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Using Time-Driven Activity-Based Costing to Model the Costs of Various Process-Improvement Strategies in Acute Pain Management

Popat, Keyuri, MD; Gracia, Kelly Ann; Guzman, Alexis B.; Feeley, Thomas W., MD

doi: 10.1097/JHM-D-16-00040

EXECUTIVE SUMMARY Pain control for patients undergoing thoracic surgery is essential for their comfort and for improving their ability to function after surgery, but it can significantly increase costs. Here, we demonstrate how time-driven activity-based costing (TDABC) can be used to assess personnel costs and create process-improvement strategies.

We used TDABC to evaluate the cost of providing pain control to patients undergoing thoracic surgery and to estimate the impact of specific process improvements on cost. Retrospective healthcare utilization data, with a focus on personnel costs, were used to assess cost across the entire cycle of acute pain medicine delivery for these patients. TDABC was used to identify possible improvements in personnel allocation, workflow changes, and epidural placement location and to model the cost savings of those improvements.

We found that the cost of placing epidurals in the preoperative holding room was less than that of placing epidurals in the operating room. Personnel reallocation and workflow changes resulted in mean cost reductions of 14% with epidurals in the holding room and 7% cost reductions with epidurals in the operating room. Most cost savings were due to redeploying anesthesiologists to duties that are more appropriate and reducing their unnecessary duties by 30%. Furthermore, the change in epidural placement location alone in 80% of cases reduced costs by 18%. These changes did not compromise quality of care.

TDABC can model personnel costs and process improvements in delivering specific healthcare services and justify further investigation of process improvements.

medical director, acute pain medicine, Division of Anesthesiology and Critical Care, The University of Texas MD Anderson Cancer Center, Houston

senior research data coordinator, The University of Texas MD Anderson Cancer Center, Houston

project manager, reimbursement strategy, clinical revenue and reimbursement, The University of Texas MD Anderson Cancer Center;

senior fellow, Harvard Business School, and professor emeritus, The University of Texas MD Anderson Cancer Center

For more information about the concepts in this article, contact Dr. Popat at

The authors declare no conflicts of interest.

© 2018 Foundation of the American College of Healthcare Executives
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