Determinants of High Facility Costs in Total Joint Arthroplasty Patients: A Time-driven Activity-based Costing Analysis

Abstract

Introduction: Although several studies identify risk factors for high-cost patients in an episode of care for total hip (THA) and knee arthroplasty (TKA), few have looked at cost outliers from a facility perspective. The purpose of this study was to use time-driven activity-based costing (TDABC) to identify characteristics of high-cost patients. Methods: We reviewed a consecutive series of primary THA and TKA patients by 22 different surgeons at two hospitals between 2015 and 2020. Facility costs were calculated using a TDABC algorithm for their entire hospital stay. Patients in the top decile of costs were considered to be high-cost patients. Multivariate regression was done to identify independent patient factors that predicted high costs. Results: Of the 8,647 patients we identified, 60.5% underwent THA and 39.5% underwent TKA. Implant purchase price accounted for 49.5% of total inpatient costs (mean $2,880), followed by intraoperative (15.9%, mean $925) and postoperative personnel costs (16.8%, mean $980). Implant price demonstrated the highest variation between high-cost and low-cost groups (4.4 times). Patient-related factors associated with high costs were female sex (OR = 1.332), Hispanic ethnicity (OR = 1.409), American Society of Anesthesiology score (OR = 1.658), need for transfusion (OR = 2.008), and lower preoperative HOOS/KOOS Jr (OR = 1.009). Conclusion: This study identifies several variables for patients at risk to have high facility costs after primary THA and TKA. From the hospital's perspective, efforts to reduce implant purchase prices may translate into substantial cost savings. At the patient level, multidisciplinary initiatives to optimize medical comorbidities, decrease transfusion risk, and control medication expenses in high-risk patients may narrow the existing variation in costs.