Editorial Commentary: The Value of Time-Driven, Activity-Based Costing in Health Care Delivery

Time-driven activity-based costing (TDABC) provides a powerful approach to more targeted cost accounting based on resources actually used by patients during cycle of care. Since its introduction in 2004 Kaplan and Anderson, TDABC has gained increasing popularity defining the actual costs care for various orthopaedic processes pathways. may demonstrate lower compared with traditional methods, including ratio charges relative value units. Weaknesses methods include approaching through lens charges, revenue, procedures, adopting “top-down” approach, potentially overestimating costs. In contrast, builds from individual level, taking front-line, condition-focused, patient-centered view. Existing organizational decision-making is oriented around revenue metrics (relative units charges) rather than metrics, yet alternative payment models are shifting toward fixed revenues certain conditions or procedures. The variability, both financial upside loss, will primarily be function care—a number that profoundly opaque most health settings. We view as an sheds light variation, offers granular differentiation approaches, mitigates risk, sparks opportunities operational efficiency waste reduction. goal identify provide greatest-value