure the costs of an intervention, treatment or care path and label the study as 'value based'. An inductive qualitative approach was used to identify studies that adopted management accounting techniques to identify if or how cost information facilitated VBHC by aiding decision-making.

RESULTS

We identified 1930 studies, of which 215 measured costs in a VBHC setting. Half of these studies measured hospital costs (110, 51.2%) and the rest relied on reimbursement amounts. Sophisticated costing methods that allocate both direct and indirect costs to care paths were seen as able to provide valuable managerial information by facilitating care path adjustments (39), benchmarking (38), the identification of cost drivers (47) and the measurement of total costs or cost savings (26). We found three best practices that were key to success in cost measurement: process mapping (33), expert input (17) and observations (24).

CONCLUSIONS

Cost information can facilitate VBHC. Time-driven activity-based costing (TDABC) is viewed as the best method although its ability to inform decision-making depends on how it is implemented. While costing short, or partial, care paths and surgical episodes produces accurate cost information, it provides only limited decision-making information. Practitioners are advised to focus on costing full care cycles and to consider both direct and indirect costs through TDABC.

Total Knee Arthroplasty Hospital Costs by Time-Driven Activity-Based Costing: Robotic vs Conventional

Background

Total knee arthroplasty (TKA) represents a major national health expenditure. The last decade has seen a surge in robotic-assisted TKA (roTKA); however, literature on the costs of roTKA as compared to conventional TKA (cTKA) is limited. The purpose of this study was to assess the costs associated with roTKA as compared to cTKA.

Methods

This was a retrospective cohort cost-analysis study of patients undergoing primary, elective roTKA or cTKA from July 2020 to March 2021. Time-driven activity-based costing (TDABC) was used to determine granular costs. Patient demographics, medical/surgical details, and costs were compared.

Results

A total of 2058 TKAs were analyzed (1795 cTKAs and 263 roTKAs). roTKA patients were more often male (50.2% vs 42.3%; P = .016), and discharged home (98.5% vs 93.7%; P = .017), and had longer operating room (OR) time (144.6 vs 130.9 minutes; P < .0001), and lower length of stay (LOS) (1.8 vs 2.1 days; P < .0001). roTKA costs were 2.17× greater for supplies excluding implant (P < .0001), 1.18× for total supplies (P < .0001), 1.12× for OR personnel (P < .0001), and 1.05× for total personnel (P = .0001). Implant costs were similar (P = .076), but 0.98× cheaper for post-anesthesia care unit personnel (P = .018) and 0.84× for inpatient personnel (P < .0001). Overall hospital costs for roTKA were 1.10× more than cTKA (P < .0001).

Conclusion

roTKA had higher total hospital costs than cTKA. Despite a lower LOS, the longer OR time with higher supply and personnel costs resulted in a costlier procedure. Understanding the costs of roTKA is essential when considering the value (ie, outcomes per dollars spent) of this modern technology.