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Time-driven activity-based costing of multivessel coronary artery bypass grafting across national boundaries to
F Erhun1, B Mistry2, T Platchek1
1Clinical Excellence Research Center, Stanford University, Stanford, California, USA.
Insights
This study analyzes coronary artery bypass graft (CABG) surgery costs in US hospitals using time-driven activity-based costing. Findings reveal significant cost variations and identify opportunities to reduce expenses for this common cardiovascular procedure.
Area of Science:
- Health Economics
- Cardiovascular Surgery
- Healthcare Management
Background:
- Coronary artery disease affects over 10% of US adults, with coronary artery bypass graft (CABG) surgery being a primary treatment.
- CABG surgery costs in the USA are substantial (mean $32,201 in 2005), significantly higher than in other countries like India (under $2000).
- High costs associated with CABG surgery necessitate an investigation into cost variations and reduction opportunities.
Purpose of the Study:
- To identify cost differences in performing coronary artery bypass graft (CABG) surgery across three Joint Commission accredited hospitals.
- To characterize opportunities for reducing the overall cost of CABG surgery production in the USA.
- To analyze the economic efficiency of high-quality CABG surgery providers.
Main Methods:
- Employed time-driven activity-based costing (TDABC) to quantify the costs associated with elective, multivessel CABG procedures.
- Developed CABG process maps through site observations and staff interviews to estimate resource utilization (labor and non-labor).
- Calculated unit costs as a capacity cost rate ($/min) for each resource and aggregated to determine the average cost of CABG production.
Main Results:
- Quantified the specific costs incurred by three high-quality hospitals for producing multivessel CABG surgery.
- Identified variations in resource utilization and unit costs contributing to differential CABG production expenses.
- Conducted a variance analysis of labor costs to pinpoint specific areas for cost reduction.
Conclusions:
- Significant cost differences exist in CABG surgery production among reputable US hospitals.
- TDABC provides a robust framework for understanding and analyzing healthcare service costs.
- Opportunities to reduce CABG surgery costs in the USA are identifiable through detailed process and cost analysis.
Introduction:
Coronary artery bypass graft (CABG) surgery is a well-established, commonly performed treatment for coronary artery disease--a disease that affects over 10% of US adults and is a major cause of morbidity and mortality. In 2005, the mean cost for a CABG procedure among Medicare beneficiaries in the USA was $32, 201 ± $23,059. The same operation reportedly costs less than $2000 to produce in India. The goals of the proposed study are to (1) identify the difference in the costs incurred to perform CABG surgery by three Joint Commission accredited hospitals with reputations for high quality and efficiency and (2) characterise the opportunity to reduce the cost of performing CABG surgery.
Methods And Analysis:
We use time-driven activity-based costing (TDABC) to quantify the hospitals' costs of producing elective, multivessel CABG. TDABC estimates the costs of a given clinical service by combining information about the process of patient care delivery (specifically, the time and quantity of labour and non-labour resources utilised to perform each activity) with the unit cost of each resource used to provide the care. Resource utilisation was estimated by constructing CABG process maps for each site based on observation of care and staff interviews. Unit costs were calculated as a capacity cost rate, measured as a $/min, for each resource consumed in CABG production. Multiplying together the unit costs and resource quantities and summing across all resources used will produce the average cost of CABG production at each site. We will conclude by conducting a variance analysis of labour costs to reveal opportunities to bend the cost curve for CABG production in the USA.
Ethics And Dissemination:
All our methods were exempted from review by the Stanford Institutional Review Board. Results will be published in peer-reviewed journals and presented at scientific meetings.
