TDABC: Accurately Measuring Supply Costs

In our recent blog post “TDABC: Accurately Measuring Personnel Costs” we walked through the personnel cost component of the TDABC equation that we use at Avant-garde Health to help hospitals understand the true cost of delivering care. Here we’ll cover the second component of the TDABC cost equation: supplies. Unlike other methods of supply costing such as those based on purchase orders, our method assigns supply costs to each individual patient, allowing you to understand supply costs and utilization by patient, procedure, or surgeon.

Our supply cost analysis encompasses all supplies utilized during patient care, including disposables, implants, and medication. We take patient-level supply data from your EHR in order to identify and catalogue all of the supplies consumed during the care of each individual patient. From there we determine and present back to you the actual cost of each item as well as the total supply cost incurred by your hospital to procure the supplies used for each case. This supply cost data is enhanced by standardized supply categories and detailed utilization information.

Our supply cataloguing algorithms, which take advantage a supply database built from supply data from hospitals around the country, catalogue all supplies into standard categories. These categories are designed to be specific and clinically meaningful (e.g., “Tibial Baseplate” for a Knee Replacement or “Stent” for a PCI). This catalogued information has been very useful for hospitals looking to understand the big picture of their supply costs by benchmarking their supply costs by category against those of other hospitals in our network. But it also allows practitioners to get very detailed information about the types of supplies being used by different practitioners during particular procedures, such as insights into the percentage of joint replacement cases where antibiotic cement was used. This data, available down to the case level, allows clinicians to explore questions like whether or not the added cost of a certain supply will benefit the patient outcome.

Detailed utilization information also sets Avant-garde Health’s supply costing apart from others. We show you exactly which supplies were used for which cases – and in what amount. A shoulder surgeon using the platform can determine exactly how many anchors were used for a particular rotator cuff repair; a cardiologist can identify the types and amounts of drugs used in the management of an AMI case. Unlike other supply costing methods, this takes into account wasted items that were consumed but not actually used, thus giving you insight into true cost incurred per case.

Together, this detailed supply cost information is coupled with personnel costs to provide hospitals with their full TDABC costs, which can be analyzed in many ways on our platform, including across procedures and providers.

If you are ready to explore how TDABC can improve your cost and quality improvements, let’s start a conversation.