Time-Driven Activity-Based Costing and Its Use in Health Economic Analysis: A Systematic Literature Review

Abstract

Objectives

With rising global healthcare expenditures, there is an increasing demand for value-based healthcare (VBHC). Time-driven activity-based costing (TDABC) has been proposed as a key component of VBHC for addressing cost-related challenges. This study aimed to review the application of TDABC in health economic analyses across the continuum of care, explore its methodological advantages, and assess adherence to the 7-step or 8-step methodological reporting frameworks.

Methods

This systematic review was conducted by screening the MEDLINE, Embase, and Scopus databases following the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guidelines, including all studies published until April 2025. Studies that used TDABC for diagnosis and treatment of health conditions were included, while costing studies involving any surgeries were excluded. The NVivo qualitative data analysis software was used to analyse data through content analyses.

Results

A total of 32 studies met inclusion criteria, including 25 partial economic evaluations (costing) and seven full economic evaluations (EEs). Time-driven activity-based costing was predominantly applied in cancer treatment and management, followed by diabetes care. This methodology proved applicable across all stages of healthcare, helping to accurately identify the cost of care and resource waste, enhancing value in healthcare, and overcoming the current cost accounting challenges. Studies that used hybrid data collection approaches combining direct observation with staff input were more likely to report detailed and actionable cost assessments. Studies using 8-step framework demonstrated improved methodological adherence and reduced reporting variability.

Conclusions

Time-driven activity-based costing supports more accurate, transparent, and resource-sensitive health economic analysis enabling informed decision making and system-level efficiency. Its application across diverse care stages and conditions demonstrates its adaptability and relevance for modern health-economic evaluation. Policy makers and healthcare providers should consider adopting TDABC to strengthen costing practices and advance the transition toward value-based healthcare.

PROSPERO Registration Number

ID CRD42023447085

Supplementary Information

The online version contains supplementary material available at 10.1007/s40258-025-00988-3.

Key Points for Decision Makers

Time-driven activity-based costing (TDABC) is increasingly used in health-economic analysis, with expanding application in both partial and full economic evaluations for a variety of chronic conditions across the care continuum.

Time-driven activity-based costing has demonstrated effectiveness across all stages of healthcare delivery, including primary, secondary, acute, tertiary, and long-term care by improving cost accuracy, exposing inefficiencies, and supporting resource optimisation.

Compared to conventional costing methods, TDABC offers more granular, patient-specific insights that enhance cost transparency and enable value-based decision making.

Decision makers should consider integrating TDABC into healthcare economic analyses and healthcare management to support cost-effective, patient-centred, and sustainable health systems.

Introduction

With rising global healthcare expenditure, there is an increasing demand for a patient-centred, value-based healthcare (VBHC) approach [1, 2]. In this context, ‘value’ refers to the health outcomes achieved relative to the costs incurred across the entire care delivery value chain [1, 3]. Enhancing healthcare value involves either improving outcomes while maintaining costs or reducing costs without compromising outcome quality [4]. To achieve this, both costs and outcomes at the patient level need to be measured, considering the entire continuum of care for a patient’s medical condition [4]. The continuum of care encompasses an integrated system that spans primary, secondary, and tertiary care [5]. Applying accurate costing across this continuum is crucial for breaking down silos, reducing costly hospitalisations, and ensuring optimal patient outcome [6]. However, accurately measuring healthcare cost remains challenging due to the complexity of the system [7]. The relatively new time-driven activity based costing (TDABC) offers a promising solution to these challenges as the cost component of VBHC [8, 9].

Time-driven activity-based costing is a bottom-up micro-costing approach that generates detailed cost data at the unit level, with the potential to support improved resource allocation and quality improvement efforts in healthcare [7, 8]. It measures cost across the continuum of care using a time equation to forecast resource demands, identify inefficiencies, and optimise resource use [4, 8, 10]. In contrast, traditional bottom-up costing methods, although fairly straight forward, can be less accurate as they often rely on top-down accounting systems and may fail to capture costs over a patient’s care cycle, limiting opportunities for cost reduction or value improvement [4, 11, 12]. While TDABC has been successfully applied in industries like manufacturing, its use in healthcare remains limited [13]. In the era of ever-increasing healthcare costs, TDABC is emerging as a leading solution, necessitating broader adoption by healthcare organisations [14].

Time-driven activity-based costing employs either a 7-step or 8-step cost calculation framework (Table 1) [8, 11]. The 7-step framework, introduced by Kaplan and Porter in 2011, laid the foundation for TDABC in healthcare [4]. However, in 2017, Keel et al. identified implementation discrepancies that increased the potential for inaccurate results [6]. To address these issues, Da Silva et al. proposed an 8-step framework in 2019 [11], which includes an additional step focused on cost-data analytics. This eighth step generates informative charts and tables to support decision making and enhance an institution’s capability to conduct good economic evaluations [11]. It enables analysis of resource cost composition, cost per activity, cost benchmarking, idleness analysis, among other metrics [11]. Additionally, the 8-step framework expands first step to include identifying research questions or technologies for assessment, making it suitable for economic evaluation [4, 11], offering clear guidance on steps, data sources, and process compared to the 7-step method [11].

Table 1.

