Better Accounting Transforms Health Care Delivery

Robert S. Kaplan; Mary L. Witkowski

Article | Accounting Horizons

Better Accounting Transforms Health Care Delivery

by Robert S. Kaplan and Mary L. Witkowski

Abstract

The paper describes the theory and preliminary results for an action research program that explores the implications from better measurements of health care outcomes and costs. After summarizing Porter's outcome taxonomy (Porter 2010), we illustrate how to use process mapping and time-driven activity-based costing to measure the costs of treating patients over a complete cycle of care for a specific medical condition. With valid outcome and cost information, managers and clinicians can standardize clinical and administrative processes, eliminate non-value added and redundant steps, improve resource utilization, and redesign care so that appropriate medical resources perform each process step. These actions enable costs to be reduced while maintaining or improving medical outcomes. Better measurements also allow payers to offer bundled payments, based on the costs of using efficient processes and contingent on achieving superior outcomes. The end result will be a more effective and more productive health care sector. The paper concludes with suggestions for accounting research opportunities in the sector.

Keywords: Activity Based Costing and Management; Research; Health Care and Treatment; Health Industry;

Format: Print

DOI: 10.2308/acch-50658

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Kaplan, Robert S., and Mary L. Witkowski. "Better Accounting Transforms Health Care Delivery." Accounting Horizons 28, no. 2 (June 2014): 365–383.

Article | Journal of Medical Economics | 2019

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 22, no. 5 (2019): 471–477. View Details

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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.

We describe a quality improvement initiative aimed at achieving interdisciplinary consensus about the appropriate delivery of extracorporeal membrane oxygenation (ECMO). Interdisciplinary rounds were implemented for all patients on ECMO and addressed whether care was consistent with a patient’s minimally acceptable outcome, maximally acceptable burden, and relative likelihood of achieving either. The rounding process was associated with decreased days on venoarterial ECMO, from a median of six days in 2014 to 5 days in 2015 and in 2016.

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Better Accounting Transforms Health Care Delivery

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