Pediatric neurosurgery through the lens of time-driven activity-based costing: a pilot study

OBJECTIVE Time-driven activity-based costing (TDABC) is a method used in cost accounting that has gained traction in health economics to identify value optimization initiatives. It measures time, assigns value to time increments spent on a patient, and integrates the cost of material and human resources utilized in each episode of care. In this study, the authors report the first use of TDABC to evaluate costs in a pediatric neurosurgical practice. METHODS A clinical pathway was developed with a multifunction team. A time survey among each care team member, including surgeons, medical assistants (MAs), and patient service representatives (PSRs), was carried out prospectively over a 10-week period at a pediatric neurosurgery clinic. Consecutive patient encounters for Chiari malformation (CM), hydrocephalus, or tethered cord syndrome (TCS) were included. Encounters were categorized as new or established. Relative annual personnel costs, using the salary of a PSR as a reference (i.e., 1.0-unit cost), were calculated for all members using departmental financial data after adjustments. The relative capacity cost rates (minute⁻¹) for each personnel, a representation of per capita cost per minute, were then derived, and the relative costs per visit were calculated. RESULTS A total of 110 visits (24 new, 86 established) were captured, including 40% CM, 41% hydrocephalus, and 19% TCS encounters. Surgeons had the highest relative capacity cost rate (118.4 × 10⁻⁶), more than 10-fold higher than that of an MA or PSR (10.65 × 10⁻⁶ and 9.259 × 10⁻⁶, respectively). Surgeons also logged more time with patients compared with the rest of the care team in nearly all visits (p ≤ 0.002); consequently, the total visit costs were primarily driven by the surgeon cost (p < 0.0001). Overall, surgeon cost constituted the vast majority of the total visit cost (92%–93%), regardless of whether the visits were new or established. Visit costs did not differ by diagnosis. On average, new visits took longer than established visits (p < 0.001). This difference was largely driven by new CM visits (44.3 ± 13.7 minutes), which were significantly longer than established CM visits (29.8 ± 9.2 minutes; p = 0.001). CONCLUSIONS TDABC may reveal opportunities to maximize value by highlighting instances of variability and high cost in each module of care delivery. Physician leaders in pediatric neurosurgery may be able to use this information to allocate costs and streamline value care pathways.