Elizabeth Hofheinz, M.P.H., M.Ed. • Mon, November 24th, 2014
New Harvard Study Could Change Orthopedics Forever
In what is likely the one of the first-ever attempt to map a cycle of care using an advanced economic model, researchers from Harvard have joined together with business gurus at the same institution. Jon J.P. Warner, M.D. is chief of the Shoulder Service at Massachusetts General Hospital and co-director of the Boston Shoulder Institute Fellowship worked in collaboration with Laurence D. Higgins, M.D. chief of the Sports Medicine and Shoulder Service at the Brigham and Women’s Hospital. A former president of the American Shoulder and Elbow Society (ASES), Dr. Warner told OTW, “Dr. Higgins and I have worked with Robert Kaplan and his colleagues at the Harvard Business School, and have just completed a study where we looked at the actual cost of an episode of care for rotator cuff surgery. By mapping the entire cycle of care and carefully analyzing each step, we were able to reduce the price of the entire one year episode of care by 15%.
“The tool we used—Time-Driven Activity Based Costing (TDABC)—allowed us to map the cycle of care. This accounting methodology analyzes use of resources including individual caregiver’s time for each step in the care cycle. A cost-capacity rate for an individual is their cost per minute for their time based on their salary and benefits and number of minutes worked per year. This is also combined with cost for using equipment and space. Such accounting is more accurate in representing true costs than allocation of historical costs. Moreover, this method allows us to analyze a care map looking for bottlenecks in the process and thus improve the efficiency of the entire care process. Applying this methodology allows us to bring healthcare delivery on par with other industries.”
“The single most important factor in the cost of rotator cuff repair was personnel (73%). So if you take a look at the evidence based medicine you see that the patient does not need physical therapy (PT) in the first four weeks after rotator cuff repair and voilà…you just saved a substantial amount of money.”