Deep dive · Healthcare × Profitability Visibility

See which care covers its cost.

A healthcare service line can look balanced while specific pathways quietly run at a loss and routine ones subsidise them. The average hides it. We make profitability visible at the pathway and case level with TDABC, comparing true cost to the tariff that pays for it, so leaders can see exactly where the surplus and the deficit sit.

Cost and Profitability Consulting · 150+ models since 2010 · TDABC

Per pathway
surplus or deficit by procedure and pathway, against the tariff
Not an average
a balanced service line can hide pathways well below cost
Per case
visibility measured the way reimbursement is paid
01Why the line looks balanced

An average covers the deficit.

Service-line reporting divides total cost by activity to reach an average per case, then compares it to the average tariff. On that view the line breaks even. But the line is made of pathways that look nothing like each other: the routine day-case that comes in well under tariff, and the complex admission that runs over by days.

Averaged together they net to roughly zero, and the deficit disappears into the surplus. Nobody can see that a handful of pathways are deeply underwater, funded by the routine work, because the report never looks below the line.

TRUE COST VS REIMBURSEMENT BY PATHWAY

Illustrative. The same tariff across pathways. Routine and day-case sit below it; complex and chronic pathways cost more to deliver than they are paid.

02How we make it visible

Cost to the case, against the tariff.

01

Map the pathway

Every step a patient passes through, with the staff and equipment each one uses, for the conditions that matter most.

02

Cost each step with TDABC

Each step is costed per minute of the capacity it consumes, summing to a true cost per case and pathway.

03

Compare to reimbursement

True cost sits next to the tariff or bundled payment, turning each pathway into a clear surplus or deficit.

04

Rank and surface

Pathways and service lines rank by contribution, so the deficits an average hid are finally on the table.

03The line, opened up

Break-even on top, two truths underneath.

Routine pathwayComplex pathway
Share of cases70%30%
Tariff per case€3,200€6,400
True cost (TDABC)€2,450€7,700
Contribution per case+€750−€1,300
On the service-line averagelooks like break-even

Blended, the line breaks even. Seen by pathway, the routine work funds a complex pathway running €1,300 under tariff per case, which is the conversation to have with commissioners, not bury.

EVERY PATHWAY, BY VOLUME AND CONTRIBUTION

Illustrative. Plot pathways by volume and contribution against tariff and the deficits an average kept hidden separate from the work that covers its cost.

04What it enables

Fund and redesign with eyes open.

With profitability visible by pathway, leaders can negotiate tariffs with evidence, fund complex care deliberately rather than by accident, and redesign the steps that add cost without adding outcome. The surplus that was quietly cross-subsidising becomes a choice, not a blind spot.

You cannot manage a deficit you cannot see, and an average is built to hide it.

Frequently asked questions

Why can a healthcare service line look profitable when it is not?
Because reporting aggregates. A service line average blends routine cases that cover their cost with complex ones that run well over the tariff, so the line looks balanced while specific pathways quietly lose money and others subsidise them.
What does pathway-level profitability visibility require?
A true cost per case and pathway, measured the way reimbursement is paid. TDABC costs each step a patient passes through and compares it to the tariff, so surplus and deficit become visible where decisions are made.
Does this mean cutting loss-making care?
No. Visibility informs funding, tariff negotiation and pathway redesign. The aim is to fund complex care honestly and remove cost that adds no outcome, not to ration.
Start here

Find the pathways running at a loss.

The Profit Check takes five minutes and no data upload. It points to where your service-line averages are most likely hiding pathways well below cost.

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