Seven- and eight-step frameworks

Steps	7-Step framework (2011)	8-Step framework (2019)
1	Select the medical condition	Identifying a study question or technology to be assessed
2	Define the care delivery value chain	Mapping process: the care delivery value chain
3	Develop process maps that include each activity in patient care delivery, and incorporate all direct and indirect capacity supplying resources	Identifying the main resources used in each activity and department
4	Obtain time estimates for each process (activities and resources)	Estimating the total cost of each resource group and department
5	Estimate the cost of supplying patient care resources, i.e., the cost of all direct and indirect resources involved in care delivery	Estimating the capacity of each resource and calculating CCR ($/h)
6	Estimate the capacity of each resource and calculate the capacity cost rate	Analysing the time estimates for each resource used in each activity
7	Calculate the total cost of patient care	Calculating the total cost of patient
8	–	Cost data analysis

CCR capacity cost rate

Since the introduction of the 8-step framework [11], there has been limited focus on evaluating its application across the continuum of care and the potential benefits of TDABC. Examining these aspects will deepen the understanding of TDABC’s practical use, the types of studies employing different methodological frameworks, and whether the 8-step framework addresses variability in implementation. Previous reviews have primarily focused on specific health conditions, healthcare settings, and costing studies, limiting TDABC’s broader application and analysis [6, 14, 15]. Additionally, reviewing TDABC’s application in economic evaluations will enhance our understanding of its methodology, suitability, and potential to improve the quality of economic evaluation. If proven effective, TDABC can help identify opportunities to reduce resource waste in health systems and support VBHC.

Given the prioritisation of VBHC by governments and health systems, there is a pressing need for a comprehensive review of TDABC’s application across diverse healthcare scenarios. Accurate costing can uncover opportunities for innovation and value creation [11]. Proper application of TDABC requires understanding its methodology and benefits [8, 11]. In light of the existing gaps, this study aims to systematically review: (i) the application of TDABC in health economic analysis, including costing studies (cost, cost comparison, and cost minimisation analysis) and full economic evaluation (cost-effectiveness analysis [CEA] and cost-utility analysis [CUA]) and across the care continuum; (ii) its application in various healthcare conditions; (iii) its methodological applications and advantages; and (iv) adherence to the proposed TDABC methodological reporting framework (7-step or 8-step).

Materials and Methods

Protocol and Registration

The systematic review was conducted according to a pre-specified protocol registered on the PROSPERO register of systematic reviews (ID CRD42023447085) and reported following the Preferred Reporting Items for Systematic Review and Meta-Analysis (PRISMA) 2020 statement [16] (Supplementary file 1). We aimed to analyse the application of TDABC as a method, therefore, we employed a qualitative approach using content analysis [17]. We explored its use in partial economic evaluation, which primarily focuses on cost (hereinafter referred to as costing studies) and full economic evaluation (EE) assessing both costs and outcomes of the health intervention, such as CEA and CUA (hereinafter referred to as EE), as defined by Drummond et al. [18].

Search Strategy

A comprehensive literature search was conducted using MEDLINE, Embase, and Scopus. Other iterative searching techniques, such as a manual search of reference lists of primary studies, were also carried out for the databases from 2011 to April 2025. The search strategy used all possible formulations of the phrase “time-driven activity-based costing,” “healthcare,” “economic analysis” and “economic evaluation” identified through an integrative discussion among the authors. The search was conducted separately for costing and EE studies in all three databases (Supplementary file 2). All search strategies were initially run on July 23, 2023, and updated on May 28, 2024. In addition, targeted search covering the period from May 28, 2024, to April 28, 2025, was performed to capture newly published studies during that timeframe.

Eligibility Criteria and Study Selection

The identified records were imported to Endnote, where duplicates were removed before exporting to the Covidence platform for further deduplication. Two independent reviewers (SS and SBM) conducted two rounds of screening, starting with titles and abstracts, followed by full-text review of selected studies. There was a high level of agreement between reviewers during the selection process, with only one study requiring discussion to reach to consensus. Separate inclusion and exclusion criteria were defined for costing studies and EE. Eligible studies included peer-reviewed articles applying the TDABC methodology to estimate the cost of diagnosis or treatment of a health condition. Only articles published in English since September 20111 [4] were eligible for inclusion. Reviews, commentaries, conference papers, opinions, letters, protocols, and studies available only in the abstracts, and studies not providing detail steps of TDABC methodology were excluded. Studies involving any surgical procedures, preventive services, or evaluations of programmatic and service delivery interventions were excluded from the costing studies as surgical TDABC applications have been extensively reviewed in a recent 2020 review2 [14].

Data Extraction and Analysis

Data extraction was performed by SS and reviewed by SBM. First, general study characteristics, including title, author, publication year, journal, country, health condition, technology assessed, study settings, type of economic analysis, study perspective, and methodological application, were extracted and stored in Microsoft Excel 2023. Additionally, data on the application to the continuum of care were extracted and analysed. Second, we employed a conventional inductive content analysis [17] to extract and code information on TDABC’s advantages based on manifest meaning. Third, a deductive content analysis was used to compare the empirical applications with an existing theoretical framework [17] using predefined 7-step and 8-step methods [4, 11]. This provided an overview, which was then exported to Microsoft Excel 2023. The analysis was conducted using the NVivo qualitative data analysis software, QSR International Pty Ltd. Version 14, 2023.

In this analysis, the continuum of care refers to the range of healthcare services delivered to patients in a coordinated manner to meet patient’s needs at different health stages including primary, secondary/specialty, acute, tertiary, and long-term care [19]. In this review, primary care included first contact services like general practitioners (GP) visits, walk-in primary care clinics, and primary care centres; secondary/specialty care involved hospital and clinics providing secondary care after referral; emergency department care was considered acute care; advanced treatment was classified as tertiary care; and care spanning multiple settings or for long-term care, like a consultation to follow up and nursing home care, was categorised as long-term management [19, 20]. Healthcare setting refers to the physical location or environment where these services are delivered such as hospitals, clinics and nursing homes [21].

