CME/CEU Offering

The following activity is supported by an unrestricted educational grant from Cordis Corporation. This presentation contains discussion of published and/or investigational uses of agents that are not indicated by the FDA. Neither HMP Communications nor Cordis Corporation recommends the use of any agent outside of the labeled indications. Please refer to the official prescribing information for each product for discussion of approved indications, contraindications and warnings. Topics: Maintaining Profitability in Cardiac Services Faculty/Credentials: Kathleen C. Chumer, RN, Clinical Director, Heart and Vascular Institute, Lenox Hill Hospital, New York, NY, Joanne Vaul, MBA, Health Care Financial Consultant, Lawrence Michaelis, MD, Professor of Surgery, Northwestern University Medical School, Jack DeCerce FACHE, Health Systems CEO. Learning Objectives. At the conclusion of this activity, the participant should be able to: 1. Determine organization gap in medicare reimbursement for DES. 2. Identify revenue opportunities with new technology and shifts in care. 3. Project DES per case utilization and organization return to profitability. Activity instructions. Successful completion of this activity entails reading the article, answering the test questions and obtaining a score of over 70%, and submitting the test and completed evaluation form to the address listed on the form. Tests will be accepted until the expiration date listed below. A certificate of completion will be mailed to you within 60 days. Estimated time to complete this activity: 1 hour Initial release date: May 31, 2003 Expiration date: May 31, 2004. Target audience. This educational activity is designed for physicians, nurses and cardiology technologists who treat patients with coronary artery disease. Accreditation statements. This activity is sponsored by HMP Communications. Physicians: HMP Communications, LLC is accredited by the Accreditation Council for Continuing Medical Education to provide continuing medical education for physicians. HMP Communications, LLC designates this continuing medical education activity for a maximum of 1 category 1 credit toward the AMA Physician’s Recognition Award. Each physician should claim only those credits that he/she actually spent in the educational activity. This activity has been planned and produced in accordance with the ACCME Essential Areas and Policies. Nurses: Provider approved by the California Board of Registered Nursing, Provider Number 13255 for 1 contact hour. Radiologic Technologists: Activities approved by the American Medical Association (AMA Category 1) are eligible for ARRT Category B credit as long as they are relevant to the radiologic sciences. Radiologic Technologists, registered by the ARRT, may claim up to 12 Category B credits per biennium. SICP: Society of Invasive Cardiovascular Professionals (SICP) approved for 1 CEU. Commercial support disclosure. This educational activity has been supported by an educational grant from Cordis Corporation. Faculty disclosure information. All faculty participating in Continuing Education programs presented by HMP Communications are expected to disclose to the meeting audience any real or apparent conflict(s) of interest related to the content of their presentation. Ms. Chumer has disclosed that that she has received a research grant from Cordis/J&J. Ms. Vaul has disclosed that she has received a research grant from Cordis/J&J. Dr. Michaelis disclosed that he is a consultant for Cordis. Jack DeCerce has disclosed that he receives grant support from Cordis/J&J. Maintaining Profitability in Cardiac Services An updated economic model provides a database and expert panel assumptions on projecting revenue and expense with new stent technology An Introduction to the Expert Panel The authors of this article make up an independent research/education initiative, or Expert Panel, which receives grant support from Cordis/J&J. As members, we serve as independent hospital advocates on the emerging technology of drug-eluting stents (DES). During 2002, we interacted with 400 cardiac centers through personal presentations and videoconferences. Our ongoing work reflects feedback obtained through dialogues with administrators, MD leadership and cardiology experts during these sessions. The Panel has also advocated with third parties regarding the reclassification of reimbursement to reflect the offsets in revenue and expenses associated with the shifts in medical/surgical practice patterns following DES deployment. Currently, our original database of 300,000 patient cases has been broadened to include additional elements of both medical and surgical procedures. The Panel’s hospital budgeting model has also been expanded to examine potential growth in a broad array of closely interrelated cardiac and vascular procedures. Our conclusions have resulted in a new economic model that will assist hospital decision-makers in projecting patient volumes as well as revenue and expense for a more comprehensive suite of cardiovascular services. Cardiac centers anticipate widespread adoption of the new drug-eluting stent. Cardiac administrators, cardiologists and cath lab managers agree this enhanced technology will