UCLA researchers have described cost across an entire care process for benign prostate hyperplasia (BPH) using a novel strategy developed by Harvard Business School healthcare economists called time-driven activity-based costing.

They found a 400 percent discrepancy between the least and most expensive ways to treat the condition. The finding takes on even further importance as there isn’t any proven difference in outcomes between the lower and higher cost treatments, said study first author Alan Kaplan, M.D., a resident physician in the UCLA urology department.

“The rising cost of healthcare is unsustainable, and a big part of the problem is that health systems, healthcare providers and policy makers have a poor understanding of how much healthcare really costs,” Kaplan said. “Until this is well understood, taxpayers, insurers and patients alike will continue to bear the burden of soaring healthcare costs.”

Also See: Top 1 Percent of Patients Account for 22 Percent of Costs

The one-year study appears in Healthcare: The Journal of Delivery Science and Innovation.

Time-driven activity-based costing estimates cost and demand through measuring the unit cost of supplying capacity and the time required to perform a transaction or an activity.

Kaplan and his team created a process map that detailed each step of care for a BPH patient. They determined space and product costs and calculated personnel capacity cost rates. They calculated personnel costs for the BPH medical management team of doctors, nurses, and patient affairs based on the steps of the process. Space and equipment costs also were defined.

“We felt that if we could tackle the cost of such a complex and common condition we could use the technique to really understand cost on a larger scale,” Kaplan said. “Most importantly, we found that within our own institution the cost of treating BPH varied about 400 percent and, as of yet, we have no proof that one way is any better than the other.”

BPH can be treated medically, but invasive procedures often are needed for patients in whom medical therapies are no longer effective. These procedures range from in-office minimally invasive to outpatient surgery to inpatient open surgery to remove the majority of the prostate tissue. The pre-operative work-up varies significantly, which represents a large part of the cost differential, Kaplan said.

The study is available here.

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