Home Dissecting Costs of CT Study Application of TDABC (Time-driven Activity-based Costing) in a Tertiary Academic Center
Post
Cancel

Dissecting Costs of CT Study Application of TDABC (Time-driven Activity-based Costing) in a Tertiary Academic Center

Posted Jan 31, 2017 Updated Apr 10, 2023
By Yoshimi Anzai MD MPH , Marta E. Heilbrun MD , Derek Haas MBA , Luca Boi MS , Kirk Moshre MBA , Satoshi Minoshima MD PhD , Robert Kaplan PhD , Vivian S. Lee MBA MD PhD
10 min read

Rationale and Objectives

The lack of understanding of the real costs (not charge) of delivering healthcare services poses tremendous challenges in the containment of healthcare costs. In this study, we applied an established cost accounting method, the time-driven activity-based costing (TDABC), to assess the costs of performing an abdomen and pelvis computed tomography (AP CT) in an academic radiology department and identified opportunities for improved efficiency in the delivery of this service.

Materials and Methods

The study was exempt from an institutional review board approval. TDABC utilizes process mapping tools from industrial engineering and activity-based costing. The process map outlines every step of discrete activity and duration of use of clinical resources, personnel, and equipment. By multiplying the cost per unit of capacity by the required task time for each step, and summing each component cost, the overall costs of AP CT is determined for patients in three settings, inpatient (IP), outpatient (OP), and emergency departments (ED).

Results

The component costs to deliver an AP CT study were as follows: radiologist interpretation: 40.1%; other personnel (scheduler, technologist, nurse, pharmacist, and transporter): 39.6%; materials: 13.9%; and space and equipment: 6.4%. The cost of performing CT was 13% higher for ED patients and 31% higher for inpatients (IP), as compared to that for OP. The difference in cost was mostly due to non-radiologist personnel costs.

Conclusions

Approximately 80% of the direct costs of AP CT to the academic medical center are related to labor. Potential opportunities to reduce the costs include increasing the efficiency of utilization of CT, substituting lower cost resources when appropriate, and streamlining the ordering system to clarify medical necessity and clinical indications.

Introduction

The growing pressure to reduce the overall healthcare expenditure and to improve coordination of care has led to transformation of the Medicare payment model. The US Department of Health and Human Services announced the goal that 30% of Medicare payments are tied to alternative payment models by the end of 2016 and 50% by the end of 2018 . This value-based payment models reward quality and value of care over quantity of services, clearly shifting from the traditional fee-for-service model . Bundled payment, one approach of alternative payment models, facilitates improved coordination and integration of care and holds the provider team accountable for the full cycle of care to achieve better outcomes .

The healthcare expense of medical imaging has dramatically increased over the past several decades . Most of the growth in imaging expenditures has been driven by increased utilization of advanced imaging, including computed tomography (CT), magnetic resonance imaging, and positron emission tomography (PET). Efforts to reduce healthcare costs have had impact on the reduction of imaging-related expense. For example, from 2009 to 2010, the imaging volume among Medicare beneficiaries declined by 3.5% . Nevertheless, as of June 2012, medical imaging remains 11.9% of the total Medicare charges (MedPAC Report on March 2014; www.medpac.gov ).

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Materials and Methods

Get Radiology Tree app to read full this article<

Setting

Get Radiology Tree app to read full this article<

Time-driven Activity-based Costing (TDABC)

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Development of Process Maps

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Financial Accounting

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Process Mapping

Get Radiology Tree app to read full this article<

Figure 1, TDABC workflow. An oval shape indicates the starting and ending point of the workflow process. A yellow diamond shape indicates a decision point. The percentage reflects the distribution across different categories. Each personnel-based activity is shown in a rectangular shape with different color for different roles (eg, purple for CT technologist and blue for radiologist). CT, computed tomography; ED, emergency department; EMR, electronic medical record; IP, inpatient; OP, outpatient; TDABC, time-driven activity-based costing. (Color version of figure is available online.)

Figure 2, OSS workflow (Map 1). Prior to arrival of a patient, OSS schedules the examination and obtains preauthorization for the examination. Once the patient arrives, the patient needs to fill out a questionnaire, and the OSS escorts the patient to a changing room if no oral contrast is required. When the patient needs oral contrast, the patient spends 90 minutes drinking oral contrast in the waiting room. CT, computed tomography; OSS, outpatient service specialist; RIS, radiology information system.

Figure 3, CT technologist process map for the OP encounter (Map 2). CT technologist process map starts when a patient arrives at the CT room. A point-of- care serum creatinine check is performed for those patients requiring intravenous contrast without recent laboratory tests. The CT technologist performs the examination, takes the patient back to the changing room, performs necessary post processing, and cleans the CT room. The CT technologist contacts a radiologist in the event of a contrast reaction. CT, computed tomography; OP, outpatient.

Figure 4, CT technologist process map for the ED encounter (Map 3). The ED nurse administers oral contrast to the ED patient and also delivers the patient to the CT room. The CT technologist returns the patient to the ED after the examination is complete. CT, computed tomography; ED, emergency department; EMR, electronic medical record.