dictate a new standard of care. Patients and physicians will demand the better outcomes associated with the improved stent. Most hospitals anticipate short-term financial risk based on increased costs, a migration of some CABG cases, and fewer repeat admissions for revascularization after DES becomes broadly deployed. [See Fig. 1] Formerly, clinical managers could focus solely on improving clinical status for their patients. That altruism has been altered. All cardiovascular managers must now be aware of the financial implications of emerging technology. They must help manage the complexities of utilization to include analysis of stents used per case and they need to understand how their institution is reimbursed for these procedures. Hospital Opportunities with Transformative Technology Drug-eluting stents are seen as an idea that moves like a virus. Gladwell uses this term advising that change happens as frequently and unexpectedly as it does in his text The Tipping Point.¹ Emerging technologies, such as the stent, are shifting medical models for cardiac and vascular treatment to less invasive, shorter stay procedures. Society as a whole sees the value of these lower cost, more convenient techniques which offer superb clinical outcomes. Hospitals must be aggressive in addressing shifts in reimbursement for these new treatment modalities. Healthcare leaders will need to recognize the market opportunity in building patient referrals (and attracting MD specialists) through a strategy which embraces these changing care strategies. [See Fig. 2] Recently, The New York Times described a new generation of patients surviving heart attack and stroke who will require comprehensive care for the next 25-30 years. ² Cardiac disease continues to be a leading cause of death, but each year one million Americans are surviving a major adverse cardiac event. Progressive cardiac centers should be positioning their services in a strategic way to support this growing population cohort of chronic cardiac patients, who will now require comprehensive sequential care. Our Panel predicts increased diagnostic and therapeutic procedures for rhythm disturbances, heart failure, progressive arterial obstruction and open-heart surgery to maintain quality of life for these patients. DES Economics - Cost/Availability Clearly hospitals will face challenges in managing the financial impact of this more expensive technology. Many elements, including price, number of stents utilized per case, DES adoption rate by cardiologists, and third party payments for this medical advance will need to be included in hospital budget projections. Medicare has provided unprecedented rate relief. Many hospitals have also had favorable results seeking increased private insurance payments based on the cost shifts resulting from changes in patient referral patterns. It is believed by the Panel that most hospitals will find success in negotiating with third-party payers by documenting the cost-savings elements of this new treatment. Fewer expensive CABG procedures and fewer repeat admissions make DES a break-even technology. Many hospitals have been able to include carve-out or % of Charges provisions in third-party contracts, which can help close the gaps in reimbursement. [See Fig. 3] The Medicare Gap There is clearly a need to understand how each hospital is reimbursed for Medicare patients. Since each hospital is paid differently under CMS regulations, it is important to calculate the Medicare rate for your institution. The example cited details a typical gap in Medicare payments among major cardiac centers. Since current Medicare reimbursement is based on an average 1.5 stent utilized per case, it is also clear that hospitals should work to carefully manage stent utilization, where possible. [See Fig. 4] One-Stent Cases Are Most Profitable Hospital decision-makers need to understand the inherent profitability of DES utilization. Since Medicare reimbursement is geared to a 1.5 stents-per-average case, the single stent case will help profitability as well as reduce the average stents per case overall. Some hospitals considering protocols for the use of bare stents should compare reimbursement rates for both devices as part of their analysis. Clinical trials to date show the unequivocal benefit of DES, as compared with the bare stent, for virtually all sizes and types of obstructive coronary lesions. ³ Besides anticipated clinical benefits for single vessel use, the new CMS reimbursement insures higher profitability for single vessel procedures. [See Fig. 5] Projecting Stents per Case Many cardiac centers have projected significant jumps in stent utilization per patient procedure, especially for more complex cases. Careful review of current and projected medical practice with interventional cardiologists on staff will help clarify anticipated utilization trends. The expected shift in CABG cases to DES procedures will have a relatively small impact on the average stents per case. Sharing this information with specialty physicians and other decision makers will be important in working to align profitability and utilization. Utilization of DES per case will be driven by the clinician, based on his/her current practice and the types