Using Time-Driven Activity-Based Costing to Demonstrate Value in Perioperative Care

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

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

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

Abstract

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;

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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).

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.

Since its establishment in 2005, Hamburg’s Martini Klinik had single mindedly focused on prostate cancer care with a commitment to measure long-term health outcomes for every patient. A wholly owned subsidiary of the University Hospital Hamburg, Martini Klinik was a “hospital in a hospital” in close proximity to other medical departments and services. By 2019, Martini Klinik had become the largest prostate cancer treatment program in the world with 8,000 outpatient cases and more than 2,500 surgical cases annually. Patients came from all over Germany and from around the world. A new and expanded facility was under construction to have the capacity to manage more patients with prostate cancer.

Article | Journal of Bone and Joint Surgery Reviews | November 2019

A Review of Bundled Payments in Total Joint Replacement

Olivia Manickas-Hill, Kevin J. Bozic and Thomas W. Feeley

The Bundled Payments for Care Improvement (BPCI) initiative, developed by the U.S. Center for Medicare & Medicaid Innovation, aims to reduce health care expenditures while maintaining or improving patient outcomes.
Several published reports evaluating the impact of the BPCI on payment, utilization, and patient outcomes during the first three years of the initiative demonstrated a reduction in Medicare payments for major joint replacement of the lower extremity, driven primarily by a reduction in post-acute care utilization, without a sacrifice in quality of care as measured by no change in unplanned readmission rate, emergency department use, or mortality rate during the 90 days from episode start date. However, this reduction in Medicare payments did not translate into savings to the Medicare program, as the Net Payment Reconciliation Amount (NPRA) to providers was not included in any of the cost analyses.
The impact of the BPCI on outcomes important to patients and physicians has not been thoroughly evaluated in the published literature. Important (and standardly trackable) outcome measures that can be considered when assessing the effectiveness of a health care model for bundled payments for total joint replacement include 30-day postoperative mortality, reoperation, and readmission; hip or knee functional status; hip, knee, or lower back pain; quality of life; work status; and satisfaction with results. Many studies directly evaluated only survival and disutility as manifested by readmission rate and emergency department use.
Multiple pilot studies evaluating cost savings and quality measures using a bundled payment alternative payment model have demonstrated a reduction in Medicare episode payments, primarily related to decreased length of hospital stay and post-acute care utilization.
Readmission, certain comorbidities, and low socioeconomic status are associated with higher episode costs.
An evaluation of a bundled payment program for orthopaedic procedures in Stockholm, Sweden, revealed a decrease in cost, complication rate, and wait time after the introduction of a bundled payment system. Some of these improvements may be related to an increase in the number of surgical procedures on younger, healthier patients performed at specialized orthopaedic centers, with a concomitant shift of patients with comorbidities to hospitals.

Keywords: bundled payments; Health Care and Treatment; Cost Management;

Citation:

Manickas-Hill, Olivia, Kevin J. Bozic, and Thomas W. Feeley. "A Review of Bundled Payments in Total Joint Replacement." Journal of Bone and Joint Surgery Reviews 7, no. 11 (November 2019). View Details

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

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