Time-Driven Activity-Based Costing (TDABC) is best described as:

• A. Method to bill by the hour
• B. Time-Driven Activity-Based Costing (TDABC) tracks the true cost of care over the full cycle
• C. Method to calculate cost of care based on time and resources used
• D. Strategy to increase physician salaries

Answer: (C)

Time-Driven Activity-Based Costing assigns costs based on the actual time resources are used and how costly those resources are. You determine a capacity cost rate for each resource (for example, cost per hour for staff, rooms, or equipment), map out how much time each resource spends on each care activity, and multiply the time by the resource’s cost rate. Adding up these amounts across all activities provides the total cost of care. This method links cost directly to time and resource use rather than just counting activities, which helps reveal where costs arise and where to focus improvements. The other descriptions mostly miss this core idea: TDABC isn’t simply a billing-by-the-hour method, and while it can capture costs over a care cycle, its defining point is allocating costs according to time and resources used.