Figure 5, IP CT technologist process map for IP encounter (Map 4). For the IP study, the CT technologist orders oral contrast material to a pharmacy. The pharmacy mixes the contrast and delivers the contrast material to the IP. The IP nurse administers the oral contrast material. Once the patient is ready to come down to the CT suite, a patient transporter delivers the patient to the CT room. For ICU patients, an ICU nurse accompanies the patient to the CT room and stays for the duration of the examination. CT, computed tomography; ICU, intensive care unit; IP, inpatient.

Figure 6, Radiologist process map for imaging interpretation (Map 5). The radiologist workflow starts when an imaging study appears on the PACS worklist. In this model, 60% of cases are interpreted initially by a trainee and the remaining 40% are read by attending radiologist alone. A subset of 15% of the cases is associated with critical findings that require verbal communication to an ordering physician or require additional images, as directed by the radiologist, at the time of the examination. PACS, picture archiving and communication system.

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Part I: Outpatient Service Specialist Workflow

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Part II: CT Technologist Workflow

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Part III: Image Interpretation

Get Radiology Tree app to read full this article<

Results

Direct Costs of AP CT

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Figure 7, Costing data for AP CT. Tiered bar graphs represent the costing data with the OP costs pegged to 100%, and the cost for ED and IP expressed in a percentage as compared to the OP costs. A percentage of cost in each bar graph is adjusted with respect to the OP cost of AP CT. AP CT, abdomen and pelvis CT; ED, emergency department; IP, inpatient; OP, outpatient.

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Discussion

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Get Radiology Tree app to read full this article<

Conclusion

Get Radiology Tree app to read full this article<

References

  • 1. Burwell S.M.: Setting value-based payment goals—HHS efforts to improve U.S. health care. N Engl J Med 2015; 372: pp. 897-899.

  • 2. Porter M.E., Kaplan R.S.: How to pay for health care. Harvard Business Review , July–August, p. 88–1002016.

  • 3. Armao D., Semelka R.C., Elias J.: Radiology’s ethical responsibility for healthcare reform: tempering the overutilization of medical imaging and trimming down a heavyweight. J Magn Reson Imaging 2012; 35: pp. 512-517.

  • 4. Korenstein D., Falk R., Howell E.A., et. al.: Overuse of health care services in the United States: an understudied problem. Arch Intern Med 2012; 172: pp. 171-178.

  • 5. Lee D.W., Duszak R., Hughes D.R.: Comparative analysis of Medicare spending for medical imaging: sustained dramatic slowdown compared with other services. AJR Am J Roentgenol 2013; 201: pp. 1277-1282.

  • 6. Hendee W.R., Becker G.J., Borgstede J.P., et. al.: Addressing overutilization in medical imaging. Radiology 2010; 257: pp. 240-245.

  • 7. Porter M.E.: What is value in health care?. NEJM 2010; 363: pp. 2477-2481.

  • 8. Lee V.S., Kawamoto K., Hess R., et. al.: Implementation of a value-driven outcomes program to identify high variability in clinical costs and outcomes and association with reduced cost and improved quality. JAMA 2016; 316: pp. 1061-1072.

  • 9. Hess E.P., Haas L.R., Shah N.D., et. al.: Trends in computed tomography utilization rates: a longitudinal practice-based study. J Patient Saf 2014; 10: pp. 52-58.

  • 10. Kaplan R.S., Porter M.E.: How to solve the cost crisis in health care. Harv Bus Rev 2011; R9011B: pp. 1-19.

  • 11. Kaplan R.S., Anderson S.R.: Time-driven activity-based costing. Harv Bus Rev 2004; 82: pp. 131-138. 150

  • 12. French K.E., Albright H.W., Frenzel J.C., et. al.: Measuring the value of process improvement initiatives in a preoperative assessment center using time-driven activity-based costing. Healthc (Amst) 2013; 1: pp. 136-142.

  • 13. Donovan C.J., Hopkins M., Kimmel B.M., et. al.: How Cleveland Clinic used TDABC to improve value. Healthc Financ Manage 2014; 68: pp. 84-88. http://www.ncbi.nlm.nih.gov/pubmed/24968630

  • 14. French K.E., Guzman A.B., Rubio A.C., et. al.: Value based care and bundled payments: anesthesia care costs for outpatient oncology surgery using time-driven activity-based costing. Healthc (Amst) 2016; 4: pp. 173-180.

  • 15. Kaplan R.S.: Improving value with TDABC. Healthc Financ Manage 2014; 68: pp. 76-83. http://www.ncbi.nlm.nih.gov/pubmed/24968629

  • 16. Kaplan R.S., Witkowski M., Abbott M., et. al.: Using time-driven activity-based costing to identify value improvement opportunities in healthcare. J Healthc Manag 2014; 59: pp. 399-412. http://www.ncbi.nlm.nih.gov/pubmed/25647962

  • 17. Luther G., Miller P., Waters P.M., et. al.: Radiographic evaluation during treatment of pediatric forearm fractures: implications on clinical care and cost. J Pediatr Orthop 2016; 36: pp. 465-471.

