Time-driven Activity-based Costing Model Research Articles

Evaluation of the economic impact of the robotic approach in major and postero-superior segment liver resections: a multicenter retrospective analysis.

Economic impact of robotic liver surgery (RLS) is still a debated issue due to the heterogeneity of liver resections considered and the lack of a rigorous methodology. Therefore, the aim of this study is to perform a time-driven activity-based costing (TD-ABC) comparing the costs of RLS, laparoscopic liver surgery (LLS) and open liver surgery (OLS) in the context of complex liver resections and to compare short term perioperative outcomes. The institutional databases of two Italian high volume hepatobiliary centres were retrospectively reviewed from February 2021 to April 2022. Patients submitted to major hepatectomies or postero-superior liver resections were selected and divided into three groups according to the approach scheduled (RLS, LLS and OLS) and compared. Major contributors of perioperative expenses were calculated using the TD-ABC model and accurately quantifying each unit resource consumed per patient and the time spent performing each activity. A primary intention-to-treat analysis (ITT-A) including conversions in the RLS and LLS groups was performed. Forty-seven RLS, 101 LLS and 124 OLS were collected. LLS and RLS showed reduced blood loss, morbidity, mortality and hospital stay compared with open. A trend towards reduced conversion rate in RLS compared to LLS was registered. Total costs associated with RLS were estimated at €10,637 vs. €9,543 for LLS and vs. €13,960 for OLS. The higher intraoperative costs associated with RLS (+153.3% vs. OLS and +148.2% vs. LLS, P<0.001), primarily related to surgical equipment expenses, were slightly offset by the postoperative savings (-56.0% vs. OLS and -29.4% vs. LLS, P<0.001) resulting from significantly reduced hospital stays. RLS offers economic advantages over OLS, as initial higher costs are offset by better perioperative outcomes. The evolving robotic marketplace is expected to drive down RLS costs, promoting widespread adoption in minimally invasive procedures. Despite its higher costs than LLS, RLS's ability to enhance minimally invasive feasibility makes it a preferred choice for complex cases, reducing the need for conversions.

Utilization of time-driven activity-based costing and process simulation in cost management of organization

The deployment of information and communication technologies in organizations is on the rise. Many organizations consider the application of technologies to be a crucial key to improve their processes. However, traditional costing systems are not suitable for cost estimation of business processes due to the use of volume-based cost drivers, which are often not adequate for the structure of today’s organizations. In this research, we present an overview of how the TDABC (time-driven activity-based costing) model can be combined with process mining and business process simulation for cost estimation of such processes. The objective of this paper is to use the cost dimension as a major attribute for the potential implementation of robotic process automation (RPA) in companies. However, information and communication technologies could be considered in general. We demonstrate our approach in a case study that takes advantage of a real-life event log containing transactional data representing the loan application process in an insurance company. The event log is analyzed and processed using process mining techniques. Based on the preprocessing, a simulation model representing the original loan application process is designed. The designed simulation model is then used for simulation of partial and full implementation of RPA through separate scenarios. Then, we add the cost dimension to the simulation by enriching the event log with cost data based on a formalized cost model. We show that even though partial implementation of RPA might not deliver significant increase in efficiency in the process, it might still represent significant cost savings.

Dealing with Time Estimates in Hospital Cost Accounting: Integrating Fuzzy Logic into Time-Driven Activity-Based Costing.

