How much does health care really cost? Earlier this year a team of University of California at Los Angeles (UCLA) Health Sciences researchers using time-driven activity-based costing analysis, for the first time described cost across an entire treatment and care process spectrum for a common urological condition called benign prostate hyperplasia (BPH) — non-cancerous enlargement of the prostate gland. The investigators found a 400 percent discrepancy between the least and most expensive approaches to treating BPH.
“The finding takes on even further importance as there isn’t any proven difference in outcomes between the lower and higher cost treatments,” commented study first author Dr. Alan Kaplan, a resident physician in the UCLA Department of Urology.
“The rising cost of health care is unsustainable, and a big part of the problem is that health systems, health care providers and policy makers have a poor understanding of how much health care really costs,” Dr. Kaplan observes. “Until this is well understood, taxpayers, insurers and patients alike will continue to bear the burden of soaring health care costs.”
The one-year study appeared in the March, 2015 issue of Healthcare: The Journal of Delivery Science and Innovation, entitled “Measuring the cost of care in benign prostatic hyperplasia using time-driven activity-based costing (TDABC)“ (Healthcare Volume 3, Issue 1, March 2015, Pages 4348 doi:10.1016/j.hjdsi.2014.09.007), coauthored by Dr. Kaplan with N. Agarwal, N.P. Setlur, H.J. Tan, D. Niedzwiecki, N. McLaughlin, M.A. Burke, K. Steinberg, K. Chamie, and C.S. Saigal — all of various UCLA Health Sciences departments.
A UCLA release notes that in 2013, University of Iowa researchers polled more than 100 hospitals seeking the cost of a hip replacement and found a huge range of price estimates, while in some instances, hospitals could not even provide a cost. UCLA researchers wanted to use a new technique, time-driven activity-based costing (TDABC) — a novel strategy developed by Harvard Business School health care economists that estimates cost and demand through measuring the unit cost of supplying capacity and the time required to perform a transaction or an activity — to determine how much it actually costs at UCLA to treat BPH, or enlarged prostate, which according the American Urologic Association, affects about 50 percent of men between 51 and 60 and up to 90 percent of men over 80.affects roughly half of men over age 50 and can be treated in many different ways. BPH is caused by the non-cancerous enlargement of the prostate gland due to aging. Symptoms include difficult and/or frequent urination, dribbling after urination and pain during urination.
Dr. Kaplan and his team created a process maps that detailed each step of care for a BPH patient. They determined space and product costs and calculated personnel capacity cost rates. The researchers applied TDABC across the entire care pathway for BPH, including primary and specialist care in both inpatient and outpatient settings, calculating personnel costs for BPH medical management teams of doctors, nurses and patient affairs based on the steps of the process. Space and equipment costs also were defined. A team of expert stakeholders created detailed process maps, determined space and product costs, and calculated personnel capacity cost rates. A model pathway was derived from practice guidelines and calculated costs were applied
The investigating team found that although it is listed as optional in practice guidelines, invasive diagnostic testing can increase BPH treatment costs by 150 percent compared with standalone urology clinic visits. Across a range of five different surgical options, a 400 percent cost discrepancy was discovered between the most and least expensive treatments.
Based on their findings, the investigators say TDABC can be used to measure cost across an entire care pathway in a large academic medical center, and that a substantial cost variation exists between diagnostic and surgical modalities for men with BPH. They suggest that as financial risk is shifted toward providers, understanding the cost of care will be vital, and that future work is needed to determine outcome discrepancy between the diagnostic and surgical modalities in BPH.
BPH can be treated medically, but invasive procedures often are needed for patients in whom medical therapies are no longer effective. These procedures range from in-office minimally invasive to outpatient surgery to inpatient open surgery to remove the majority of the prostate tissue (trans-urethral resection or TUR). Pre-operative work-up varies significantly, which represents a large part of the cost differential, Dr. Kaplan notes.
“Cost can be a dirty word in medicine. People want the best health care money can buy,” says Dr. Kaplan. “A poor understanding of health care costs means a lot of waste and unnecessary expenses that are borne mostly by patients. Value in health care demands high quality care at the lowest possible cost.”
Going forward, UCLA researchers are collecting and analyzing data to determine value in BPH, including which tests add value to care and which may be unnecessary.
The study was a collaborative effort of the UCLA Department of Urology and the UCLA Institute for Innovations in Health.
Time-driven activity-based costing can be used to measure cost across an entire care pathway in a large academic medical center, the study states. As financial risk is shifted toward providers, understanding the cost of care will be vital. Future work is needed to determine outcome discrepancy between the diagnostic and surgical modalities in BPH.
Sources:
University of California at Los Angeles (UCLA) Health Sciences
Healthcare: The Journal of Delivery Science and Innovation
Image Credit:
University of California at Los Angeles (UCLA) Health Sciences