How Much Does a Stable Shoulder Really Cost? Utilization of Time-Driven Activity-Based Costing to Increase Value in Shoulder Instability Surgical Care

Abstract

Background: Accurate measurement of the costs involved in surgical care is pivotal to understanding the value of the care provided, defined as outcomes per dollar spent. Our goal was to utilize time-driven activity-based costing (TDABC) to delineate the costs associated with anterior shoulder instability surgical care and to increase the value offered to patients. Methods: We implemented TDABC across the entire care pathway for patients who received surgical intervention for anterior shoulder instability by four fellowship trained orthopedic surgeons at a tertiary pediatric hospital. We created detailed process maps, measured the amount of time spent with each personnel, calculated cost of space and equipment, and calculated cost of consumables. The TDABC data was used to calculate the total mean cost of the care pathway and define cost drivers. We then made cost saving suggestions to increase the value offered to surgical patients. Results: The anterior shoulder instability care pathway cost $9,666. The primary cost drivers were diagnostic imaging utilization and the day of surgery. Time spent in the operating room was the primary cost on the day of surgery. Standardization of a few elements of cost variation in the care pathway would result in an 8% reduction in total cost. Conclusions: TDABC is a more effective tool for calculating the true cost of care when compared with standard accounting practices. As the responsibility for controlling costs in the US healthcare system is shifted to physicians, the ability to accurately calculate those costs and to understand the cost drivers becomes vital. This study provides an example of utilizing TDABC to accurately measure the cost of care and to increase the value of care provided to patients with anterior shoulder instability.