Reviewed by
Miguel Guimarães
Founding Partner, Cost and Profitability Consulting
More than 150 Time-Driven ABC engagements across 11 sectors since 2010, working within the Kaplan and Anderson framework.
About the author →Published
The value equation is outcomes divided by cost. Outcomes have standards, such as the ICHOM sets. The cost side is the gap. We close it with TDABC, the method Kaplan and Porter have recommended since 2011.
Most VBHC programmes measure the numerator and estimate or ignore the denominator. A systematic review of cost measurement in VBHC found that half of studies relied on reimbursement or charges rather than real provider cost. Reimbursement reflects what was billed, not what was consumed.
Source: systematic review of cost measurement in VBHC, PubMed 36600363.
Traditional hospital accounting uses averages and allocations. It knows the average cost of a bed-day, not what a specific patient consumed across their cycle of care.
DRG and claims data tell you what was billed. They cannot tell you what a cycle of care actually consumed, in people, equipment and time.
Incentives still reward volume. Without the real cost per cycle, it is hard to build the value-based payment models that would reward the result.
Source: 2025 Frontiers scoping review on VBHC. Value-Based Purchasing and TDABC were the most frequently reported funding models.
In 2011, in Harvard Business Review, Kaplan and Porter published "How to Solve the Cost Crisis in Health Care". The method they proposed was Time-Driven Activity-Based Costing. It gives the accurate, transparent cost of treating a medical condition across a complete cycle of care.
TDABC needs only two: the capacity cost rate of each resource and the time equations of each activity. From there, the cost of any cycle of care is the sum of each resource time, at its cost per minute.
Because it starts from practical capacity, not theoretical capacity, TDABC reveals the unused capacity that averages hide. That is where the improvement levers appear: idle room time, operating blocks, imaging equipment.
Where time and cost accumulate across the care cycle.
The seven-step TDABC approach applied to a medical condition and a complete cycle of care. It is the methodology we use, adapted to the reality of public and private providers.
The real cost per cycle of care for one high-impact condition, in 6 to 10 weeks.
A process map and the time equations your team owns.
The unused-capacity curve, showing where cost is paid for and not used.
A defensible cost number for pricing, contracting and value-based reimbursement conversations.
CostCtrl to keep the model live: capacities, cost per cycle and unused capacity over time.
Independent. We do not sell outcomes or reimbursement. We sell the cost and its reliability. It is the half of the equation most programmes leave undone, and it is the only one we work on.
Illustrative: cumulative margin by care line, reimbursement vs real TDABC cost.
In Portugal, the Value-Based Health Care context is advanced by initiatives such as VOH.CoLAB and APAH. Illustrative examples, cited by their reference. We do not invent numbers.
Canonical works behind this method. Each opens in a new tab.
No deck, no follow-up sequence. A senior partner. Thirty minutes. Free. NDA on request.
Proof
A dialysis unit. A €349K deficit made visible, then cut to €52K. Published in the APDH hospital magazine, not a marketing claim.
Read the case study →Who you would be talking to
Miguel Guimarães, Founding Partner
Cost and profitability practitioner for 25+ years. Lectured alongside Professor Robert S. Kaplan at the CFO conference in Amsterdam (2009).
Call +351 910 313 731
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Reviewed by
Miguel Guimarães
Founding Partner, Cost and Profitability Consulting
More than 150 Time-Driven ABC engagements across 11 sectors since 2010, working within the Kaplan and Anderson framework.
About the author →Published