Objective: The aim of the study was to illustrate the differences in the cost-to-heal wounds using two methods: (1) reimbursement-based costing and (2) activity-based costing (ABC). Approach: A small cohort (100 patients with multiple wounds of which 1 was a diabetic foot ulcer [DFU]) was randomly selected from the U.S. Wound Registry to be representative of all patients with DFUs in the registry. Unit costs, resource utilization, and total costs were estimated through both methods. For the ABC method, costs were calculated in ranges: low, mid, and high. Results: The mean cost to heal through the reimbursement-based costing method was US$20,618 compared with a range of US$18,627-US$35,185 for the ABC method. About 20% of DFUs that cost US$10,000-US$20,000 to heal with the reimbursement-based costing method shifted to much higher values based on the ABC method. The percentage of costs represented by inpatient procedures was much lower for the reimbursement method compared with the ABC method. Innovation and Conclusions: The results show that (1) the "true" cost-to-heal DFUs strongly depend on the method used to calculate the costs, and (2) the reimbursement-based costing method may not accurately reflect real costs. The concept of aggregating episodes of care to obtain a single value equating to cost to heal is likely to remain a challenging exercise for the foreseeable future. A better approach may be to provide a range of cost values that are dependent on specific methods, such as the ABC method.
Keywords: Medicare reimbursement; activity-based costing; cost to heal; diabetic foot ulcers.
Copyright 2018, Mary Ann Liebert, Inc., publishers.