Time-driven activity-based costing (TDABC) can support value-based healthcare (VBHC) programs by providing insights into the actual relationships between time spent by the medical staff and the costs associated with specific care cycles. However, the robustness of time estimates (time variation) as well as the effort required to obtain these estimates are major challenges of the TDABC methodology, given the heterogeneity in patients' needs and the presence of (multi)morbidity. To allow for the variation in time estimates in an efficient manner, this study uses fuzzy logic (FL) to estimate the TDABC model parameters (FL-TDABC). A standardized care path was used to calculate the annual costs (per patient) and cost drivers of the Rheumatoid arthritis (RA) care cycle following the FL-TDABC methodology. Cost information (2018) was derived from hospital reports concerning financial, human resource and business intelligence data from a Dutch top clinical research hospital, Maasstad Hospital. Time estimates of procedures were obtained by interviewing the medical staff and relevant care activities were extracted from electronic health records. For analytical and validation purposes, FL-TDABC estimates were compared with TDABC and ABC cost estimates. The RA care cycle annual costs totaled €1497 per patient (2018 prices) based on the FL-TDABC methodology. Maximum RA cycle costs (€1684) were some 22% higher than minimum costs (€1317) observed from FL-TDABC. Cost drivers explaining the cost variation are predominantly the number of consultations with rheumatologists and pharmacy costs related to RA. Based on TDABC and ABC, annual costs per patient were €1609 and €1604, respectively. The FL-TDABC methodology offers a more precise and efficient estimate of care cycle costs, allowing for the subjective (fuzzy) nature of healthcare time estimates made by the medical staff. As a result, the FL-TDABC provides insight into the practice variation, and hence it can promote the transition from a volume-based system to a VBHC system.

Unit Cost Calculation of Elective Caesarean section without Complications Based on The Time-Driven Activity-Based Costing Model

Unit Cost Calculation of Elective Caesarean section without Complications Based on The Time-Driven Activity-Based Costing Model

Elective caesarean section cost efficiency with time-driven activity-based costing

Hospitals compete to increase the value of services, one of which is cost-efficiency. The complexity of the service process and many resources in health services make calculating costs difficult. Time-driven activity based costing (TDABC) can identify specific cost drivers so that it has the potential to help identify inefficient processes. This study analyzes the cost efficiency of caesarean section with the TDABC. This study uses a qualitative research design with a case study method at one of the hospitals in Bantul, Yogyakarta, Indonesia. Primary data was taken from direct observation and interviewing hospital staff. Secondary data were obtained from hospital annual report 2019, hospital financial reports 2019, and patient medical records. The cost of a caesarean section was calculated and analyzed using the seven-step TDABC model with one-year hospital 2019 data. The cost of an elective caesarean section with the TDABC method is IDR 4,576,182.72. Hospitals can reduce postoperative costs by 25% by reducing the use of medicine and antibiotics. Based on the research results, TDABC can properly analyze costs based on services and identify inefficient processes.

Developing time-driven activity-based costing at the national level to support policy recommendations for radiation oncology in Belgium

We use time-driven activity-based costing (TDABC) to estimate the cost of radiation treatments at the national level. Although TDABC has mostly been applied at the hospital level, we demonstrate its potential to estimate costs at the national level, which can provide health policy recommendations. Contrary to work on reimbursement or charges representing the health care system perspective, we focus on resource costs from the perspective of health care service providers. Using the example of Belgian inputs and results, we discuss development of a TDABC model. We also present insights into the challenges that arose during model design and implementation. Finally, we discuss recent examples of policy implications in Belgium as well as some caveats that should be considered when developing resource allocation models at the national level.

Understanding the Economic Impact of an Essential Service: Applying Time-Driven Activity-Based Costing to the Hospital Airway Response Team.

As the United States moves toward value-based care metrics, it will become essential for anesthesia groups nationwide to understand the costs of their services. Time-driven activity-based costing (TDABC) estimates the amount of time it takes to perform a clinical activity by dividing complex tasks into process steps and mapping each step and has historically been used to estimate the costs of various health care services. TDABC is a tool that can be adapted for variable staffing models and the volume of service provided. Anesthesia departments often provide staffing for airway response teams (ART). The economic implications of staffing ART have not been well described. We present a TDABC model for ART activation in a tertiary-care center to estimate the cost incurred by an anesthesiology department to staff an ART. Pages received by the Brigham and Women's Hospital ART over a 24-month time period (January 2019 to December 2020) were analyzed and categorized. The local administrative database was queried for the Current Procedural Terminology (CPT) code used to bill for emergency airway placements. Sessions were held by multiple members of the ART to create process maps for the different types of ART activations. We estimated the staffing costs using the estimated time it took for each type of ART activation as well as the data collected for local ART activations. From the paging records, we analyzed 3368 activations of the ART. During the study period, 1044 airways were billed for with emergency airway CPT code. The average revenue collected per airway was $198.45 (95% CI, $190-$207). For STAT/Emergency airway team activations, process maps and non-STAT airway team activations were created, and third subprocess map was created for performing endotracheal intubation. Using the TDABC, the total staffing costs are estimated to be $218,601 for the 2-year study period. The ART generated $207,181 in revenue during the study period. Our analysis of ART-activation pages suggests that while the revenue generated may cover the cost of staffing the team during ART activations, it does not cover consumable equipment costs. Additionally, the current fee-for-service model relies on the team being able to perform other clinical duties in addition to covering the airway pager and would be impossible to capture using traditional top-down costing methods. By using TDABC, anesthesia groups can demonstrate how certain services, such as ART, are not fully covered by current reimbursement models and how to negotiate for subsidy agreements.As the transition from traditional fee-for-service payments to value-based care models continues in the United States, improving the understanding and communication of medical care costs will be essential. In the United States, it is common for anesthesia groups to receive direct revenue from hospitals to preserve financial viability, and therefore, knowledge of true cost is essential regardless of payer model.1 With traditional payment models, what is billable and nonbillable may not reflect either the need for or the cost of providing the service. As anesthesia departments navigate the transition of care from volume to value, actual costs will be essential to understand for negotiations with hospitals for support when services are nonbillable, when revenue from payers does not cover anesthesia costs, and when calculating the appropriate share for anesthesia departments when bundled payments are distributed.

