Time-driven activity-based costing of total knee replacements in Karachi, Pakistan

Introduction: Osteoarthritis of the knee has been identified as the most common disability in Pakistan. Total knee replacement (TKR) surgery is the curative treatment for advanced osteoarthritis of the knee; however, cost remains one of the barriers to effective and timely service delivery.

Objective: We conducted a time-driven activity-based costing (TDABC) analysis of TKR to identify major cost drivers and areas for process improvement.

Methods and analysis: We performed a prospective TDABC analysis of patients who underwent bilateral TKR at The Indus Hospital (TIH) during a 14-month period from October 2015 to December 2016. Detailed process maps were developed for each phase of the care cycle. Time durations and costs were allocated to each resource utilised and aggregated across the care cycle, including personnel, direct and indirect costs.

Results: We identified seven care phases for a complete TKR care cycle and created their detailed process maps. Major time contributors were ward stay and discharge (20 160 min), TKR surgery (563 min) and surgical admission (333 min). Overall, 92.10% of time is spent during the ward stay and discharge phase of care. Patients remain hospitalised for an average of 14 days postoperatively. Overall institutional cost of a TKR at TIH was US$4360.51 (Pakistani rupees 456 981.17) per bilateral TKR surgery. The overall primary cost drivers for the full bundle of care were consumables used during TKR surgery itself, consumables utilised in the wards and personnel costs contributing 57.64%, 27.45% and 12.03% of total costs, respectively.

Conclusion: Utilising TDABC allowed us to obtain a granular analysis of time and cost that was subsequently used to inform quality process improvement initiatives. In low-resource settings, such as Pakistan, TDABC has the potential to be a useful tool to guide resource allocation and process improvement.