Are Ambulatory Surgery Centers Worthwhile? An Analysis of Surgery Costs Using Time-Driven Activity Based Costing Methods
Jessi A Fore, BA1, Alex C Lindahl, B.S.2, Jacob R. Kalkman, B.S.3, Eric Battista, BS4, Amy Tang, PhD4, Amy Busha, MBA4 and Charles S Day, MD, MBA4, (1)Oakland University William Beaumont School of Medicine, Rochester, MI, (2)Oakland University William Beaumont, Rochester, MI, (3)Wayne State University School of Medicine, Detroit, MI, (4)Henry Ford Health System, Detroit, MI
Ambulatory surgery centers (ASCs) are often used for outpatient orthopaedic surgical procedures in place of hospital operating rooms (ORs). We hypothesize that the overall cost of concomitant carpal tunnel release (CTR) and trigger finger release (TFR) procedures will be reduced in an ASC when compared to an OR.
Materials and Methods
Separate process maps, including all steps of patient care from arrival to discharge from PACU, were constructed using combined CTR with TFR procedures in both ASC and OR settings. The time needed to complete each step of the process map was measured for all patients and used to calculate cost according to the Time-Driven Activity-Based Costing (TDABC) methodology. Total costs were broken down for comparison in the following categories:
- Direct Variable Costs: Costs associated with individual salaries for staff involved in patient care.
- Direct Fixed Costs: Costs associated with building fees and materials.
- Indirect Costs: Costs not directly linked to the procedure (e.g. marketing, administration, and maintenance).
The total cost for combined CTR with TFR in an OR was $3,346. Within this total, direct fixed, direct variable, and indirect costs were $1,634.38 (48.8% of cost), $755.62 (22.6%), and $956 (28.6%), respectively. In the ASC setting, the total cost was reduced to $3,216.78, $129.22 less than the OR cost. This total was broken down to $1,634.38 direct fixed (50.8%), $663.32 direct variable (20.6%), and $919.08 indirect cost (28.6%). There was no difference between direct fixed costs at the OR versus the ASC; however, there was a $92.30 reduction in direct variable costs and a $36.92 reduction in indirect costs. When comparing time on each step, the ASC showed decreased time overall allocated by personnel thus allowing for an larger overall reduction of the direct variable cost attributed to the per-minute salaries of personnel (Table 1).
- ASCs are only 4% more cost effective than ORs for concomitant CTR and TFR procedures.
- The largest contributor to the cost reduction at ASCs was direct variable cost; this can be attributed to the decrease in time required by most personnel at the ASC.
- Direct fixed costs were the largest contributor to the overall cost of procedures and did not vary between the OR and ASC; this could be an avenue for future research in cost reduction.
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