Hugh Pickens writes writes "Regardless of what decision the Supreme Court reaches on the legality of the Affordable Care Act, Robert Kaplan and Michael Porter write in the NY Times that solutions to our health care problems are failing because of a fundamental and largely unrecognized problem: We don’t know what it costs to deliver health care to individual patients, much less how those costs compare to the outcomes achieved. Providers themselves do not measure their costs correctly. They assign costs to patients based on what they charge, not on the actual costs of the resources, like personnel and equipment, used to care for the patient. The result is that attempts to cut costs fail, and total health care costs just keep rising. In a pilot program to address the problem, doctors asked their staffs to help them map out each step in a patient’s treatment, from the moment they’re checked in at the door of the hospital to their final follow-up visit. Mapping the process allowed the doctors to identify inefficiencies, like the amount of time nurses spent filling out paperwork instead of tending to patients. After mapping the process, one surgeon repairing cleft palates at Children’s Hospital Boston discovered that 40 percent of the total cost of an 18-month-care process was due to the time a child spent in the intensive care unit before and after surgery and that by using a far less intensively staffed and equipped observation room, the hospital could achieve equivalent quality and safety at much lower costs. Kaplan and Porter say there are hundreds of opportunities like this one in every hospital to use time, equipment and facilities more intelligently using Time-Driven Activity-Based Accounting (PDF) but these opportunities have been obscured by existing costing systems that have little connection to the processes actually performed. "Understanding costs could be the single most powerful lever to transform the value of health care. This would give payers and providers the data they need to improve patient care, and to stop arbitrary cuts and counterproductive cost shifting.""