TDABC Reveals Arthroscopic Surgery Costs Over 50% Higher Than Traditional Accounting in Ecuadorian Hospital

A case study at a private university hospital in Ecuador has applied Time-Driven Activity-Based Costing (TDABC) to arthroscopic surgery and found that patient-level costs determined under this method were more than 50% higher than the figures produced by the hospital’s traditional costing system. The researchers attribute this gap to TDABC’s ability to capture all costs related to the surgical episode, rather than to any change in actual spending.

The study, published in Cost Effectiveness and Resource Allocation, set out to implement the eight-step TDABC framework and determine full patient-level costs, both direct and indirect, across the complete care cycle of arthroscopic surgery. The hospital’s existing system allocates costs on a volume basis, and the new analysis was contrasted directly against that approach.

Using a mixed-methods design, the team examined 60 medical records of patients who underwent arthroscopic surgery during the second half of 2022, from July to December, with all figures expressed in base-year 2022 US dollars. The unit of analysis was the individual patient care pathway, spanning from outpatient or emergency admission through the surgical intervention to postoperative discharge, covering the full surgical episode.

The primary cost outcome was the total patient-level cost per procedure, broken down into direct and indirect components. These were calculated using time equations and practical capacity cost rates expressed in dollars per hour, a method that links resource consumption to the actual time activities consume rather than to broad allocation bases.

On the direct cost side, hospitalization and surgery emerged as the most significant items. Indirect costs were driven mainly by medical equipment maintenance and depreciation, categories that volume-based allocation systems often spread thinly across services and therefore fail to attribute precisely to the procedures that generate them.

According to the results, cost analysis using TDABC provides a more granular estimation of resource consumption across the arthroscopy service. The authors note that, despite being a pilot study, the exercise generates important information for managerial decision-making, giving hospital administrators a clearer picture of where resources are absorbed within the care cycle.

The conclusions emphasize that determining costs under TDABC is not only intended to identify potential cost savings, but also to capture a more realistic reflection of resource absorption during service delivery. In this study, the TDABC figures for the arthroscopic surgery procedures studied exceeded the hospital’s traditional costing results by more than 50%, which the authors suggest indicates that TDABC captures all related costs.

The study’s scope is limited: it is a single-hospital case study of one surgical service over a six-month window of records, and the authors themselves describe it as a pilot. The published version is an accepted manuscript shared early for faster access, subject to further edits before the final Version of Record. Within those limits, the findings illustrate how time-based costing can change the apparent economics of a common surgical procedure in a Latin American healthcare setting, where evidence of TDABC’s practical implementation and economic implications remains scarce.

Subject of Research: Implementation of time-driven activity-based costing to determine patient-level costs of arthroscopic surgery in an Ecuadorian hospital

Article Title: Implementation and results of TDABC in arthroscopic surgery: case study in an Ecuadorian hospital

Article References: Yaguache-Aguilar, M.-F., Niñerola-Monserrat, A., & Sánchez-Rebull, M.-V. (2026). Implementation and results of TDABC in arthroscopic surgery: case study in an Ecuadorian hospital. Cost Effectiveness and Resource Allocation. https://doi.org/10.1186/s12962-026-00849-3

Image Credits: AI Generated

DOI: 10.1186/s12962-026-00849-3

Keywords: TDABC, arthroscopic surgery, cost accounting, patient-level costing, Ecuador, hospital management, health economics, direct and indirect costs, case study, resource allocation, Implementation, results