Measuring cost in the value equation using time-driven activity-based costing (TDABC) at The University of Texas MD Anderson Cancer Center, Division of Radiation Oncology.

e18305 Background: The cost of a full cycle of radiation therapy at MD Anderson Cancer Center has not been determined using a bottom-up measurement approach. Due to the complexity and variation in clinical processes, typical costing strategies do not provide the level of detail necessary to evaluate the value equation, defined as outcomes over cost. To address this limitation, we designed and implemented a practice-wide Time-Driven Activity-Based Costing (TDABC) strategy to capture our total direct cost of care for all treatment modalities within each of 9 disease site-specific services. Methods: Process maps were created for each of the 9 disease site-specific services. Care delivery times were captured by treatment modality for each service as determined by multidisciplinary teams routinely performing each step of the process. The data were entered into a standardized tool, which calculated step costs based upon capacity cost rates for each human resource. The costing tool also calculated total direct labor costs for specific treatment plans based on modality, complexity, and fractionation. Results: The analysis took six months to complete and required the use of approximately 1,000 administrative hours, 250 physician hours, 250 clinical staff hours and 100 medical physics hours. Approximately 17 process maps were created for each of the 9 services with each process map receiving further analysis based upon radiation treatment modality. As a result of observed variation in costs between disease-site services, best practices were identified and 15 standardization opportunities were discovered. Additionally, the cost-benefit analysis between high profile modalities within each disease-site service, such as Proton Therapy and Intensity Modulated Radiation Therapy (IMRT) on the Head and Neck service, were easier to complete. Conclusions: Time-Driven Activity-Based Costing is a valid method for calculating direct costs in a large academic radiation oncology practice. Standardized clinical outcome data can be used to complete the value equation and ultimately provide insight for better clinical and administrative decision making.