Abstract
Purpose :
Declining reimbursement and rising costs of labor, operating space, and equipment are threatening the financial health of large academic medical centers. Our goal is to use electronic health record (EHR) time logs and the cost per unit of each resource to calculate the complete cost profile of upper eyelid surgery using time-driven activity based costing (TDABC) analysis. The TDABC analysis uses a bottom up, process based approach to determine resource utilization and estimate cost compared to the level of maximum Medicare reimbursement in the hospital setting.
Methods :
Using TDABC analysis, we calculated the cost of healthcare resources consumed for patients undergoing elective upper eyelid surgery (CPT 15822, 15823, 67901, 67903, 67904, 67908) at Vanderbilt University Medical Center (VUMC) in fiscal years 2018-2020. We devised an upper eyelid surgery process flow map and used de-identified time-stamped logs extracted from the EHR, averaged across 154 unique patient encounters, to categorize pre-operative, peri-operative, and post-operative durations. We used cost per minute data for space and equipment, personnel, materials, and overhead provided by the VUMC financial management office for cost allocation. This study was approved by Vanderbilt Institutional Review Board.
Results :
TDABC analysis resulted in a total cost of $5393.72 per patient, which is $1706.91 more than the average maximum Medicare reimbursement of $3686.81 for the six upper eyelid procedures studied. Upper eyelid surgery cases do not reach breakeven unless the case duration is less than 39.97 minutes, overhead is reduced by 48.6%, or reimbursement is increased by 46.3%.
Conclusions :
The analysis demonstrates that true costs for upper eyelid surgery are significantly greater than the maximum allowable Medicare reimbursement for a hospital setting. Reimbursement is inadequate even under ideal capacity constraints with fully available ORs and full copayment from every patient.
Upper eyelid surgery TDABC analysis can guide surgeons and administrators in providing higher value, lower cost care by optimizing processes, settings of care, and allocating resources judiciously. Ophthalmology departments in academic hospital settings may also benefit from accurately measured upper eyelid surgery costs to inform policy discussion regarding appropriate reimbursement.
This abstract was presented at the 2022 ARVO Annual Meeting, held in Denver, CO, May 1-4, 2022, and virtually.