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How a Tertiary Care Academic Endoscopy Center Used Time-Driven, Activity-Based Costing to Improve Value

Case Study · February 15, 2017

Brigham and Women’s Hospital implemented time-driven activity-based costing (TDABC) methodology to better understand the complex non-operating-room (non-OR) setting of the endoscopy center for the purpose of improving resource management and practice care design. We found that reallocation of resources could result in a reduction in waiting times (from 3 months to 3 weeks), annual savings of up to $102,000, and increased availability of the preoperative clinic to focus on higher-risk surgical patients.

Key Takeaways

  1. Time-driven activity-based costing (TDABC) is an innovative approach that is used to provide meaningful cost and process information in a complex health care system in order to improve resource allocation and value.

  2. TDABC can be applied to non-operating-room (non-OR) environments, which often are not well organized given the many medical disciplines and multiple locations involved.

  3. The endoscopy suite is a non-OR environment in which the demand for anesthesiology services is growing because of increasing patient and procedure complexity. One impact of this increased demand is longer patient waiting times.

  4. Using TDABC methodology, we learned that waiting times for a colonoscopy with anesthesiologist-administered sedation were almost 3 months longer at the main hospital than at the ambulatory site, likely as a result of inappropriate triage and overuse of the preoperative assessment center.

  5. TDABC allowed us to update the model of operating conditions, such that shifting a portion of the volume of patients receiving anesthesiologist-administered sedation from the main hospital to the ambulatory site addressed the long waiting list, improved resource utilization, and built a financial case to justify such changes.

The Challenge

Nationwide, there is a movement of procedures to non-OR locations, and this trend is particularly evident in the endoscopy center. Concurrently, there is a trend toward increasing involvement of anesthesiologist services in these cases given the increase in the number of complicated patients (such as those with an American Society of Anesthesiologists [ASA] Physical Status of 3 or 4) as well as in the complexity of procedures. With more aggressive management of inflammatory bowel disease, the number of patients who require anesthesiology services to manage pain or anxiety associated with previous unsuccessful endoscopic attempts is increasing.

Non-OR locations have important differences in comparison with the traditional operating room. For example, unlike in the operating room, where the surgeon is the primary coordinator of perioperative care, scheduling in the endoscopy suite often is handled by multiple types of health care personnel, such as primary care providers, administrative schedulers, and nurses. Because these individuals do not perform the procedures, there is a lack of understanding of what is needed for the optimization of patient care. Lack of adequate procedural preparation leads to inefficiencies that can occupy the anesthesiologist and cause delays and cancellations of procedures, resulting in lost revenue, patient dissatisfaction, and compromised patient outcomes. In addition, given the many medical disciplines involved, these periprocedural pathways have not been adequately mapped.

Brigham and Women’s Hospital has two sites for endoscopy: one at the main hospital (53% of colonoscopy volume) and another at an ambulatory site (47% of colonoscopy volume). Near the beginning of the project in June 2015, meetings with endoscopy administrative leadership revealed that patients who were scheduled for a colonoscopy with anesthesiologist-administered sedation at the hospital site (8% of colonoscopy volume) had to wait 3 months for the procedure, whereas those who were scheduled for such a colonoscopy at the ambulatory site (4% of volume) waited only 14 days. Conversely, for colonoscopies involving nurse-administered sedation at either location, waiting times were only 7 days or less. Our challenge was to identify the bottlenecks at the main hospital and to determine how resources could be reorganized or patients could be better triaged for the overall purpose of improving patient satisfaction, efficiency, and value.

The Goal

Our aims were (1) to delineate the baseline processes and costs from referral to day-of-procedure discharge using TDABC methodology for both the main hospital site and the ambulatory site as well as for procedures both with and without anesthesiology services, and (2) to measure the impact of shifting a portion of colonoscopies involving anesthesiologist-administered sedation from the main hospital to the ambulatory site.

The Execution

Origins of Our TDABC Effort

Our investigation began in 2015 when anesthesiology residents and their faculty mentor from Brigham and Women’s Hospital were awarded a grant from the Partners President’s Prize for Value-Based Healthcare Delivery in collaboration with Harvard Business School. The residents and their mentor started by building a team comprising representatives from the multiple disciplines involved in the delivery of endoscopy care, such as gastroenterologists, anesthesiologists, nurses, and hospital administration staff, as well as experts in TDABC implementation from Harvard Business School and the Institute for Cancer Care Innovation at the University of Texas MD Anderson Cancer Center. The executive champion was the Associate Chief Nurse of the Perioperative Nursing and Procedure Areas. This multidisciplinary buy-in laid the groundwork for executing the TDABC methodology and framework as advocated by Michael E. Porter from Harvard Business School.

TDABC Methodology

Through multidisciplinary staff interviews, patient-centered process flow maps were created from the time when patients were referred for colonoscopy to the time when they were discharged on the day of the procedure. These process maps captured the distinct pathways for patients who had anesthesiologist-administered versus nurse-administered sedation at both locations. The indications for colonoscopy included screening, diagnosis, and surveillance. Time estimates were gathered from multidisciplinary staff interviews and were verified with a stopwatch for several patients moving through the pathway.