of lesions targeted for this therapy. This will obviously vary for each physician. Historic average stent utilization of 1.5 stents per case may well increase, but careful management of stent utilization to include single vessel application may well serve to limit significant increases in the average stents per case. [See Fig. 6] Drug-eluting Stent Cost The most significant remaining question relates to the cost of the DES. Hospitals need to understand the potential impact of various price and utilization levels on their bottom line. This can be accomplished by preparing a sensitivity analysis that considers the hospital-specific payment levels with alternative price and utilization levels. Preparation of this type of analysis prior to finalization of purchasing plans and agreements will permit hospitals to easily anticipate the impact of various pricing scenarios. [See Fig. 7] Quantification of the hospital’s break-even price per DES is also an effective step in understanding the potential risk associated with any given price level or strategy. To perform this calculation requires utilization of the hospital-specific rate and anticipated utilization level. Returning to Profitability Hospitals are anxiously anticipating the operational impact of the DES technology. Preliminary financial analyses have been performed. Most of these efforts focused exclusively on the impact of the DES without consideration of the upside volume potential of this technology. We believe it is critical that hospitals now re-evaluate their financial projections and introduce new elements into their calculations. A significant portion of the projected financial impact was based on the loss of revenue related to reduced readmissions and CABG volume. Research is now supporting that this volume will be rapidly replaced with medical therapy volume, and new cardiac surgery volume (mainly non-CABG) due to aging demographics and other technology advances. The introduction of this new volume and corresponding marginal profits into financial analysis dramatically changes the financial projections. We anticipate that most hospitals will return to pre-DES profitability levels within two years. [See Fig. 8] The growing volume of patients requiring comprehensive care and treatment offers great opportunity for cardiac centers that seek to exploit this market by appropriate introduction of new technology. A recent study prepared for Cordis by The Nova Group (Conversion Potential of Medical Therapy Patients to DES, October 2002) examines the potential for referral of drug therapy patients for PTCA procedures. ⁴Hospital Opportunities The general outlook for growth in cath lab procedures is especially significant; increasing numbers of patients with cardiovascular disease, combined with enhanced technology, offers great potential. Hospital managers must also look to increased reimbursement, adjustments in the cost of the stent, and careful management of stent utilization to help increases in profitability for cath lab operations [see Fig. 9] Cardiovascular Service Program Growth An aging population and the fact that cardiovascular growth is a progressive disease will effect a tremendous increase in the number of patients requiring ongoing care. A wide variety of new diagnostic procedures, electrophysiology services, pacemakers and ICDs, programs to manage chronic heart failure, and non-CABG open heart procedures will all provide opportunity for growth. In addition, an emerging increase in related less-invasive procedures can be anticipated. [See Fig. 10] Conclusion The impact of sudden cost increases for new drug-eluting stent technology is temporary and correctable. Leading cardiac programs will anticipate the huge opportunity in a variety of new and emerging less invasive procedures. Patients, physicians, and society as a whole will recognize the value and convenience of these enhanced models for treatment. Cardiac centers seeking to become strategic referral centers for these new techniques will need to develop patient-centric/best practices. Winners in this effort will be the early adapters who reorganize vascular and cardiac centers to support delivery of comprehensive services that offer the best patient outcomes. Anticipating and planning for continued paradigm shifts in the management of cardiovascular disease will position your organization for clinical and financial success. Physicians and patients will gravitate towards cardiac centers of excellence that readily adapt and implement new medical technologies such as the drug-eluting stents. Please direct any questions regarding the content of this article to author Jack DeCerce at: jdecerce@att.net Questions regarding the CME/CEU should be directed to Trish Levy at: TLevy@hmpcommunications.com TO OBTAIN YOUR CME OR CEU CREDIT, PLEASE COMPLETE THE 2 ATTACHED PDF FORMS.

<b>References </b>1. Gladwell M. The Tipping Point. Little Brown: New York, New York, 2002.2. Kolata G. Gains on Heart Disease Leave More Survivors. 1/19/2003. The New York Times. 3. Abizaid A. Do We Have Enough Evidence to Use DES for All Patients and Lesion Subsets? 3/27/03. Webcast, www.tctmd.com.4. The Nova Group (Conversion Potential of Medical Therapy Patients to DES, October 2002).