Boston Children's Hospital: Measuring Patient Costs Robert S. Kaplan, Mary L. Witkowski and Jessica A. Hohman The case describes two pilot projects on applying activity-based costing to measuring the cost of treating patients. It presents process maps and financial data relating to the processes used during (1) an office visit to a plastic surgeon for three different diagnoses and (2) application and removal of three different casts in the orthopedic cast room. Students calculate and compare the costs and margins of the three procedures at the two different sites using the hospital's existing cost system and a proposed new system based on time-driven activity-based costing.
Hoag Orthopedic Institute Harvard Business School Case 115-023 Robert S. Kaplan and Jonathan Warsh Two groups of orthopedic surgeons form a joint venture with a community hospital to establish Hoag Orthopedic Institute, a for-profit hospital and two ambulatory service centers. By controlling and integrating all aspects of the patients' medical treatment, the physicians deliver superior outcomes, which they communicate with an annual public outcomes report. They also introduce bundled payment contracts with three insurers for orthopedic surgeries, and join a multi-hospital study for applying time-driven activity-based costing to identify process improvement and cost reduction opportunities. The case concludes with HOI leaders examining several options for expansion and growth.
Schön Klinik: Measuring Cost and Value Harvard Business School Case 112-085 Robert S. Kaplan, Mary L. Witkowski, and Jessica A. Hohman The case illustrates how a leading German hospital group has invested deeply in the measurement of patient-level outcomes and costs, the foundations of a health care value framework. The company launches a pilot project to use time-driven activity-based costing (TDABC) for measuring the cost of total knee replacements. The costing project complements an existing initiative for comprehensive outcomes measurement. The combination of accurate measurement of outcomes and costs empowers local personnel — physicians, nurses, and administrators — to improve the value of care they deliver. It also permits benchmarking across the group's multiple hospital sites to identify best practices that can be shared. The case concludes with a decision on using outcome and cost measurement to inform the adoption of a new recuperative approach that promises to dramatically lower post-surgical length-of-stays.
OrthoChoice: Bundled Payments in the County of Stockholm Harvard Business School Case 714-514 Michael E. Porter, Clifford M. Marks and Zachary C. Landman It was the waiting that drew the attention of the Stockholm County Council. In 2008, patients seeking a hip or knee replacement in Stockholm County faced wait times of up to two years of sometimes debilitating pain, intermittent missed work and income, and the trials of disability. Seeking a new model to lower wait times, but also improve patient choice of care, County Council Senior Medical Adviser, Dr. Holger Stalberg, set out to create a bundled payment system for hip and knee replacements in the County. The new model, called OrthoChoice, was set to go into operation on January 1, 2009.
