Boston Children's Hospital: Measuring Patient Costs

Robert S. Kaplan; Mary L. Witkowski; Jessica A. Hohman

Case | HBS Case Collection | March 2012 (Revised January 2013)

Boston Children's Hospital: Measuring Patient Costs

by Robert S. Kaplan, Mary L. Witkowski and Jessica A. Hohman

Abstract

The case describes two pilot projects on applying activity-based costing to measuring the cost of treating patients. It presents process maps and financial data relating to the processes used during (1) an office visit to a plastic surgeon for three different diagnoses and (2) application and removal of three different casts in the orthopedic cast room. Students calculate and compare the costs and margins of the three procedures at the two different sites using the hospital's existing cost system and a proposed new system based on time-driven activity-based costing.

Keywords: health care; Time-Driven Activity-Based Costing; Costing; Hospitals; Activity Based Costing and Management; Mathematical Methods; Health Industry;

Language: English

Format: Print

28 pages

Educators Purchase

Citation:

Kaplan, Robert S., Mary L. Witkowski, and Jessica A. Hohman. "Boston Children's Hospital: Measuring Patient Costs." Harvard Business School Case 112-086, March 2012. (Revised January 2013.)

Related Work

Case | HBS Case Collection | March 2012 (Revised January 2013)

Boston Children's Hospital: Measuring Patient Costs

Robert S. Kaplan, Mary L. Witkowski and Jessica A. Hohman

The case describes two pilot projects on applying activity-based costing to measuring the cost of treating patients. It presents process maps and financial data relating to the processes used during (1) an office visit to a plastic surgeon for three different diagnoses and (2) application and removal of three different casts in the orthopedic cast room. Students calculate and compare the costs and margins of the three procedures at the two different sites using the hospital's existing cost system and a proposed new system based on time-driven activity-based costing.

Keywords: health care; Time-Driven Activity-Based Costing; Costing; Hospitals; Activity Based Costing and Management; Mathematical Methods; Health Industry;

Citation:
Kaplan, Robert S., Mary L. Witkowski, and Jessica A. Hohman. "Boston Children's Hospital: Measuring Patient Costs." Harvard Business School Case 112-086, March 2012. (Revised January 2013.) View Details

Cite View Details Educators Purchase Related
Teaching Note | HBS Case Collection | June 2013

Boston Children's Hospital: Measuring Patient Costs

Robert S. Kaplan and Robert S. Kaplan

Keywords: health care; Activity-Based Costing; Hospitals; Costing; Time-Driven ABC; Activity Based Costing and Management; Health Industry;

Citation:
Kaplan, Robert S. "Boston Children's Hospital: Measuring Patient Costs." Harvard Business School Teaching Note 913-419, June 2013. View Details

Cite View Details Purchase Related
Supplement | HBS Case Collection | June 2013

Boston Children's Hospital Assignment Worksheet

Robert S. Kaplan

Keywords: health care; Time-Driven Activity-Based Costing; Costing; Hospitals; Activity Based Costing and Management;

Citation:
Kaplan, Robert S. "Boston Children's Hospital Assignment Worksheet." Harvard Business School Spreadsheet Supplement 913-801, June 2013. View Details

Cite View Details Purchase Related
Teaching Note | HBS Case Collection | June 2013

Boston Children's Hospital: Measuring Patient Costs

Robert S. Kaplan and Robert S. Kaplan

Keywords: health care; Activity-Based Costing; Hospitals; Costing; Time-Driven ABC; Activity Based Costing and Management; Health Industry;

Citation:
Kaplan, Robert S. "Boston Children's Hospital: Measuring Patient Costs." Harvard Business School Teaching Note 913-419, June 2013. View Details

Cite View Details Purchase Related
Case | HBS Case Collection | September 2013

Boston Children's Hospital: Measuring Patient Costs (Abridged)

Robert S. Kaplan

The case describes a pilot project on applying activity-based costing to measure the cost of treating patients. After an overview of Boston Children's Hospital and its local health care market environment, the case presents process maps and financial data relating to patients making office visits to a plastic surgeon for three different diagnoses. Students use the hospital's existing cost system and a proposed new system, based on time-driven activity-based costing, to calculate and compare costs and margins of the three types of office visits.

Keywords: health care; Time-Driven Activity-Based Costing; Costing; Hospitals; Activity Based Costing and Management;

Citation:
Kaplan, Robert S. "Boston Children's Hospital: Measuring Patient Costs (Abridged)." Harvard Business School Case 914-407, September 2013. View Details

Cite View Details Educators Purchase Related
Supplement | HBS Case Collection | May 2017

Boston Children's Hospital Process Map Video

Robert S. Kaplan and Mary Witkowski

The 13 minute video simulates a discussion among orthopedic surgeons and cast room technicians about the processes and resources used when applying long leg casts for patients. The video should be used when teaching Boston Children’s Hospital (Abridged) case, #914-407, or the unabridged case, Boston Children’s Hospital: Measuring Patient Costs, #112-086. The video allows students to create a time-driven activity-based costing (TDABC) process map for two types of leg casts. Students should view the video when preparing the case. The instructor can elicit the process map, in real time, on a blackboard or white board, using 5-10 minutes of class time. The teaching goals are for students to learn that process maps – the key component in a TDABC model - are not difficult to create, and what appropriate level of detail and precision is required for a TDABC process map.

