Abstract
The aging population, the rapid evolution of health technology, the prevalence of chronic diseases, the changes in demand and supply of care pose significant challenges to the healthcare systems. Professors Kaplan and Porter claimed they had the solution to the cost crisis in healthcare by introducing a new method that accurately measures costs and compare them with outcomes, the Time Driven Activity Based Costing (TDABC) methodology. The objective of this paper was to describe in details this new method at its application in healthcare. TDABC achieves its simplicity by building time equations based on observable processes. Only two parameters need to be estimated: the capacity cost rate and the capacity usage by each process. TDABC is a Simple-Multiperspective-Accurate-Realistic-Time-based (SMART) costing tool that may solve the cost crisis in healthcare.
Comments or questions are welcome.