Quality Assessment of Included Studies

The studies were critically appraised using the TDABC in Healthcare Consortium Consensus Statement 2020 checklist for evaluating TDABC in healthcare [22]. Quality assessment of all studies was performed by SS, while a second reviewer (SBM) audited 20% of the studies randomly, with no discrepancies found between the two reviewers. The overall scores were calculated as follows: 1 = ‘Yes’, or ‘Not applicable’; 0 = ‘No’. Scores were scaled out of 100, with studies scoring over 75% considered high quality [23].

Results

Study Selection

A total of 1068 studies (917 cost and 151 CEA/CUA studies) were retrieved from the three databases including an additional 50 studies identified from the updated search on 28 April 2025. After removing duplicates, 606 studies remained. Applying inclusion criteria to titles and abstracts, reduced studies to 94 for full-text screening. Sixty-two studies were excluded, leaving thirty-two studies for the analysis. Thus, a total of 32 studies incorporating two additional studies included from the updated search were included in the final analysis. Figure 1 shows the PRISMA flow diagram of the review process.

Fig. 1.

Preferred Reporting Items for Systematic reviews and Meta-Analyses (PRISMA) flow diagram. CEA cost-effectiveness analysis, CUA cost-utility analysis, TDABC time-driven activity-based costing

Characteristics of Studies

Over time, the number of studies published using the TDABC approach in health economic analyses has increased, with publication years ranging from 2015 to 2025. Of the 32 studies analysed, 26 (80%) were published in the last seven years (2019 or later). Most studies were conducted in the USA (n = 11; 34%) [24–34], followed by Brazil (n = 4; 12.5%) [35–38], three each in Sweden [39–41] and Ireland [42–44], and two each in Canada [45, 46] and Belgium [47, 48], and one each in Switzerland [49], Peru [50], Mexico [51], Italy [52], Singapore [53] and Finland [54], and one involved multi-countries [55]. Seventeen studies (53%) were conducted from a healthcare provider’s perspective [24, 25, 27, 30–32, 34, 39–41, 44, 46–48, 50, 52, 54, 55], seven (22%) from a health system perspective [28, 36–38, 44, 45, 53], four (13%) from a societal perspective [26, 42, 51, 52], and one (3%) from a third-party payers’ perspective [33] (Table 2).

Table 2.

Characteristics of included studies

Author (year of publication)	Country of study	Perspective	Economic analysis	Health condition/ programme/intervention	Technology /programme/intervention assessed	Study settings	Continuum of care	Reporting framework
Costing studies—cost comparison, cost minimisation, and cost analysis
Dittrich et al. (2025) [55]	Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Peru, and Uruguay	Hospital	Costing	Acute ischaemic stroke	–	Stroke care hospital	Tertiary	8-Step
Da Silva Etges et al. (2024) [38]	Brazil	Hospital	Costing	Haemophilia A	–	Blood centres	Tertiary	8-Step
Kenny et al. (2024) [44]	Ireland	Health system	Costing	Rheumatoid arthritis	–	Primary care	Primary care	7-Step
Bulman et al. (2024) [34]	USA	Provider	Costing	Uterine artery embolism	–	Tertiary hospital outpatient	Tertiary care	7-Step
Goh et al. (2023) [53]	Singapore	Health system	Cost minimisation	Dengue	Hospital at home vs ambulatory care team (ACT) model	Home and Emergency department	Secondary care	7-Step
Vargas et al. (2023) [35]	Brazil	Not mentioned	Costing	Chronic graft-versus-host disease	Extracorporeal photopheresis	Hospital inpatient	Tertiary care	8-Step
Li Benjamin et al. (2022) [50]	Peru	Health care provider	Costing	Cervical cancer	Radiation therapy	Clinic outpatient	Secondary care	7-Step
Doyle et al. (2022) [43]	Ireland	Not mentioned	Costing	Type 2 diabetes	–	Hospital, primary care centre	Long-term management	7-Step
Marx et al. (2021) [45]	Canada	Ministry of Health's	Cost comparison	Respiratory disease	Management of respiratory disease	Walk-in primary care clinic and Emergency department	Primary and acute care	7-Step
Thaker et al. (2021) [24]	USA	Provider/hospital	Cost comparison	Oropharyngeal cancer	Intensity modulated proton vs photon therapy	Hospital inpatient	Tertiary care	7-Step
Keyrilainen et al. (2021) [54]	Finland	Hospital	Cost comparison	Prostate cancer	MRI only vs CT+MRI	Hospital inpatient	Secondary care	7-Step
Dziemianowicz et al. (2021) [25]	USA	Health care provider/hospital	Costing	Breast cancer	Radiation therapy	Hospital outpatient	Secondary care	7-Step
Vargas Alves et al. (2021) [37]	Brazil	Health system	Costing	Prostate cancer	–	Hospital	Long-term management	8-Step
Nevens et al. (2020) [48]	Belgium	Provider	Costing	Oligometastatic disease	Stereotactic body radiotherapy (SBRT)	Radiotherapy Centre	Tertiary care	7-Step
Keel et al. (2020) [41]	Sweden	Hospital	Costing	Multiple chronic conditions (diabetes, CVD, CKD)	–	Hospital outpatient	Secondary care	7-Step
Suralik et al. (2020) [31]	USA	Provider	Cost comparison	Breast cancer	CT guided HDR brachytherapy vs conventional breast therapy	Radiotherapy centre	Secondary care	7-Step
Nabelsi et al. (2019) [46]	Canada	Healthcare provider /hospital	Costing	Breast cancer	–	Hospital inpatient	Secondary care	7-Step
Gaitonde et al. (2019) [26]	USA	Societal perspective	Costing	Recurrent urinary tract infections	rUTI management	Hospital, primary care centre	Long-term management	7-Step
Ning et al. (2019) [27]	USA	Healthcare provider/ hospital	Cost comparison	Endometrial cancer	Brachytherapy	Hospital	Long-term management	7-Step
Blumenthal et al. (2019) [28]	USA	Health system	Costing	Penicillin allergy	–	Clinic outpatient	Secondary care	7-Step
Su et al. (2019) [32]	USA	Clinic	Cost comparison	Endometrial cancer	Vaginal cuff brachytherapy	Clinic outpatient	Secondary care	7-Step
Dutta et al. (2018) [29]	USA	Not mentioned	Cost comparison	Prostate cancer	Brachytherapy vs intensity modulated radiation therapy	Clinic outpatient	Secondary care	7-Step
Ridderstrale (2017) [40]	Sweden	Hospital	Cost comparison	Type 1 diabetes	Insulin pump initiation	Hospital outpatient	Secondary care	7-Step
Schutzer et al. (2016) [30]	USA	Provider	Cost comparison	Breast cancer	Whole breast radiotherapy vs balloon-based brachytherapy	Clinic outpatient	Tertiary care	7-Step
Lievens et al. (2015) [47]	Belgium	Healthcare provider	Costing	Lung cancer	Stereotactic body radiotherapy	Hospital	Secondary care	7-Step
Economic evaluation—CEA and CUA
Rognoni et al. (2023) [52]	Italy	Hospital and societal	CEA and CUA	Deep vein thrombosis and leg ulcers	Venous stenting to compression with/without anticoagulation	Hospital	Long-term management	7-Step
Bartakova et al. (2022) [49]	Switzerland	Nursing home	CEA	Hospitalisations of nursing home residents	INTERCARE nurse-led care model vs usual nursing home care	Nursing home	Long-term care	7-Step
Duan et al. (2021) [51]	Mexico	Societal	Cost and CEA	Type 2 diabetes	Novel community-based model vs usual care	Primary healthcare centre	Primary care	7-Step
Etges et al. (2021) [36]	Brazil	Health system	CUA	Ophthalmology	Telediagnosis vs face-to-face care	Primary health care centre	Primary care	8-Step
Mericli et al. (2020) [33]	USA	Third party payer	CUA	Microvascular breast reconstruction	Enhance recovery after surgery pathways vs usual care	Hospital	Long-term management	7-Step
Dowd et al. (2018) [42]	Ireland	Societal	CEA	Dementia	Connected health intervention	Primary healthcare centre	Primary care	7-Step
Alaoui et al. (2016) [39]	Sweden	Healthcare provider	CEA	Depression	Internet based cognitive Behavioural therapy	Primary healthcare centre	Primary care	7-Step