Keywords: Activity based costing; Healthcare Costing; Process Maps; Activity Based Costing and Management; Health Care and Treatment;

Citation:
Kaplan, Robert S., and Mary Witkowski. "Boston Children's Hospital Process Map Video." Harvard Business School Multimedia/Video Supplement 117-703, May 2017. View Details

Cite View Details Purchase Related

Objectives: To apply time-driven activity-based costing (TDABC) methodology to determine emergency medicine physician documentation costs with and without scribes.

Methods: Two research assistants shadowed attending physicians for a total of 64 hours in the adult emergency department. A tablet-based time recorded was used to obtain estimates for physician documentation time on both control (no scribe) and intervention (scribe) shifts.

Results: Control shifts yielded approximately 3 hours of documentation time per 8 hours of clinical time. When paired with a scribe, attending physician documentation decreased to 1 hour and 45 minutes during a shift and 15 minutes of post-shift documentation. The physician cost estimate for documentation without and with a scribe is 644 and 488 dollars, respectively.

Conclusions: TDABC methodology demonstrated that scribes afford a cost-effective solution to ED clinical documentation. The costing approach enables clinicians to understand utilization and cost of medical resource at a more granular level.

Article | Journal of Medical Economics | Forthcoming

Time-Driven Activity-Based Cost Analysis for Outpatient Anticoagulation Therapy: Direct Costs in a Primary Care Setting with Optimal Performance

Robert S. Kaplan, Rohit A. Bobade, Richard A. Helmers, Thomas M. Jaeger, Laura J. Odell and Derek A. Haas

Objectives: To determine how overall cost of anticoagulation therapy for warfarin compares with that of Novel Oral Anticoagulants (NOACs). Also, to demonstrate a scientific, comprehensive, and an analytical approach to estimate direct costs involved in monitoring and management of anticoagulation therapy for outpatients in an academic primary care clinic setting, post-initiation of therapy.

Methods: Time-Driven Activity-Based Costing (TDABC) was applied in a population-based cross-sectional study at Mayo Clinic’s warfarin anticoagulation clinic. The study measured the personnel and supplies costs to monitor and manage anticoagulation therapy for 5,526 patients.

Results: The cost of warfarin management for patients who display unstable International Normalized Ratio (INR) is more than three times those who display stable INR over time. For complex anticoagulation patients, the total cost of medication and monitoring for warfarin anticoagulation therapy is similar to that for NOACs.

Conclusion: Despite warfarin being significantly less expensive to purchase than NOACs, overall warfarin management incurs higher costs due to laboratory monitoring and provider time than NOACs. NOAC treatment, therefore, may not be more expensive than warfarin therapy management for complex anticoagulation patients.

Keywords: Time-Driven Activity-Based Costing; Activity Based Costing and Management; Health Care and Treatment; Analysis;

Citation:

Kaplan, Robert S., Rohit A. Bobade, Richard A. Helmers, Thomas M. Jaeger, Laura J. Odell, and Derek A. Haas. "Time-Driven Activity-Based Cost Analysis for Outpatient Anticoagulation Therapy: Direct Costs in a Primary Care Setting with Optimal Performance." Journal of Medical Economics (forthcoming). (Pre-published online March 4, 2019.) View Details

Cite View Details Purchase

Kurt Meyer, chief risk officer of Swissgrid, the Swiss national electricity transmission system operator, reflects on the risk management system he installed after the deregulation and liberalization of the European energy market. With 41 connections to other European networks, a failure in Swissgrid’s network could interrupt the supply of electricity in Switzerland and much of Europe. Meyer describes the periodic interactive risk workshops conducted at each business unit to identify, assess, and mitigate risks. Executive Risk Workshops focus on the CEO and the company’s leadership team and discuss the business units’ risk profiles and risks that cut across the units, such as safety, weather, and regulatory changes. New and emerging risks are discussed at Extraordinary Risk Workshops. Meyer recently deployed an app on employees’ smartphones for them to easily report anomalies or concerns. Reports from the app are embedded in a new real-time crisis management platform used by several Swiss companies, federal authorities, and the Swiss Army. Despite a full array of risk management tools and processes, Meyer remains concerned about risks yet to be identified.

Faculty & Research

Boston Children's Hospital: Measuring Patient Costs

Abstract

Citation:

About the Author

More from the Author