Time-driven activity-based costing to model the utility of parallel induction redesign in high-turnover operating lists

doi:10.1016/j.hjdsi.2019.01.003

Healthcare

Volume 7, Issue 3, September 2019, 100355

https://doi.org/10.1016/j.hjdsi.2019.01.003 Get rights and content

Abstract

Background

Value-based healthcare is strongly advocated to reduce the spiralling rise in healthcare expenditure. Operating room efficiency is an important focus of value-based healthcare delivery due to high costs and associated hospital revenue derived from procedural streams of care. A parallel induction design, utilising induction rooms for anesthetising patients, may improve operating room efficiency and optimise revenue. We used time-driven activity-based costing (TDABC) to model personnel costs for a high-turnover operating list to assess value of parallel induction redesign.

Methods

We prospectively captured activity data from high-turnover surgery allocated to induction of anesthesia within the operating room (serial design) or within induction rooms prior to completion of preceding surgery (parallel design). Personnel costs were constructed using TDABC following assignment of a case-mix that integrated our activity data. This was contrasted against procedural revenue to assess value of projected case throughput.

Results

Under a parallel induction design, projected operating list duration was reduced by 55 min at marginal increase (1.6%) in personnel costs as assessed by TDABC. This could facilitate an additional short duration surgical case (e.g. Wide Local Excision, with potential additional revenue of $2818 per day and $0.73 M per annum per operating room.

Conclusions

Parallel induction design reduces non-operative time at minimal increase in personnel costs for all-day, high turnover surgery. An additional short duration surgical case is likely feasible under this model and represents a value investment with minimal requirement for additional personnel resources.

Implications

A parallel induction design, within the constraints of finite healthcare funding, may help alleviate some of the global increase in demand for surgical capacity that accompanies an expanding and aging population.

Section snippets

Background

Optimising costs in operating rooms is of increasing importance amidst rising demand for increased surgical capacity that accompanies globally expanding and aging populations.1., 2. Although operating room running costs are high, the associated revenue from procedural streams of care form a significant source of funding for hospitals performing elective surgery.3., 4. Improving throughput of cases within existing budgetary constraints may represent an enormous cost-saving measure for hospitals

Developing process times following observational trial within operating rooms

Following institutional ethics committee approval (HREC No: LNR/16/PMCC/141), we allocated parallel or serial processing randomly across 19 all-day operating lists that predominantly comprised breast or melanoma procedures. The principal investigator recorded all process times in the operating room using a preconceived case report form. To facilitate modelling of our operating list, process time was dichotomised into operative and non-operative time periods. Operative time was defined from the

Analysis of operative and non-operative process times

In our trial of operating room redesign we observed a median non-operative duration of 35 min under a serial model of induction, compared to 24 min under a parallel design, a 31.43% improvement (Fig. 3).

The median additional anesthetic exposure time (as assessed from the completion of induction of anesthesia until entry into the operating room) under the parallel induction design was 8 min. Divided chronologically, the median duration was 15 min for the first fifteen attempts and 3 min for the

Discussion

Attempts to improve operating room suite (theatre) efficiency requires the capacity to model the surgical process times of a heterogenous case-mix and relate resource costs with surgical throughput. Our activity data yielded a median 11-min reduction in non-operative time that complements the improvements in non-operative time of 23 and 24 min in two previous studies that incorporated parallel processing alongside several other efficiency improvements (serial duration: 35 IQR 29–44 min vs.

Conclusion

Improvements to efficiency in operating rooms are an opportunity for hospitals to optimise revenue and reduce surgical waiting lists within existing budgetary confines. By combining surgical process times to model an operating list of multiple minor procedures we have facilitated application of costs using TDABC alongside projections of case throughput and admission revenue. Application of this system to assess value improvement of parallel induction redesign demonstrates an all-day operating

Acknowledgements

The authors would like to thank the operating theatre staff of the Peter MacCallum Cancer Centre (trial assistance); Prof. Thomas Feeley and Prof. Franklin Dexter (consultation), Ariel Tong and Clinton Kitt (financial data collection); the Melbourne Clinical and Translational Sciences research platform (health economics grant support), and the reviewers of Healthcare: The Journal of Delivery Science and Innovation for their contribution to this research.

Ethics approval details

Peter MacCallum Project No: 16/99LAU RED HREC Reference No: LNR/16/PMCC/141.

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This study seeks to establish Provider Team Efficiency (PTE) as a useful operating room efficiency metric and to associate a dollar value as a cost to the institution for a decrement in PTE for each site within our academic center's network. In the secondary analysis, multiple weighted linear regressions were performed to determine additional institutional factors, which might affect the corresponding PTE.
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Original researchTime-driven activity-based costing to model the utility of parallel induction redesign in high-turnover operating lists

Abstract

Background

Methods

Results

Conclusions

Implications

Section snippets

Background

Developing process times following observational trial within operating rooms

Analysis of operative and non-operative process times

Discussion

Conclusion

Acknowledgements

Ethics approval details

J Am Coll Surg

Healthcare

Healthcare

Health Policy

Knee

Surgery

The aging population and its impact on the surgery workforce

Ann Surg

Where are the costs in perioperative care?: analysis of hospital costs and charges for inpatient surgical care

Anesthesiology

What is value in health care?

New Engl J Med

Redefining Health Care: Creating Value-based Competition on Results

Utilizing time-driven activity-based costing to understand the short- and long-term costs of treating localized, low-risk prostate cancer

Cancer

How to solve the cost crisis in health care

Harv Bus Rev

Original research
Time-driven activity-based costing to model the utility of parallel induction redesign in high-turnover operating lists