A time-driven activity-based costing approach of magnetic resonance-guided high-intensity focused ultrasound for cancer-induced bone pain

Objective To determine resource consumption and total costs for providing magnetic resonance-guided high-intensity focused ultrasound (MR-HIFU) treatment to a patient with cancer-induced bone pain (CIBP). Methods We conducted a time-driven activity-based costing (TD-ABC) of MR-HIFU treatments for CIBP from a hospital perspective. A European care-pathway (including a macro-, meso-, and micro-level) was designed to incorporate the care–delivery value chain. Time estimates were obtained from medical records and from prospective direct observations. To calculate the capacity cost rate, data from the controlling department of a German university hospital were allocated to the modules of the care pathway. Best- and worst-case scenarios were calculated by applying lower and upper bounds of time measurements. Results The macro-level care pathway consisted of eight modules (i.e., outpatient consultations, pretreatment imaging, preparation, optimization, sonication, post-treatment, recovery, and anesthesia). The total cost of an MR-HIFU treatment amounted to €5147 per patient. Best- and worst-case scenarios yielded a total cost of €4092 and to €5876. According to cost categories, costs due to equipment accounted for 41% of total costs, followed by costs with personnel (32%), overhead (16%) and materials (11%). Conclusion MR-HIFU is an emerging noninvasive treatment for alleviating CIBP, with increasing evidence on treatment efficacy. This costing study can support MR-HIFU reimbursement negotiations and facilitate the adoption of MR-HIFU as first-line treatment for CIBP. The present TD-ABC model creates the opportunity of benchmarking the provision of MR-HIFU to bone tumor. Key points Magnetic resonance-guided high-intensity focused ultrasound (MR-HIFU) is an emerging noninvasive treatment modality for alleviating cancer-induced bone pain (CIBP). From a hospital perspective, the total cost of MR-HIFU amounted to €5147 per treatment. This time-driven activity-based costing model creates the opportunity of benchmarking the provision of MR-HIFU to bone tumor.

Achieving self-sustainability of service delivery in an eye care program in Madagascar using time-driven activity based costing

