Value Based Care and Bundled Payments

Katy E. French; Alexis B.  Guzman; Augustin C. Rubio; John C. Frenzel; Thomas  Feeley

Article | Healthcare: The Journal of Delivery Science and Innovation | September 2016

Value Based Care and Bundled Payments: Anesthesia Care Costs for Outpatient Oncology Surgery Using Time-driven Activity-based Costing

by Katy E. French, Alexis B. Guzman, Augustin C. Rubio, John C. Frenzel and Thomas Feeley

Abstract

Background: With the movement towards bundled payments, stakeholders should know the true cost of the care they deliver. Time-driven activity-based costing (TDABC) can be used to estimate costs for each episode of care. In this analysis, TDABC is used to both estimate the costs of anesthesia care and identify the primary drivers of the costs of 11 common oncologic outpatient surgical procedures. Methods: Personnel cost was calculated by determining the hourly cost of each provider and the associated process time of the 11 surgical procedures. Using the anesthesia record, drugs, supplies and equipment costs were identified and calculated. The current staffing model was used to determine baseline personnel costs for each procedure. Using the costs identified through TDABC analysis, the effect of different staffing ratios on anesthesia costs could be predicted. Results: Costs for each of the procedures were determined. Process time and costs are linearly related. Personnel represented 79% of overall cost while drugs, supplies, and equipment represented the remaining 21%. Changing staffing ratios shows potential savings between 13% and 28% across the 11 procedures. Conclusions: TDABC can be used to estimate the costs of anesthesia care. This costing information is critical to assessing the anesthesiology component in a bundled payment. It can also be used to identify areas of cost savings and model costs of anesthesia care. Certified Registered Nurse Anesthetist (CRNA) to anesthesiologist staffing ratios profoundly influence the cost of care. This methodology could be applied to other medical specialties to help determine costs in the setting of bundled payments.

Keywords: Cost; Insurance; Health Care and Treatment; Insurance Industry; Health Industry;

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French, Katy E., Alexis B. Guzman, Augustin C. Rubio, John C. Frenzel, and Thomas Feeley. "Value Based Care and Bundled Payments: Anesthesia Care Costs for Outpatient Oncology Surgery Using Time-driven Activity-based Costing." Healthcare: The Journal of Delivery Science and Innovation 4, no. 3 (September 2016): 173–180.

As the diffusion of value-based health care efforts accelerates globally, the need for interoperable information technology systems that support value-based care is essential. Such systems are needed to facilitate dramatic improvements in patient outcomes and efficiency and, importantly, to end an era in which health IT has entrenched the status quo, perpetuated silos, and blocked reimbursement reform. A value-enabling IT platform must organize data around conditions and must enable integrated practice units to integrate care both within and across health systems. In addition, the electronic health record should be the sole source of costing information so that accurate costs for every encounter can be tracked, aggregated, shared, and used for improvement. This is the next generation of health care IT.

Problem: Value-based health care (VBHC) is an innovative framework for redesigning care delivery to achieve better outcomes for patients and reduce cost; however, providing students with the skills to understand and engage with these topics is a challenge to medical educators. Approach: Here the authors present a novel, VBHC curriculum integrated into a required course for post-core clerkship students—launched in 2018 at Harvard Medical School and taught in conjunction with Harvard Business School faculty—that highlights key principles of VBHC most relevant to undergraduate medical education. The course integrates VBHC with related health disciplines, including health policy, ethics, epidemiology, and social medicine, using a case-based method. Students practice active decision-making while learning key concepts to address value in clinical practice. Outcomes: Since the course’s inception in March 2018, 95 students (87%) completed the standardized course evaluation; the majority said VBHC content and pedagogical style (i.e., case-based learning) enhanced their learning. Students’ critiques focused on too little integration with other disciplines (e.g., social medicine, ethics), the physical space, and inadequate time for debates about potential tensions between VBHC and other course disciplines. Next Steps: The authors believe that by exposing medical students to the principles of VBHC, students will fulfill the expectations of graduating physicians by excelling as critical thinkers, collaborative team members, and judicious care providers throughout their residency, clinical practice, and beyond. Future VBHC curricula expansions may include elective coursework, intensive seminar series, and formal dual degrees.

Article | Journal of Medical Systems | January 2020

Using Time-Driven Activity-Based Costing to Demonstrate Value in Perioperative Care: Recommendations and Review from the Society for Perioperative Assessment and Quality Improvement

O. Allin, RD Urman, AF Edwards, JD Blitz, KJ Pfeifer, TW Feeley and AM Bader

A shift in health care payment models from volume toward value-based incentives will require deliberate input into systems development from both perioperative clinicians and administrators to ensure appropriate recognition of the value of all services provided—particularly ones that are not reimbursable in current fee-for-service payment models. Time-driven activity-based costing (TDABC) methodology identifies cost drivers and reduces inaccurate costing based on siloed budgets. Inaccurate costing also results from the fact that current costing methods use charges and there has been tremendous cost shifting throughout health care. High cost, high variability processes can be identified for process improvement. As payment models inevitably evolve towards value-based metrics, it will be critical to knowledgably participate in the coordination of these changes. This document provides eight practical recommendations from the Society for Perioperative Assessment and Quality Improvement (SPAQI) aimed at outlining the principles of TDABC, creating process maps for patient workflows, understanding payment structures, establishing physician alignment across service lines to create integrated practice units to facilitate development of evidence-based pathways for specific patient risk groups, establishing consistent care delivery, minimizing variability between physicians and departments, utilizing data analytics and information technology tools to track progress and obtain actionable data, and using TDABC to create costing transparency.

Keywords: value-based health care; outcomes; Time-Driven Activity-Based Costing; Health Care and Treatment; Cost Management; Value; Activity Based Costing and Management;

Citation:

Allin, O., RD Urman, AF Edwards, JD Blitz, KJ Pfeifer, TW Feeley, and AM Bader. "Using Time-Driven Activity-Based Costing to Demonstrate Value in Perioperative Care: Recommendations and Review from the Society for Perioperative Assessment and Quality Improvement." Journal of Medical Systems 44, no. 1 (January 2020). View Details

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Value Based Care and Bundled Payments: Anesthesia Care Costs for Outpatient Oncology Surgery Using Time-driven Activity-based Costing

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