Value Lessons from Bottom-Up Cost Accounting

Commentary The article by Doxey et al. provides readers with an insightful report on measuring value in total hip arthroplasty (THA). The major finding that patient-reported outcomes (PROs) did not correlate with costs presents the reader with challenges in, and opportunities for, understanding and improving value in THA. The article provides meaningful information and perspective for all hip replacement surgeons, especially as the value of care continues to fall under the closer scrutiny of surgeons, administrators, and payers. However, the findings must be understood in the context of the study design and limitations. Time-driven activity-based costing (TDABC) was first described by Kaplan and Anderson as an alternative to traditional activity-based costing1. TDABC has been found to more accurately reflect the actual cost of an episode of care for numerous orthopaedic procedures. Akhavan et al. utilized TDABC to study primary THA and total knee arthroplasty and concluded that “TDABC … can be used to identify high-cost/high-variability processes that can be targeted for process/quality improvement.”2 Doxey et al. attempt to do just this by calculating the value quotient—that is, the ratio of the 1-year change in the Hip disability and Osteoarthritis Outcome Score, Joint Replacement (HOOS-JR) to the 1-year cost of an episode of care using TDABC—and comparing it across 480 patients to identify the variables that have the largest impact on quality. Their findings are largely consistent with prior studies; specifically, they reported that surgery at an ambulatory surgery center (ASC) with discharge to home was associated with higher value than surgery at a hospital with discharge to a specialized nursing facility and that implant costs were the single largest driver of costs. The only surgical factor resulting in higher value was the use of fixed-bearing components. Although the article provides an outstanding overview of TDABC and value, scrutiny of the study reveals some of the gaps that still need to be filled in order to fully understand value in THA. Patient-related factors such as sex and age were found to be predictive of costs and changes in PRO scores; however, body mass index and smoking status were the only alterable patient factors evaluated. A more comprehensive group of patient factors (e.g., preoperative anemia, renal insufficiency, preoperative anticoagulation therapy) should be studied for a more complete understanding. Additionally, the exclusion of patients requiring readmission or revision within 1 year provides an opportunity for study expansion and is critically important to recognize when contextualizing the main findings. The true value of factors such as implant choice or surgical approach cannot truly be understood with these exclusions because readmission and revision costs are ultimately part of the true measure of the value of THA. As we continue to focus more on providing high-value care and are presented with both mandated and voluntary bundled payment programs, our understanding of factors that can be leveraged to improve patient outcomes and to lower costs will improve. Ultimately, the optimization of value for each individual patient will be determined by a unique set of fixed and variable factors. As surgeons, we must continue to study and recognize those factors that can be optimized, reduce variability in care, and provide the right care at the right time in the right place for each patient in order to improve value. The study by Doxey et al. educates us and advances our pursuit of value while leaving many questions still open for investigation.