BackgroundIn the absence of adequate and reliable external funding, eye care programs in developing countries need a high level of financial self-sustainability for maintenance and growth. To cope with these cost pressures, an eye care program in Sava, Madagascar adopted a Time-Driven Activity Based Costing (TDABC) methodology to better manage the cost of, and to improve revenue associated with, their three principle activities: consultation visits, cataract operations, and sale of glasses.MethodsDirect (variable) and indirect (fixed) cost estimates and revenue sources were gathered by activity (consultation, cataract operation, sale of glasses) and location (hospital or outreach) and TDABC models were established. Estimates were made of the proportion of the ophthalmologist’s time (by far the scarcest and most expensive resource) dedicated to consultation, cataract operation, or sale of glasses. These proportions were used to attribute costs by activity. The hospital manager and medical director modified staff roles, program activities, and infrastructure investments to reduce costs and expand revenue sources by activity while monitoring activity specific efficiency and profit.ResultsThe TDABC model for patient consultations showed that they were time consuming for the ophthalmologist and only resulted in net profit for the institution if the ophthalmologist converted most cataract patients into accepting surgery and refractive error patients into purchasing glasses from the hospital optical shop. The TDABC model for cataract surgery showed the programs needed to reduce the cost of imported consumable surgical products, reduce operation time, and, most importantly, reduce the number of very costly surgical camps providing essentially free surgery. In addition the model pushed the hospital to train staff in marketing skills so that a higher proportion of cataract cases come directly to the hospital willing to pay for surgery. The TDABC model provided the optical shop manager, for the first time, data on both the cost of supplies (frames and lenses) and the price of glasses sold resulting in strategies to maximize profit through preferential product presentation and customer experience. The eye program in the Sava region in northern Madagascar improved its cost recovery from 68 to 102% through patient revenue.ConclusionsTDABC models helped the Sava eye care program develop more efficient service delivery and increase revenue in excess of steadily increasing costs.

What Are the Uses and Limitations of Time-driven Activity-based Costing in Total Joint Replacement?

With increasing emphasis on value-based payment models for primary total joint arthroplasty (TJA), there is greater need for orthopaedic surgeons and hospitals to better understand the actual costs and resource use of TJA. Time-driven activity-based costing (TDABC) is a methodology for accurate cost estimation, but its application in the TJA care pathway across institutions/regions has not yet been analyzed. In this systematic review of studies applying TDABC to primary TJA, we investigated the following: (1) Is there variation in TDABC methodology and cost estimates across institutions? (2) Is a standard set of direct and indirect costs included across studies? (3) Is there a difference in cost estimates derived from TDABC and traditional hospital cost-accounting approaches? and (4) How are institutions using TDABC (process and outputs) with respect to the TJA care pathway? A comprehensive search strategy was developed that included the keywords "TDABC," "time-driven activity-based cost," "THA," "TKA," "THR," "TKR," and "TJR" in the PubMed/MEDLINE, EMBASE, Web of Science, Ovid SP, Scopus, and ScienceDirect databases for articles published between 2004 and 2018 as well as extensive hand searching and citation mining. Relevant studies (n = 15) were screened to include THA or TKA as the focus of the TDABC model, full-text articles, TDABC-based cost estimates for TJA, and studies written in English (n = 8). Due to the heterogeneity of outcomes/methodology in TDABC studies involving TJA, quality assessment was based on each study's adherence to the seven steps delineated by Kaplan et al. in their original publication introducing TDABC in health care. There was substantial variation in TDABC methodology (especially in scope), adherence to the seven steps of TDABC, and data collection. Only five of eight studies incorporated indirect costs into their TDABC calculation, with notable differences in which direct and indirect expenses were included. TDABC-based cost estimates for TJA ranged from USD 7081 to USD 29,557, with variation driven by the TJA timeframe and whether implant costs were included in the costing calculation. TDABC was most frequently used to compare against traditional hospital accounting methods (n = 4), to increase operational efficiency (n = 4), to reduce wasted resources (n = 3), and to mitigate risk (n = 3). TDABC-based cost estimates are more granular and useful in practice than those calculated via traditional hospital accounting; however, there is a lack of standardized principles to guide TDABC implementation (especially for indirect costs) due to institutional and regional differences in TDABC application. Although TDABC methodology will likely continue to vary somewhat between studies, standardized principles are needed to guide the definition, estimation, and reporting of costs to enable detailed examination of study methodology and inputs by readers. Level III, economic and decision analysis.

A combined modelling of fuzzy logic and Time-Driven Activity-based Costing (TDABC) for hospital services costing under uncertainty.

