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Background A major challenge of mental health care is to provide safe and effective treatment with limited resources. The main purpose of this study was to examine a value-based approach in clinical psychiatry when evaluating a process improvement initiative. This was accomplished by using the relatively new time driven activity based costing (TDABC) method within the more widely adopted cost-effectiveness analysis framework for economic evaluation of healthcare technologies. The objective was to evaluate the cost-effectiveness of allowing psychologists to perform post-treatment assessment previously performed by psychiatrists at an outpatient clinic treating depression using internet-based cognitive-behavioral therapy (ICBT). Methods Data was collected from 568 adult patients treated with ICBT for depression during 2013± 2014. The TDABC methodology was used to estimate total healthcare costs, including development of process maps for the complete cycle of care and estimation of resource use and minute costs of staff, hospital space and materials based on their relative proportions used. Clinical outcomes were measured using the Patient Health Questionnaire depression scale (PHQ-9) before and after treatment and at 6-month follow-up. Cost-effectiveness analyses (CEA) was performed and the results presented as incremental net benefits (INB), cost-effectiveness acceptability curves (CEACs) and confidence ellipses to demonstrate uncertainty around the value of the organizational intervention. Outcomes Taking into account the complete healthcare process (from referral to follow-up assessment), treatment costs decreased from $709 (SD = $130) per patient in 2013 to $659 (SD = $134) in 2014 while treatment effectiveness was maintained; 27% had achieved full remission from depression after treatment (PHQ-9 < 5) during both 2013 and 2014 and an additional 35% and 33% had achieved partial remission in 2013 and 2014, respectively. At follow-up, 42% were in full remission after treatment during both 2013 and 2014; an additional 35% and 33% were in partial remission during 2013 and 2014, respectively. Confidence ellipses occupied the south-east (SE) and south-west (SW) quadrants of the incremental cost-effectiveness plane at both post-treatment and at follow-up, indicating that the ICBT treatment was less costly and equally effective after staff reallocation. Conclusion Treating patients to the target of full remission using psychologists instead of medical specialists for post-treatment assessment is cost-saving and consequently a more valuable use of limited resources. TDABC may be a useful tool for measuring resource costs, identifying quality improvement opportunities and evaluating the consequences of such initiatives. Combining TDABC with clinical outcome measures in CEA is potentially a useful approach in mental healthcare to estimate the value of process improvement initiatives. [ABSTRACT FROM AUTHOR]