Time-driven activity based costing (TDABC) in long-term healthcare (LTH)-A practical application

Sargento, Ana; Santos, Isa; Carvalho, Henrique; Querido, Ana

http://hdl.handle.net/10400.8/3957

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Statement of the Problem: This paper focuses the cost component of a larger ongoing action-research project (CARE4VALUE), aiming to enhance value creation (patient-centered health outcomes per unit of cost) in LTH providers. The main objective is to share the experience of designing and implementing TDABC in a Portuguese LTH unit. TDABC methodology applied to healthcare allows identifying the cost per patient, for each clinical condition, in the full cycle of care, mapping processes, activities, resources and time allocated. The cost model was developed in a close cooperation with the clinical and management staff of the partner LTH unit. Mixed qualitative and quantitative methods were applied, involving: Three focus groups and anonymized clinical data analysis to categorize different complexity degrees of patients; structured observation of the full cycle of care; analysis and rearrangement of accounting records and cost calculation per patient and activity. Despite the difficulties found, mainly concerning the adaptation of the existing management accounting system to the requirements of TDABC, the implementation in a real LTH setting proved successful. A recording tool and dashboard was also developed, to integrate multidimensional patient-centred information, prompting embeddedness of the model into daily practice.The cost model represents an important advance for the focus LTH unit, as it allows uncovering the cost per patient, according to his/her degree of complexity. Although applied to a specific LTH unit, it is replicable to similar units, generating valuable information for managers, policy-makers and funding.