Hospital traditional cost accounting systems have inherent limitations that restrict their usefulness for measuring the exact cost of healthcare services. In this regard, new approaches such as Time Driven-Activity based Costing (TDABC) provide appropriate information on the activities needed to provide a quality service. However, TDABC is not flawless. This system is designed for conditions of relatively accurate information that can accurately estimate the cost of services provided to patients. In this study, the fuzzy logic in the TDABC model is used to resolve the inherent ambiguity and uncertainty and determine the best possible values for cost, capacity, and time parameters to provide accurate information on the costs of the healthcare services. This approach has not yet been tested and used in determining the costs of services of a healthcare setting. Therefore, the aim of this study is to present a new Fuzzy Logic-TDABC (FL-TDABC) model for estimating healthcare service costs based on uncertainty conditions in hospitals. The proposed model is implemented in a sample of the hospital laboratory section and the results are compared with the TDABC system. The TDABC model, by allocating the activity costs including fixed costs and not considering the uncertainty regarding the cost, capacity, and time required for each patient, often estimates the unused capacity and costs with a higher margin of error. The results show that the maximum difference in the prescribed costs was 4.75%, 3.72%, and 2.85% in blood bank, microbiology, and hematology tests, respectively, mostly due to uncertainty in the costs of consumables, equipment and manpower (on average 4.54%, 3.8%, and 3.59%, respectively). Also, The TDABC system, in comparison with the proposed system, estimates the unused capacity of the resource with more error. Cost of unused capacity derived using FL-TDABC were 80% of costs derived using TDABC. In conditions where the information is ambiguous, using the new system in hospitals can lead to a more accurate estimate of the cost compared to the TDABC system. Moreover, it helps hospital managers to make appropriate decisions about the use of capacity, capital budgeting, cost control, and etc.

Using the Time-Driven Activity-Based Costing Model in the Eye Clinic at The Hospital for Sick Children: A Case Study and Lessons Learned.

One of the key challenges to healthcare organizations is the development of relevant and accurate cost information. In this paper, we used time-driven activity-based costing (TDABC) method to calculate the costs of treating individual patients with specific medical conditions over their full cycle of care. We discussed how TDABC provides a critical, systematic and data-driven approach to estimate costs accurately and dynamically, as well as its potential to enable structural and rational cost reduction to bring about a sustainable healthcare system.

Time-driven activity-based costing: A dynamic value assessment model in pediatric appendicitis

ObjectivesHealthcare reform policies are emphasizing value-based healthcare delivery. We hypothesize that time-driven activity-based costing (TDABC) can be used to appraise healthcare interventions in pediatric appendicitis. MethodsTriage-based standing delegation orders, surgical advanced practice providers, and a same-day discharge protocol were implemented to target deficiencies identified in our initial TDABC model. Post-intervention process maps for a hospital episode were created using electronic time stamp data for simple appendicitis cases during February to March 2016. Total personnel and consumable costs were determined using TDABC methodology. ResultsThe post-intervention TDABC model featured 6 phases of care, 33 processes, and 19 personnel types. Our interventions reduced duration and costs in the emergency department (−41min, −$23) and pre-operative floor (−57min, −$18). While post-anesthesia care unit duration and costs increased (+224min, +$41), the same-day discharge protocol eliminated post-operative floor costs (−$306). Our model incorporating all three interventions reduced total direct costs by 11% ($2753.39 to $2447.68) and duration of hospitalization by 51% (1984min to 966min). ConclusionTime-driven activity-based costing can dynamically model changes in our healthcare delivery as a result of process improvement interventions. It is an effective tool to continuously assess the impact of these interventions on the value of appendicitis care. Level of evidenceII, Type of study: Economic Analysis.

Application of the TDABC model in the logistics process using different capacity cost rates

Purpose: The understanding of logistics process in terms of costs and profitability is a complex task and there is a need of more research and applied work on these issues. In this research project, the concepts underlying Time-Driven Activity Based Costing (TDABC) have been used in the context of logistics costs.Design/methodology/approach: A Distribution Centre of wood and carpentry related materials has been studied. A multidisciplinary team has been composed to support the project including the researchers and three employees of the company responsible for accounting, logistics and warehousing. The design and implementation of the costing model asked for a deep understanding of the different tasks and processes that should be considered. Accordingly, a TDABC model for the logistics function was developed.Findings: The cost model presented here is supported on a series of time equations designed for the logistics function which allow the analysis and discussion of costs and profitability of different cost objects namely, products, clients, distribution channels, processes and activities. The cost of unused capacity and the effectiveness of logistics processes are also highlighted in this model.Research limitations/implications: In a case study, results and implications cannot be directly or immediately generalized. Nevertheless, the proposed time equations and cost model can be easily adapted to explain other types of logistics functions and it gives the foundations or other TDABC models with more than one capacity cost rate.Practical implications: The TDABC model developed in this case study can be used in similar cases and as a basis for the analysis of logistics costs in other logistics processes. Furthermore, managers can rely on the proposed approach to analyze products’ profitability and logistics cost structure. Originality/value: In this case, different capacity cost rates were computed in order to reflect appropriately the logistics function which was presented in two different processes: internal logistics and distribution. These processes have specific resources allocated and should be measured differently. This is in line with Kaplan and Anderson (2004, 2007) who have suggested a more complex TDABC model with more than one capacity cost rate for these situations.

