Bozic Value-Based Health Care in Orthopaedics

Chapter 16: Orthopaedics as a Service Line

nonclinical staff and equipment. 19 TDABC cost calculations are based on two pri mary parameters: per minute cost for each resource involved and the average time required for each resource. 19 Personnel cost is calculated using salary and benefit data divided by the actual time worked, whereas utilization times are recorded either through direct observation or by interviewing personnel involved in the episode of care. Understanding and accounting for labor costs is critical; this factor is often overlooked and a major determinant in all episodes of care. Applying TDABC is a collaborative effort that requires both clinical and nonclinical knowl edge and clear pathways identifying all steps in the involved care delivery path ways ( Figures 4 and 5 ). Although the infrastructure to establish TDABC is more involved, with focus on the indirect costs, it allows for a more accurate represen tation of expenditures associated with any episode of care that can substantially improve care pathways, profitability, and influence pricing strategies. 19,20 HIGH-TOUCH MUSCULOSKELETAL PATIENT CARE Delivery of orthopaedic patient care requires a unique combination of resources regarding personnel, facility capabilities, patient amenities, and widespread staff education (nursing, physical therapy, case management). Administrators and directors managing orthopaedic service lines often inadvertently focus primarily on cost containment and cost reduction strategies while sometimes

• Good outcomes • Autonomy • Efficiency • Fair compensation Physicians

• Maximize health benefits with a fixed amount of resources • Decrease expenditure Policymakers

• High-quality care • Decrease cost • Decrease risk Hospitals

Improvement of Patient Care

• Good outcomes • Transparency • Reliability • Develop trust Patients

• Increase sales of their products Vendors

• Add value • Provide medical coverage • Generate profit Payors

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FIGURE 4 Process map of lower extremity osteoarthritis care pathway (including patient visits) by disease severity and treatment approach (surgical versus nonsur gical). (Data from Keswani A, Sheikholeslami N, Bozic KJ: Value-based healthcare: Applying time-driven activity-based costing in orthopaedics. Clin Orthop Relat Res 2018;476[12]:2318-2321.)

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Value-Based Health Care in Orthopaedics