  • 18. Demeere N., Stouthuysen K., Roodhooft F.: Time-driven activity-based costing in an outpatient clinic environment: development, relevance and managerial impact. Health Policy (New York) 2009; 92: pp. 296-304.

  • 19. Grant P.: How much does a diabetes out-patient appointment actually cost? An argument for PLICS. J Health Organ Manage 2015; 29: pp. 154-169.

  • 20. Au J., Rudmik L.: Cost of outpatient endoscopic sinus surgery from the perspective of the Canadian government: a time-driven activity-based costing approach. Int Forum Allergy Rhinol 2013; 3: pp. 748-754.

  • 21. Balakrishnan K., Goico B., Arjmand E.M.: Applying cost accounting to operating room staffing in otolaryngology: time-driven activity-based costing and outpatient adenotonsillectomy. Otolaryngol Head Neck Surg 2015; 152: pp. 684-690. Apr

  • 22. Akhavan S., Ward L., Bozic K.J.: Time-driven activity-based costing more accurately reflects costs in arthroplasty surgery. Clin Orthop Relat Res 2016; 474: pp. 8-15.

  • 23. Pryor D.I., Porceddu S.V., Scuffham P.A., et. al.: Economic analysis of FDG-PET-guided management of the neck after primary chemoradiotherapy for node-positive head and neck squamous cell carcinoma. Head Neck 2013; 35: pp. 1287-1294.

  • 24. McLaughlin N., Burke M.A., Setlur N.P., et. al.: Time-driven activity-based costing: a driver for provider engagement in costing activities and redesign initiatives. Neurosurg Focus 2014; 37: pp. E3.

  • 25. Mercier G., Naro G.: Costing hospital surgery services: the method matters. PLoS ONE 2014; 9: e97290

  • 26. Nisenbaum H.L., Birnbaum B.A., Myers M.M., et. al.: The costs of CT procedures in an academic radiology department determined by an activity-based costing (ABC) method. J Comput Assist Tomogr 2000; 24: pp. 813-823. https://www.ncbi.nlm.nih.gov/pubmed/11045708

  • 27. Krug B., Van Zanten A., Pirson A.S., et. al.: Activity-based costing evaluation of a [(18)F]-fludeoxyglucose positron emission tomography study. Health Policy (New York) 2009; 92: pp. 234-243.

  • 28. Laviana A.A., Ilg A.M., Veruttipong D., et. al.: Utilizing time-driven activity-based costing to understand the short- and long-term costs of treating localized, low-risk prostate cancer. Cancer 2016; 122: pp. 447-455.

  • 29. Gregorio J., Russo G., Lapao L.V.: Pharmaceutical services cost analysis using time-driven activity-based costing: a contribution to improve community pharmacies’ management. Res Social Adm Pharm 2016; 12: pp. 475-485.

  • 30. DiGioia A.M., Greenhouse P.K., Giarrusso M.L., et. al.: Determining the true cost to deliver total hip and knee arthroplasty over the full cycle of care: preparing for bundling and reference-based pricing. J Arthroplasty 2016; 31: pp. 1-6.

  • 31. Crott R., Lawson G., Nollevaux M.C., et. al.: Comprehensive cost analysis of sentinel node biopsy in solid head and neck tumors using a time-driven activity-based costing approach. Eur Arch Otorhinolaryngol 2016; 273: pp. 2621-2628.

  • 32. Waters P.M.: Value in pediatric orthopaedic surgery health care: the role of time-driven activity-based cost accounting (TDABC) and standardized clinical assessment and management plans (SCAMPs). J Pediatr Orthop 2015; 35: pp. S45-S47.

  • 33. Erhun F., Mistry B., Platchek T., et. al.: Time-driven activity-based costing of multivessel coronary artery bypass grafting across national boundaries to identify improvement opportunities: study protocol. BMJ Open 2015; 5: pp. e008765.

  • 34. Wortman J.R., Goud A., Raja A.S., Marchello D., Sodickson A.: Structured physician order entry for trauma CT: value in improving clinical information transfer and billing efficiency. AJR Am J Roentgenol 2014; 203: pp. 1242-1248.

  • 35. Hoffmann U., Goud A., Raja A.S., et. al.: ACR Appropriateness Criteria((R)) acute nonspecific chest pain-low probability of coronary artery disease. J Am Coll Radiol 2012; 9: pp. 745-750.

  • 36. Lehnert B.E., Bree R.L.: Analysis of appropriateness of outpatient CT and MRI referred from primary care clinics at an academic medical center: how critical is the need for improved decision support?. J Am Coll Radiol 2010; 7: pp. 192-197.

  • 37. Strother M.K., Robert E.C., Cobb J.G., et. al.: Reduction in the number and associated costs of unindicated dual-phase head CT examinations after a quality improvement initiative. AJR Am J Roentgenol 2013; 201: pp. 1049-1056.

Academic Radiology, Volume 24, Issue 2
Journals General Radiology
This post is licensed under CC BY 4.0 by the author.
Recently Updated
Contents