Implementation and results of TDABC in arthroscopic surgery: case study in an Ecuadorian hospital

While Time-Driven Activity-Based Costing (TDABC) has gained global traction, evidence of its practical implementation and economic implications in Latin American healthcare settings remains scarce. This case study aimed to implement the 8-step TDABC framework to determine full patient-level costs (direct and indirect) across the complete care cycle of arthroscopic surgery at a private university hospital in Ecuador, and to compare them with the hospital’s traditional costing system. Using a mixed-methods design, the study examined 60 medical records of patients undergoing arthroscopic surgery during the second half of 2022 (July–December 2022; base year 2022 USD). The unit of analysis was the individual patient care pathway, spanning from outpatient/emergency admission through surgical intervention to postoperative discharge (time horizon of the full surgical episode). The primary cost outcome was the total patient-level cost per procedure, broken down into direct and indirect costs, calculated via time equations and practical capacity cost rates ($/hour) and contrasted against the hospital’s existing volume-based allocation system. Cost estimation was performed separately for direct costs, with hospitalization and surgery costs being the most significant. Indirect costs were driven mainly by medical equipment maintenance and depreciation. It was found that cost analysis using TDABC provides a more granular estimation of resource consumption across the arthroscopy service and that, despite being a pilot study, it generates important information for managerial decision-making. It was verified that determining costs under TDABC is not only intended to identify potential cost savings, but also to capture a more realistic reflection of resource absorption during service delivery. In this study, costs determined using TDABC were more than 50% higher than the hospital’s traditional costing system for the arthroscopic surgery procedures studied, suggesting that TDABC captures all related costs.