Time-driven activity-based costing to identify opportunities for cost reduction in pediatric appendectomy

PurposeAs reimbursement programs shift to value-based payment models emphasizing quality and efficient healthcare delivery, there exists a need to better understand process management to unearth true costs of patient care. We sought to identify cost-reduction opportunities in simple appendicitis management by applying a time-driven activity-based costing (TDABC) methodology to this high-volume surgical condition. MethodsProcess maps were created using medical record time stamps. Labor capacity cost rates were calculated using national median physician salaries, weighted nurse–patient ratios, and hospital cost data. Consumable costs for supplies, pharmacy, laboratory, and food were derived from the hospital general ledger. ResultsTime-driven activity-based costing resulted in precise per-minute calculation of personnel costs. Highest costs were in the operating room ($747.07), hospital floor ($388.20), and emergency department ($296.21). Major contributors to length of stay were emergency department evaluation (270min), operating room availability (395min), and post-operative monitoring (1128min). The TDABC model led to $1712.16 in personnel costs and $1041.23 in consumable costs for a total appendicitis cost of $2753.39. ConclusionInefficiencies in healthcare delivery can be identified through TDABC. Triage-based standing delegation orders, advanced practice providers, and same day discharge protocols are proposed cost-reducing interventions to optimize value-based care for simple appendicitis. Level of evidenceII.

Pharmaceutical services cost analysis using time-driven activity-based costing: A contribution to improve community pharmacies' management.

The current financial crisis is pressing health systems to reduce costs while looking to improve service standards. In this context, the necessity to optimize health care systems management has become an imperative. However, little research has been conducted on health care and pharmaceutical services cost management. Pharmaceutical services optimization requires a comprehensive understanding of resources usage and its costs. This study explores the development of a time-driven activity-based costing (TDABC) model, with the objective of calculating the cost of pharmaceutical services to help inform policy-making. Pharmaceutical services supply patterns were studied in three pharmacies during a weekday through an observational study. Details of each activity's execution were recorded, including time spent per activity performed by pharmacists. Data on pharmacy costs was obtained through pharmacies' accounting records. The calculated cost of a dispensing service in these pharmacies ranged from €3.16 to €4.29. The cost of a counseling service when no medicine was supplied ranged from €1.24 to €1.46. The cost of health screening services ranged from €2.86 to €4.55. The presented TDABC model gives us new insights on management and costs of community pharmacies. This study shows the importance of cost analysis for health care services, specifically on pharmaceutical services, in order to better inform pharmacies' management and the elaboration of pharmaceutical policies.

Time-driven activity based costing of total knee replacement surgery at a London teaching hospital

IntroductionThe aim of this study was to conduct a time-driven activity based costing (TDABC) analysis of the clinical pathway for total knee replacement (TKR) and to determine where the major cost drivers lay. MethodsThe in-patient pathway was prospectively mapped utilising a TDABC model, following 20 TKRs. The mean age for these patients was 73.4years. All patients were ASA grade I or II and their mean BMI was 30.4. The 14 varus knees had a mean deformity of 5.32° and the six valgus knee had a mean deformity of 10.83°. Timings were prospectively collected as each patient was followed through the TKR pathway. ResultsPre-operative costs including pre-assessment and joint school were £163. Total staff costs for admission and the operating theatre were £658. Consumables cost for the operating theatre were £1862. The average length of stay was 5.25days at a total cost of £910. Trust overheads contributed £1651. The overall institutional cost of a ‘noncomplex’ TKR in patients without substantial medical co-morbidities was estimated to be £5422, representing a profit of £ 1065 based on a best practice tariff of £ 6487. ConclusionsThe major cost drivers in the TKR pathway were determined to be theatre consumables, corporate overheads, overall ward cost and operating theatre staffing costs. Appropriate discounting of implant costs, reduction in length of stay by adopting an enhanced recovery programme and control of corporate overheads through the use of elective orthopaedic treatment centres are proposed approaches for reducing the overall cost of treatment.

