Clinical Process Cost Analysis

Background. New systems of reimbursement are exerting enormous pressure on clinicians and hospitals to reduce costs. Using cheaper supplies or reducing the length of stay may be a satisfactory short-term solution, but the best strategy for long-term success is radical reduction of costs by reengineering the processes of care. However, few clinicians or institutions know the actual costs of medical care; nor do they understand, in detail, the activities involved in the delivery of care. Finally, there is no accepted method for linking the two. Methods. Clinical process cost analysis begins with the construction of a detailed flow diagram incorporating each activity in the process of care. The cost of each activity is then calculated, and the two are linked. This technique was applied to Diagnosis Related Group 75 to analyze the real costs of the operative treatment of lung cancer at one institution. Results. Total costs varied between $6,400 and $7,700. The major driver of costs was personnel time, which accounted for 55% of the total. Forty percent of the total cost was incurred in the operating room. The cost of care decreased progressively during hospitalization. Conclusions. Clinical process cost analysis provides detailed information about the costs and processes of care. The insights thus obtained may be used to reduce costs by reengineering the process.