Nashville, TN

Austin, TX

(512) 591-8544

© 2018 by Ellis & Adams, Inc.

COST REDUCTIONS

  • Does your hospital know what it actually costs to treat patients?
  • Does your hospital need to know outcomes per dollar spent?
  • Do you need a cost analysis specific to a patient condition?
Challenge:

 

How much does that cost?  While this is so common in every other aspect of our lives, ask a healthcare provider exactly how much it costs to provide a service to a patient and you will be unlikely to get an answer.  The reason behind this is that we do not know what the input costs of our services are.  Health systems may use industry metrics, such as Relative Value Units (RVUs), but these are an approximation of costs at best and not unique to the institution.

 

Value-based care, be it bundled payments, ACOs, Medicare Shared Savings or other programs, will place more financial emphasis on healthcare providers to compete on both the quality of services and the cost to provide those services.  To be successful in this new environment, organizations must tackle one of the fundamental challenges facing our industry, which is how we measure the cost of the healthcare services we provide.  To effectively compete on value healthcare providers must understand the actual costs, at the patient condition level, for the services they provide.

 

Approach:

 

Ellis & Adams has researched and developed a framework to utilize Time-Driven Activity Based-Costing (TDABC) to properly account for the input costs associated to a given patient and given condition.  This framework derives equations and cost drivers requiring two sets of estimates that can easily and objectively be obtained: (1) The quantity of time that each employee provides service to a patient; and (2) the price incurred by the organization for each employee to provide service.

 

Ellis & Adams provides TDABC studies to organizations to help drive insights into the value of process improvement by providing an efficient analysis of costs at the patient treatment level.  Our TDABC studies have proven that organizations can improve their outcomes per dollar spent.

 

Benefits:

 

  • Provides real cost to patient care service areas

  • Aligns with Lean Management initiatives

  • Uncovers cost spikes and variations

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