CEA cost-effectiveness analysis, CT computed tomography, CUA cost-utility analysis, HDR high-dose rate, MRI magnetic resonance imaging, rUTI recurrent urinary tract infections, TDABC time-driven activity-based costing

TDABC in Health Economic Analyses and Continuum of Care

The application of TDABC has grown in costing analyses and EE. Of the 32 studies reviewed, 78% (n = 25) focused on costing analysis: costing (52%; n = 13/25), cost comparison (36%; n = 9/25), or cost minimisation analysis (4%; n = 1/25). The remaining 22% (n = 7) used it for EE (CEA/CUA) (Table 2). Analysis across the care continuum showed that TDABC was applied in secondary care in 38% (n = 12) of studies, long-term management in 22% (n = 7), primary care in 19% (n = 6), tertiary care in 22% (n = 7), and acute care in 6% (n = 2). Most cost studies (88%; n = 22/25) were conducted in hospital or clinic settings, whereas most EEs (57%; n = 4/7) were in primary healthcare settings (Table 2).

TDABC in Different Health Conditions

In the reviewed studies, TDABC was primarily applied to cancer treatment and management (41%; n = 13), including breast cancer (n = 4) [25, 30, 31, 46], prostate cancer (n = 3) [29, 37, 54], endometrial cancer (n = 2) [27, 32], lung cancer [47], cervical cancer [50], and oropharyngeal cancer [24]. Notably, none of these were EE studies. Diabetes care was the next common focus (10%; n = 3). Radiation therapy emerged as the most frequent treatment for cancer management. Economic evaluation using TDABC addressed diverse health conditions, including type 2 diabetes, dementia, depression, ophthalmology, deep vein thrombosis, and leg ulcers (Table 2).

Advantages of TDABC Application

Traditional costing methods, such as top-down costing, average costs across services and fail to capture patient level resource utilisation or clinical workflow variations, often masking inefficiencies [14, 43]. While micro-costing offers detail, it is labour intensive, and less scalable across complex or longitudinal care pathways [14]. Moreover, existing methods have limitations in determining practical and unused capacity as they do not track resource time use [56]. In contrast, TDABC offers a structured yet flexible approach by mapping real-world clinical activities and assigning time-based costs, enabling more granular and actionable insights [7, 57]. Across reviewed studies, TDABC was primarily applied to overcome these limitations, providing granular, patient-specific cost estimates, identify inefficiencies, and supporting value-based decision making [28, 33, 37, 41, 43]. For instance, studies in the review tracked time and cost per health professionals and department for stroke unit, emergency, and intensive care unit (ICU). This revealed high-cost steps (e.g., angiography, ICU stays), informed workflow redesign, and supported value-based care through outcome-cost comparisons and risk-adjusted use of costly technologies like proton therapy, enhancing the utility of conventional economic evaluation [24, 38, 44, 53, 55].