TDABC Blueprint for Process Maps

  Click To Enlarge.

Staff, space, equipment, and consumable-related costs were determined through interviews with hospital financial administration staff. The personnel who were included in the analysis comprised gastroenterologists, anesthesiologists, nurses, technicians, schedulers, and other administrative staff. Compensation data included the average salary rate within each department, bonuses, benefits, malpractice insurance, and other indirect costs.

The time that each resource was available for clinical use was also determined. For personnel, the number of available clinical minutes per year accounted for sick and vacation time as well as a 20% allocation for research, education, and administrative time. We allocated the full salary/benefits amount over what a full schedule would allow (i.e., 100% utilization) and then divided that amount by the total number of minutes that a resource could be used in a year in order to determine a capacity cost rate (cost per minute for that resource). Stepwise cost calculations (time elapsed multiplied by cost capacity) were performed for each step. The total cost for a patient moving through the pathway was the sum of all those values.

Using TDABC to Model Process Improvement

We modeled shifting 50% and 75% of the volume of patients receiving anesthesiologist-administered sedation from the main hospital to the ambulatory site to address the long waiting times for anesthesiology services at the main hospital. We also chose this process because the ambulatory facility had the capacity to accept more anesthesiologist-administered sedation cases given that these procedures are performed only 1 or 2 days per week. We excluded shifting general anesthesia cases.

TDABC Modeling Process Improvement

  Click To Enlarge.

We also learned that the majority of patients who were scheduled for colonoscopies with an anesthesiologist at the main hospital were seen at the preoperative assessment center before the day of the procedure, whereas those who were scheduled at the ambulatory site were not. Another consideration was that the patients who were scheduled with an anesthesiologist at the main hospital were not necessarily more complex than those who were scheduled at the ambulatory site and therefore did not necessarily require a preoperative assessment center visit. Given that only a small subset of gastroenterologists utilized the ambulatory site for only 1 or 2 days per week, it is conceivable that a significant proportion of patients who were scheduled to be seen at the main hospital (and thus would require a preoperative assessment center visit) would be eligible for the ambulatory site (and thus would not require a preoperative visit). Therefore, we also measured the impact on cost if patients who were shifted from the main hospital to the ambulatory site were no longer evaluated at the preoperative center but instead had 20 minutes added to their anesthesia assessment on the day of the procedure.

The Team

The team consisted of individuals from the departments of Anesthesiology, Gastroenterology, and Nursing at Brigham and Women’s Hospital along with collaborators from Harvard Business School, Harvard Medical School, and the Institute for Cancer Care Innovation at the University of Texas MD Anderson Cancer Center.


Using TDABC, we determined that shifting 50% of anesthesiologist-administered sedation colonoscopy volume would potentially reduce the waiting time for colonoscopies from 3 months to 6 weeks and that eliminating the need for preoperative center visits would result in approximately $68,000 in annual savings. (This value was based on the fact that a preoperative assessment center visit was ordered for 95% of patients undergoing a colonoscopy with an anesthesiologist at the main hospital, accounting for 79% of the pre-procedure costs for this subset of patients.) For a shift of 75% of this volume from the main hospital to the ambulatory site, the waiting time would be reduced further to 3 weeks and annual savings would be approximately $102,000. This improved triage also would reduce the number of preoperative assessment center visits, thereby allowing the center to focus on higher-risk surgical patients.

To accommodate the increased volume of anesthesiologist-administered sedation cases at the ambulatory site, a 50% volume shift would necessitate 5 more anesthesia room-days per month and a 75% volume shift would necessitate 8 more anesthesia room-days per month. These changes would decrease the overall capacity for nurse-administered sedation procedures. However, even with these shifts, the wait time for nurse-administered sedation cases would increase by a mere 0.3 to 0.5 day because the anesthesiologist-administered sedation volume was small compared with the nurse-administered sedation volume.

Given the backlog of colonoscopies involving anesthesiologist-administered sedation, it took an average of 25.8 minutes longer for a scheduler to find an open anesthesiology slot for such a procedure at the main hospital than for any other type of colonoscopy. In terms of personnel involved in scheduling, the triage nurse was overutilized, at 152% of capacity. Using TDABC, we modeled the effect of hiring a second triage nurse to assist with the medical screening and triage of patients before the procedure and found that such a change would still yield a net savings of approximately $15,000.

Where to Start

  1. Engage a multidisciplinary team, including an executive champion and hospital finance personnel, to generate the buy-in necessary for implementing TDABC.
  2. Define a patient-centered pathway in need of improvement, and develop process maps and calculate cost capacity rates using TDABC methodology.
  3. Prioritize process improvement opportunities to model with TDABC, through multidisciplinary consensus, to build financial arguments that drive value.


Acknowledgments: Thanks to Dana Rye, MBA, MPP, Thomas Hickey, MS, MD, Jordan J. Ash, MD, Jonathan Warsh, PhD, Richard D. Urman, MD, MBA, David Preiss, MD, PhD, Wendy Gross, MD, Kathleen Bertone, Sandra Cialfi, MBA, BSN, RN, CGRN, Alexis B. Guzman, MBA, Lisa M. Morrissey, DNP, RN, and John R. Saltzman, MD.

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