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Time-Driven Activity-Based Costing Accurately Determines Bundle Cost for Rotator Cuff Repair.

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Arthroscopy : the Journal of Arthroscopic & Related Surgery : Official Publication of the Arthroscopy Association of North America and the International Arthroscopy Association
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PubMed
Summary

The total cost for rotator cuff repair (RCR) is $10,569, with implants being the main operative cost and physical therapy dominating postoperative expenses. Understanding these costs aids in optimizing payment models for RCR.

Keywords:
cost of careepisode of carehealth policyrotator cuff repairtime driven activity-based costingvalue-based healthcare

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Area of Science:

  • Orthopedic Surgery
  • Health Economics
  • Cost Analysis

Background:

  • Rotator cuff repair (RCR) is a common orthopedic procedure.
  • Understanding the cost of care for RCR is crucial for financial planning and policy development.
  • The time-driven activity-based costing (TDABC) method offers a detailed approach to analyzing healthcare costs.

Purpose of the Study:

  • To determine the episode of care cost for primary rotator cuff repair (RCR) from surgery to 90 days postoperatively.
  • To identify the primary cost drivers within both the operative and postoperative phases of RCR care.
  • To utilize the time-driven activity-based costing (TDABC) method for comprehensive cost analysis.

Main Methods:

  • A retrospective case series design was employed.
  • The time-driven activity-based costing (TDABC) method was used to calculate the bundled cost of RCR care.
  • A process map was created to identify fixed, direct variable, and indirect costs associated with the RCR episode of care.

Main Results:

  • The total bundled cost for RCR was calculated at $10,569.
  • The operative phase accounted for 76% of the total cost, with implants being the largest contributor (55% of operative costs).
  • Physical therapy visits constituted the majority (59%) of the postoperative phase costs.

Conclusions:

  • The primary cost driver in the operative phase of RCR is direct fixed costs, particularly the surgical implant.
  • Physical therapy represents a significant portion of the postoperative costs for RCR.
  • Accurate cost analysis of RCR facilitates the development of optimized payment models and policies benefiting all stakeholders.