Building on these methodological distinctions, the included studies reported several advantages of applying TDABC across different care stages. The most frequently cited advantages were identifying the accurate cost of care (41%; n = 13), detecting resource waste (22%; n = 7), achieving cost savings (16%; n = 5), and creating value in healthcare (13%; n = 4). Identifying resource waste and creating value in healthcare were mentioned in primary, secondary, and long-term care, with value creation also emphasised in tertiary care. Granular costing, capturing cost at the resource level, and identifying cost drivers were noted in secondary and long-term care (Table 3). Collectively, these findings demonstrate that TDABC supports value-based healthcare by improving cost transparency, exposing inefficiencies, and enabling informed, patient-centred resource allocation. The methods used by these studies to capture resource utilisation and time calculations are described under respective advantage in the following sections. Resources included personnel, equipment, consumables, and space, with time defined as the duration required to perform each activity.

Table 3.

Advantages of time-driven activity-based costing (TDABC)

	Care phases/stages
Advantages of TDABC	Primary	Secondary	Acute	Tertiary	Long-term management
Identifying resource waste	Yes	Yes		Yes	Yes
Identifying accurate cost of care	Yes	Yes	Yes	Yes	Yes
Creating value in healthcare	Yes	Yes		Yes	Yes
Granular level costing		Yes			Yes
Cost control		Yes		Yes
Capturing cost at resource level		Yes			Yes
Helpful in decision making		Yes
Identifying cost drivers		Yes		Yes	Yes
Vital in pricing healthcare and defining bundled payments		Yes		Yes
Capable of costing in complex setting/multicentre setting				Yes
Capturing cost over the entire cycle of care				Yes	Yes

Identifying the Accurate Cost of Care

The frequently cited advantage (41%; n = 13) in the reviewed articles was the ability of TDABC to accurately and precisely identify the cost of care [24, 27, 28, 32, 35–37, 42, 45–47, 54, 55].

Activities and Resources Identification

Of these 13 studies, 38% (n = 5/12) employed both direct patient flow observation and staff interviews or discussions with care team for resource identification and utilisation quantification. Among them, two studies verified staff interview data through direct observation [32, 45], while two others relied solely on staff/panel interviews [27, 46]. Three studies [28, 37, 54] used only patients’ clinical processes observation for the resource data collection. Additionally, one study used TeleOftalmo database and municipal contracts survey [36], disease-specific care routines and protocols [55], and another involving multicentre resource estimation analysis provided by each centre.

Time Estimation

One study estimated time for sub-activities in care trajectories by interviewing the oncology team responsible for developing the care map, subsequently validating the time for each sub-activity in the process map [46]. Similarly, another study conducted three rounds of multidisciplinary panel interviews with staff to estimate the time required for each personnel at each step of the process map [27]. Another study documented time activities through expert consultations, staff observation, and institutional scheduling system [24]. Three studies used staff interviews and observations, validating interview data through observation of procedures [32, 35, 42]. Two studies relied on direct observation of personnel and space usage [28, 37]. One study used TeleOftalmo databases for telemedicine and was confirmed by service providers, while municipal contract surveys were used for face-to-face services [36]. Another study gathered data through patient observation utilising time-motion software (UMT Plus [Laubrass]) [45], supplemented by self-reported data from participating centres. One study used interviews with professionals, hospital guidelines, and productivity reports [55]. When time data were missing, extrapolations were made based on the treatment similarity [47]. Another study employed direct observation or practice, with durations for radiation therapy planning determined by timing 10 magnetic resonance imaging (MRI) and 12 computed tomography (CT) sessions, and image contouring duration was sourced from literature.

Identifying Resource Waste

One-fourth of the studies (n = 8; 25%) highlighted the advantage of TDABC in identifying inefficient costs, resource waste, and improving efficiencies [25, 26, 31, 33, 38, 39, 46, 55]. All but one study [33] explicitly stated the methods used for collecting resource and time data.

Activities and Resources Identification

One study involved interviewing multiple individuals who performed the process map steps in their daily clinical duties [25]. Three studies used staff interviews [55], verified with observations before and during treatment delivery [31], and consultations with senior management [46, 55]. Another study relied on observations, expert knowledge, and institutional practices, with extrapolated index pathways to understand resource use for long-term management [26]. One study combined observations and interviews along clinical pathways [39]. One study used clinical electronic medical records from a sample of patients [38].

Time Estimation

One study used interviews and surveys, and when discrepancy between individual reported time exceeded 50%, tasks performed were observed, and the mean measured time to complete the step was used [25]. Another study averaged estimates from multiple sources, including provider estimates, literature, institutional data, and billing codes, supplemented by observations and patient reports for processes like oral medication or applying cream [26]. Two studies estimated using staff interviews, corroborated by observations [31] and group of activities [46]. In one study, treatment software logged the online work time of therapist with each patient, providing insights into resource variability [39]. One study used employee allocation scales, interviews with professionals, and referred hospital guidelines [55] Another study used direct observation and collection of time data during their routine [38].

Cost Control and Creating Value in Healthcare

Six studies mentioned cost control or savings [25, 31, 35, 36, 38, 40] as a key advantage of TDABC methodology. Four studies emphasised its role in creating value in healthcare [24, 39, 52, 54]. Additionally, eight of these studies cited accurate costing and identified resource waste as significant benefits of TDABC, with detailed methods of resource identification and time estimation described under previous advantages headings, except for two studies [40, 52].

