Time-Driven Activity-Based Costing Provides a Lower and More Accurate Assessment of Costs in the Field of Orthopaedic Surgery as Compared to Traditional Accounting Methods
Koolmees D, Bernstein DN, and Makhni EC. Time-Driven Activity-Based Costing Provides a Lower and More Accurate Assessment of Costs in the Field of Orthopaedic Surgery as Compared to Traditional Accounting Methods. Arthroscopy 2020.
PURPOSE: The purpose of this article was to analyze the implementation and benefits of Time-Driven Activity-Based Costing (TDABC) in the field of orthopaedic surgery.
METHODS: We performed a search of PubMed, Google Scholar, and Embase in March 2020, using the following terms: "Time-Driven Activity-Based Costing" "TDABC" "Orthopaedic Surgery" "Cost." Then we selected the studies that used the TDABC methodology to generate costs for a particular aspect of orthopaedic surgery. The included studies were divided into the following 5 main categories for ease of analysis: joint arthroplasty, trauma, hand, EMR implementation, and pediatric. We analyzed the overall ability of TDABC in the field of orthopaedic surgery, compared to the standard costing methods.
RESULTS: We included a total of 19 studies that implemented the TDABC methodology to generate a cost, which was compared to traditional accounting methods. The orthopaedic subspecialty with the most amount of TDABC implementation has been the field of joint arthroplasty. In these studies, the authors have noted that TDABC has provided a more granular breakdown of the costs, and it has calculated a lower cost when compared to traditional accounting methods.
CONCLUSION: TDABC is a powerful cost analysis method that has demonstrated benefit over the ABC approach in determining a lower and more accurate cost of orthopaedic procedures. Furthermore, the TDABC method generates an average cost reduction of $10,000 and $12,000 for THA and TKA, respectively.