TPM과 COQ 프로세스에서 시간동인 ABC시스템의 활용

This study introduces the methods to apply and develop the integrated Cost of Quality (COQ) and Time-Driven Activity-Based Costing (TDABC) model for seeking not only quality improvement but also reduction of overhead cost. Inefficient and uneconomical COQ activities can be identified by using time driver which also maximizes the quality improvement for Prevention-Appraisal- Failure (PAF) quality costs. In contrast, reduction of the indirect cost of unused capacity resource using Quality Cost Capacity Ratio (QCCR) of TDABC minimizes overhead cost for COQ activities. In addition, linkage between Overall Equipment Effective (OEE) and Time Driver develops the integrated system of Total Productive Maintenance (TPM) and TDABC model. Lean OEE maximizes when an Unused Time (UT) of TDABC that are TPM losses and lean wastes reduces whereas the TPM Cost Capacity Ratio (TCCR) of TDABC minimizes indirect cost for non-value added TPM activities. Numerical examples are derived to better understand the proposed COQ/TDABC model and TPM/TDABC model from this paper. From the proposed model, process mapping and time driver of TDABC are known to lessen indirect cost from general ledger of comprehensive income statement with a better quality innovation and improvement of equipment.

Time-driven activity-based costing: a driver for provider engagement in costing activities and redesign initiatives.

To date, health care providers have devoted significant efforts to improve performance regarding patient safety and quality of care. To address the lagging involvement of health care providers in the cost component of the value equation, UCLA Health piloted the implementation of time-driven activity-based costing (TDABC). Here, the authors describe the implementation experiment, share lessons learned across the care continuum, and report how TDABC has actively engaged health care providers in costing activities and care redesign. After the selection of pilots in neurosurgery and urology and the creation of the TDABC team, multidisciplinary process mapping sessions, capacity-cost calculations, and model integration were coordinated and offered to engage care providers at each phase. Reviewing the maps for the entire episode of care, varying types of personnel involved in the delivery of care were noted: 63 for the neurosurgery pilot and 61 for the urology pilot. The average cost capacities for care coordinators, nurses, residents, and faculty were $0.70 (range $0.63-$0.75), $1.55 (range $1.28-$2.04), $0.58 (range $0.56-$0.62), and $3.54 (range $2.29-$4.52), across both pilots. After calculating the costs for material, equipment, and space, the TDABC model enabled the linking of a specific step of the care cycle (who performed the step and its duration) and its associated costs. Both pilots identified important opportunities to redesign care delivery in a costconscious fashion. The experimentation and implementation phases of the TDABC model have succeeded in engaging health care providers in process assessment and costing activities. The TDABC model proved to be a catalyzing agent for cost-conscious care redesign.

Time-driven activity-based costing to improve transparency and decision making in healthcare

Purpose – The purpose of this paper is to discuss the potentialities of innovative accounting tools in supporting “transparency” and “resource allocation” in public hospitals, by describing the implementation of a pilot project of time-driven activity-based costing (TDABC). Design/methodology/approach – An interventionist research (IR) approach has been adopted: two medical doctors, three financial controllers and three researchers were involved. Collection of data used to implement the accounting model is based on hospital databases and interviews. Findings – The information produced may allow a higher coherence between resources and activities. TDABC may enhance transparency and support decisions toward a better organization of work and an informed allocation of resources. Research limitations/implications – Further studies are required to analyze decisions following the implementation of the TDABC model. Originality/value – The accounting literature lacks case studies describing the application of TDABC in hospital settings, despite its good informative potentialities and the limited investment required to introduce TDABC. Moreover, the use of the IR approach and the involvement of medical doctors may help to get coherence between accounting data and clinical work and may support the further diffusion and development of this costing model in hospitals.