Activities and Resources Identification

Among the two studies, one relied solely on interviews with each team member to estimate the resources [40]. Another study employed a comprehensive approach, using three rounds of data collection: online interviews with the surgical team, face-to-face interviews with the vascular surgeon to validate the estimates and gather any missing information, and in-depth observation by following a patient from admission to discharge. This process allowed for comparing interview data with actual care activities [52].

Time Estimation

One study estimated through interviews with each team member [40]. The other study utilised a three-step approach: online interviews with vascular surgeons, nursing coordinators, and administrative assistants to record time data for each activity; face-to-face interviews with the vascular surgeon for validation and to fill gaps; and detailed observation by tracking patient’s hospitalisation from admission to discharge. This method ensured the comparison of interview data with real-time care activities, addressing potential discrepancies and refining the time estimation [52].

Granular Costing and Costing at Resource Level

Several articles highlighted the advantage of using TDABC for granular level costing [27, 33, 50, 55] and capturing costs at the resource level [26, 41]. Among these, four studies specifically emphasised its effectiveness in identifying accurate cost [27, 55] and resource waste [26, 33]. Detail methodologies have been already discussed under previous advantages headings, except for two studies [41, 50].

Activities and Resources Identification

In one study [41], meetings with clinical staff and electronic medical records were used to gather information, which was then verified through contextual observation. In another case, resource estimates were initially made with the radiation oncology department chair and chief medical physicist, and then validated through multiple in-person interviews with staff at each phase of care [50].

Time Estimation

One study involved sharing a process map with staff to collect time estimates for each activity. These estimates were then compared to those obtained from contextual observations, with adjustments made based on the observed differences [41]. Another study outlined estimates with the department chair, later verifying them through staff interviews, with some estimates reported as ranges depending on the experience of radiation oncologists and medical physicists [50].

Others

Other advantages of TDABC were noted; its ability to capture cost across entire care cycles [27, 38] in complex or multicentre setting [47], aiding decision making [26, 40], comparing treatment alternatives [40], identifying cost drivers [30, 38, 43], improving processes, and ensuring equitable access to advanced technologies [24]. It is also crucial for pricing healthcare and defining bundled payments [24, 30]. The methodologies used in these studies are detailed under previously discussed advantages headings, except for two studies [30, 43].

Activities and Resources Identification

One study used vignette-based interviews with clinical staff along the care pathway and validated the estimates with senior staff [43]. Another study relied on interviews with staff and validated data by comparing the results with data obtained from patient tracking [30].

Time Estimation

One study administered a standard survey instrument to clinical and administrative staff through face-to-face semi-structured interviews, which was then confirmed with senior staff [43]. This method helped to clarify details, explore inefficiencies, and address time variations. Another study used staff interviews to avoid potential outliers in patient data, validating the estimates by comparing them with patient tracking [30].

Data Collection Approach and TDABC Advantages

In the studies reviewed, patterns in data collection approaches appeared to influence the reported advantages of TDABC. Studies based on hybrid data collection approaches using combined direct observation, staff interviews, and real-world care pathway mapping consistently reported more reliable, detailed, and actionable cost assessments. Studies utilising both observation and practitioner input more frequently identified accurate cost drivers, detected resource inefficiencies, and supported targeted cost control initiatives. These mixed methods allowed for a more comprehensive understanding of clinical workflows and time/resource utilisation patterns, enhancing the practical applicability of TDABC in diverse healthcare settings. These findings suggest that hybrid data collection strategies enhance the practical utility of TDABC by capturing the complexity and variability inherent in healthcare delivery processes.

Use of TDABC Methodological Approach and its Adherence

Of the 32 studies, 27 (84%) used a 7-step framework, while five studies (16%) implemented an 8-step framework. Among those using the 8-step framework, four focused on costing analyses [35, 37, 38] and one was an EE study [36]. Details of these studies, their adherence to the methodological approach, and the methods employed in the major steps (2–6), are provided in Supplementary file 3.

Application of the 7-Step Framework

Among 23 studies using the 7-step framework, one did not detail the first step (selecting the medical condition) within the methodology section, although it was mentioned in the introduction as the study’s aim [33]. Six studies (22%) omitted or inadequately described the third step, which involves developing a process map of each activity in patient’s care in graphical form, showing personnel, facilities, and equipment involved [39, 40, 43, 47–49], including one study, which listed the activities in table form [48], and another which just mentioned that a process map was populated, without providing the map [49]. Eight studies (30%) calculated practical capacity without accounting for non-patient-focused activities such as breaks, holidays, training days [29, 34, 42, 47, 49–51, 53]. Two studies (7%) did not specify how time data were obtained [33, 49], and one study (4%) lacked details on calculating the capacity cost rate (sixth step).

Application of the 8-Step Framework

Of five studies using the 8-step framework, three provided step-by-step details [37, 38, 55]. However, one of these studies mentioned the first step (identifying the study question or technology to be assessed) and the eighth step (cost data analytics) only in the introduction [37]. The other two studies briefly covered only seven steps but omitted the cost data analytics through visual charts, a key step in the 8-step framework [35, 36]. All five studies included a graphical process map, explained the collection of time data and accounted for idleness in practical capacity calculations.

