Implementation of TDABC to Analyze Cost Drivers in Endoscopic Skull Base Surgery

Introduction: The use of value-based costing structures is rising in importance as stakeholders look to prioritize value of care. New accounting methods like time-driven activity-based costing (TDABC) can provide an estimate of cost of resources consumed in the patient care pathway; we sought to use TDABC to calculate the cost of different skull base approaches at our institution and identify major cost drivers to target for future intervention.

Methods: We performed a retrospective patient chart review of all outpatient procedures performed at our institution over the past year with the CPT codes 61580 and 62165 to gauge procedure times. Fixed costs (i.e., supplies, OR space, etc.) were retrieved via an in-house hospital database. Capacity cost rates for personnel were calculated by using the national average salaries for physicians, residents, and nursing staff.

Results: We performed TDABC analysis on 36 patient records but ultimately only included 29 records as we were missing supply data for some procedures. The calculated capacity cost rate for an ENT surgeon was $242.12/hr, Anesthesiologist was $294.12/hour, and Neurosurgeon was $249.03/hour. The capacity cost rate for an ENT resident was $23.83/hour, Anesthesiology resident was $23.03/hr, Neurosurgery resident was $30.64/hour and for nursing staff was $58.42/hour. For procedures with the CPT code 61580, the average total TDABC cost of the procedure was $8,733.87, the average cost of supplies was $5,024.34, while the average cost of personnel was $3,709.53. For the CPT code 62165, the average total TDABC cost of the procedure was 6810.54, the average cost of supplies was $3,854, while the average cost of personnel was $2,388.88. We found that supply costs were the greatest cost drivers primarily due to expensive technology such as the Aquamantys bipolar sealers. The next greatest cost driver was personnel cost for both procedure codes (Figs. 1 and 2). Further investigation into supplies showed that introducing Duragen into the repair of dural defects was associated with increased cost with no association with procedure duration.

Conclusion: The TDABC model allows for analysis of cost drivers by considering the capacity of each resource. Supply costs were the greatest cost drivers and understanding which supplies contribute most to cost with least to patient outcomes/procedure times can help create a more effective process. Only direct costs were considered in our analysis, but future investigation should include indirect costs. Greater transparency in all costs can provide an accurate understanding of the major factors that influence procedure costs.

No conflict of interest has been declared by the author(s).

Publication History

Article published online:
12 February 2021