Quality Assessment

Of the 32 studies assessed, more than half (n = 19; 59%) scored 75% or higher, indicating high quality, while the remaining 13 studies scored 56–72%, reflecting fair quality. Figure 2 illustrates commonly met quality criteria. However, several mandatory items showed room for improvement, including ‘use of specific methodologies to design the care pathway’ and ‘presenting cost per each patient included in the study’ (each met by only 21% of studies), and ‘use of digital technology for real time data’ (6%). This review applied a first standardised TDABC quality assessment framework, published in 2020 [22], although the studies were conducted as early as 2011.

Fig. 2.

Quality of included studies. TDABC time-driven activity-based costing

Discussion

This review examines the application of TDABC in health economic analysis, focusing on its use in various health conditions, potential advantages and implementation through a 7-step and 8-step framework. The review found that TDABC usage in healthcare has increased over the past seven years, although its application in EE studies remains limited. Most studies (over three-quarters) employed TDABC for partial economic evaluations (costing studies), while the rest used it for EE (Table 2). However, there is an increasing trend of TDABC application in EE studies compared to previous reviews, indicating a growing interest in its use [15, 58]. Most studies applied TDABC from a healthcare provider or hospital perspective, emphasising the goal of increasing patient value by reducing costs [15]. This trend, consistent with earlier reviews, highlights the primary application in hospital settings [6, 58]. However, the majority of these analyses were confined to specific departments or clinics, reflecting a limited scope of care cycle and a tendency towards departmental silo thinking. This finding aligns with the previous review and study [6, 59]. Only about one-fifth of studies, including two EE studies, extended their analysis across the primary-secondary care continuum or focused on long-term management (Table 2). This underscores the real need for and application of integrated healthcare systems to optimise health outcomes.

The costing studies were centred on cancer treatment and management, particularly radiation therapies, a focus also noted in the previous review [15]. This emphasis likely reflects the increasing incidence of cancer and the rising healthcare costs, prompting oncology and radiology sectors to explore TDABC for better healthcare planning, healthcare waste reduction, and efficiency improvement [6, 15]. The evolving use of TDABC in EE across diverse health conditions, such as diabetes, depression, dementia, ophthalmology further demonstrates the expanding scope of this methodology [33, 51].

While this review’s costing studies focused on non-surgical applications of TDABC, the 2020 review has demonstrated that the benefits observed in surgical settings were broadly similar in nature, particularly in enhancing cost transparency, identifying inefficiencies, and supporting value-based healthcare initiatives [14]. In surgical procedures, TDABC was mainly used to optimise discrete, intensive care episodes such as operating room workflows and perioperative processes, through process review and professional time involved in each activity leading to measurable short-term cost savings and efficiency gains. The optimisation was achieved through granular process mapping and time allocation to each surgical task, enabling identification of inefficiencies, reallocation of staff roles, and improved scheduling, which led to measurable reductions in operating time and cost per procedure. In contrast, the non-surgical studies included in this review applied to broader and more complex care pathways, such as chronic disease management and outpatient care coordination, where benefits were observed over longer care cycles through improved resource allocation and process optimisation. Therefore, while the underlying advantages of TDABC, such as cost accuracy, workflow improvement, and waste reduction, were consistent across surgical and non-surgical contexts, the specific patterns and timeframes of benefit realisation differed according to the nature of care delivery.

The findings demonstrate that TDABC is versatile across all stages of healthcare delivery, including primary, secondary, acute, tertiary, and long-term care. It offers detailed insights into cost drivers and resource utilisation, enhancing the accuracy of cost allocations. At every stage, TDABC identifies the accurate cost of care and resource waste, leading to cost savings and value creation in healthcare. Its ability to perform granular level costing, costing at the resource level, identify cost drivers in both primary and long-term care, capture costs over the entire care cycle in long-term care, and support the transitioning from fee-for-service to bundled payments in tertiary care highlights its potential to better predict healthcare costs and increase value in healthcare scenarios. Although some benefits were noted in the previous review studies, this review uniquely analyses its application across different care stages [14, 15, 37, 58]. This methodology also facilitates the shift towards value-based healthcare, enabling informed decisions that enhance patient care and ensure sustainability.

Building on these observations, the way TDABC was implemented, particularly the methods used to collect resource and time data, have significantly influenced the quality and utility of the study findings. Studies that integrated direct observation with practitioner interviews and pathway mapping were able to produce accurate cost assessments and reveal inefficiencies and identify actionable opportunities for cost control. For instance, one study found brachytherapy balloon applicator contributed substantially to consumable materials costs; switching to a lower-cost balloon applicator could save an estimated 30% of those costs [31]. These hybrid methods allowed clinicians and researchers to capture the subtleties of clinical workflows, assumptions about time use, and identify areas of inefficiency. This enhanced level of detail strengthened the practical relevance of TDABC findings, supporting efforts towards more efficient, value-based healthcare delivery.

Furthermore, TDABC employs full-cycle care mapping to document activities, resource input and time requirements in fine detail, enabling identification of high-cost processes across the care pathway. This helped the healthcare team to pinpoint inefficient activities and implement targeted cost saving strategies, such as reassigning appropriate tasks to less costly personnel where clinically feasible, reducing unnecessary ICU stays [25, 35, 45]. It also facilitated substitution of expensive procedures or technologies for more affordable, equally effective options, for example when this study identified opportunities to replace in-person visits with lower-cost phone consultations and shift documentation tasks from nurses to lower-cost staff [41]. By mapping all process steps and associated costs, TDABC enabled better decision making, including the detection of resource bottlenecks and informed staff allocation [32, 34, 36]. Additionally, the capacity cost rate (CCR) calculations for both labour and infrastructure provided insight of cost-intensive processes, guiding efforts to streamline workflows and enhance resource utilisation [55].

The findings of this review suggest that TDABC is highly generalisable methodology, applicable across diverse healthcare settings, clinical conditions, and health systems. Its core strength lies in its adaptability by using context-specific inputs such as staff roles, local resource availability, and actual clinical workflows, TDABC provides granular and actionable costs data. Studies employing hybrid approaches combining staff interviews, direct observation, and pathway mapping, demonstrated that this methodology is adaptable across all stages of care. Importantly, the role of TDABC in enhancing decision making, minimising inefficiency, and improving resource use across different healthcare contexts underscores its value as a practical approach for supporting the shift toward value-based care.

The primary goal of applying TDABC using the 7-step or 8-step framework is to improve healthcare efficiency by addressing challenges associated with current cost-accounting methods [4, 6]. The 8-step framework, introduced to reduce variability in TDABC reporting [6, 11], showed better adherence to recommended steps for cost calculations in studies reviewed, although data analytics through visual charts were often lacking. In contrast, studies employing the 7-step framework showed more variability in reporting, with some studies missing essential information like process maps, practical capacity calculations accounting for non-treatment activities (breaks, holidays, training days), details on time data collection, CCR calculations, and description of the medical condition. Notably, studies using the 8-step framework provided more structured and transparent insights, which could support more informed decision making for cost reduction and care improvement. This suggests that the 8-step method may reduce variability in TDABC reporting, contribute to greater clarity in mapping activities and resources, potentially enhancing the utility of TDABC for clinicians and researchers. Nonetheless, this conclusion is based on only five studies using the 8-step method, whereas the majority continued using the 7-step framework despite the introduction of the 8-step framework in 2019. Therefore, additional research is needed to evaluate whether the 8-step framework not only improves methodological consistency but also enhances the real-world effectiveness of TDABC in healthcare settings.

Despite its advantages, several limitations and implementation challenges associated with TDABC were identified across the included studies. First, TDABC can be resource intensive to implement, particularly in settings lacking access to time-tracking data or staff capacity for process mapping [37]. Inconsistent adherence to the full 7-step or 8-step frameworks also undermined methodological quality in some cases [47, 48]. Few studies (6%) employed real-time digital tools, such as time-tracking software, to capture activity duration. In addition, CCR calculations were often poorly documented, limiting transparency and reproducibility of cost estimates [47]. Importantly, while TDABC provides detailed cost data, its integration into routine decision making and budgeting processes remains limited in many health systems. Further research is needed to assess how TDABC findings are used in practice, and to develop standardised, scalable approaches that reduce implementation burden while maintaining accuracy.

Our study has some limitations. First, the literature search for costing studies was restricted to studies other than surgical procedural to avoid duplication from previous reviews. Second, manuscripts not exclusively applying or describing the TDABC method were excluded. Third, the literature search was limited to English-language publications, potentially excluding relevant studies. Another limitation is that the reported advantages of TDABC were based on the interpretations and conclusions of the original study authors. These benefits were not independently validated, and the extent to which TDABC directly contributed to improvements in efficiency or decision making may require confirmation through further empirical research. Despite these limitations, our study has several strengths. To the best of our knowledge, this is the first review to cover both methodological frameworks (7-step or 8-step), assess the 8-step framework’s effectiveness in reducing variability in costing, and apply a standardised framework evaluating the quality of TDABC studies in healthcare. Additionally, this is the first study to review TDABC’s use in both costing and EE, its application across the continuum of care, and its advantages at different stages of care.

Conclusion

In summary, this systematic review highlights a growing application of TDABC use in health economic analysis, particularly in partial economic evaluations and, more recently, in full economic evaluations across a range of chronic health conditions. Time-driven activity-based costing has been effectively applied in different stages of healthcare delivery, including primary, secondary, acute, tertiary, and long-term care, offering detailed insights into cost drivers, care processes, and resource use. Its ability to provide activity level, patient-specific costing supports greater cost transparency, process efficiency improvement, and informed decision making. By addressing key limitations of traditional costing methods, TDABC shows strong potential to support healthcare systems to transition toward value-based healthcare delivery by optimising resource use and aligning costs with patient-centred outcomes. However, further research is needed to confirm its real-world impact across diverse healthcare settings. While TDABC shows promise for enhancing value-based healthcare, its practical implementation requires further methodological standardisation, workforce engagement, and integration with real-world decision-making frameworks. Therefore, policymakers and healthcare providers are encouraged to consider the broader integration of TDABC into healthcare costing practices, particularly where detailed cost insight and resource optimisation are essential to improve system performance, sustainability, and patient outcomes.

Supplementary Information

Below is the link to the electronic supplementary material.

Declarations

Funding/Support

Open Access funding enabled and organized by CAUL and its Member Institutions.

Conflict of interests

None.

Ethics approval

Not applicable.

Consent to participate

Not applicable.

Consent for publication (from patients/participants)

Not applicable.

Availability of data and material

Data are available on reasonable request. All data relevant to the study are included in the article or uploaded as supplementary information.

Code availability

Not applicable.

Authors’ contributions

SS was responsible for the conception of the study question, search strategy, along with collecting, storing and analysing data, screening of studies, quality assessment and writing the manuscript. SBM contributed to the screening of studies and quality assessment. LG, SuR and SeR provided overall supervision for the study including ideas for conception of research question, generated ideas regarding focus areas of analysis, provided critical comments and corrections to the manuscript throughout the writing period. All authors read and approved the final manuscript. The corresponding author is the guarantor.