The Cath Lab is Full of Cost-Saving Opportunity

Author(s): 

Gary Clifton, Vice President, Terumo Business Edge

We are clearly on the precipice of what is, and will be, a defining time in the delivery of healthcare in the United States. We are not alone in our journey, as many healthcare systems around the world are struggling with how to deliver more with less. Healthcare and its associated costs are a major topic of discussion in the United Kingdom, as they struggle with a severely underfunded National Health Service (NHS). Japan’s National Health Insurance (NHI) has enacted measures to close its funding gap in an effort to continue providing government-funded healthcare to all its citizens. And India, arguably the largest potential healthcare system in the world, is currently discussing providing government-funded healthcare to an additional 500 million citizens. Yes, that’s “million”! And these are only a few of the many countries struggling with large economic challenges in healthcare.

So, where is the discussion leading? We must get this figured out and start looking at the data. In the U.S., our single biggest cost in delivering healthcare is labor, estimated to be between 50-60% of a hospital budget, followed by facility service contracts and products. When surveyed, healthcare leaders continue to point to reducing unwarranted care variation as a goal for reducing costs and improving quality. A Google search is replete with offerings and academic discourses on why this is important and how it can be achieved. As notable statistician W. Edwards Deming stated, “Uncontrolled variation is the enemy of quality” (from his book, Basic Statistical Tools for Improving Quality). So, if there is so much evidence as to the why, why are we not seeing a greater effort in our processes and care delivery of the cardiac cath lab patient? (Because it’s not easy and everyone has a day job.)

The issue is clear: hospital staff need to become part of the solution. For hospitals, their costs have officially exceeded their reimbursements in 2016.1 Hospitals continue to face increased pressure to boost efficiency and increase productivity, while at the same time, they continue to bargain with health plans and face declining payments.2 In many hospitals, the cardiac service line is the top revenue-generating service line; certainly, it is one of the top three. But maybe not always the most profitable. The cath lab is undoubtedly one of the more dynamic procedural/patient care areas in the hospital and faces challenges with profitability. Let’s look at some potential reasons why. How can we address the cath lab specifically?  

First, in Figure 1A-D, provided by Archway Health, we can see the distribution by state for the average episode payment by Medicare. Even more compelling is the interquartile range and what is obviously significant variability. For the purposes of comparison, we have provided both inpatient and outpatient percutaneous coronary intervention (PCI). Herein lies both the problem and the solution. How can we define what variability is in how a procedure is being delivered state to state, lab to lab? We would contend the answer lies in care variation or lack of defined care pathways that deliver not only on quality outcomes, but cost efficiencies. 

In Figure 2, Archway Health has broken out where costs are attributed in a 90-day PCI bundle based on FFS (Medicare fee for service). Data were taken from 10/1/15 to 9/30/2016. As you can see from the graphic, the majority of the costs (70%) are attributed to the procedure itself. In a similar analysis of the inpatient PCI bundle for 90 days, greater than 50% of costs were attributed to the procedure. Therefore, if we are to have any hope of controlling costs for PCI, we must find ways to reduce care variation by creating predictable care pathways that can manage the routine delivery of PCI in the most predictable, quality outcome-driven, cost-efficient manner possible.

In a recent publication by Amin et al3, the authors describe and profile costs at a very detailed level for their institute (Barnes Jewish Hospital, St. Louis, Missouri). Amin et al then identify the use of a patient-centered protocol and the subsequent care pathway that facilitated the rapid adoption and utilization (0-77%) of same-day discharge (even in complex patients), with no adverse outcomes, a high patient satisfaction rating, and significantly lower costs (approximately $7,000).3 It is important to note that costs were obtained from the hospital’s finance department and included direct variable, direct fixed, and total costs (Figure 3). Knowing your costs is the first goal in assessing any program for cost efficiency. It is not enough to know just your product acquisition costs; there is a need to look at the entire value stream of the procedure and the care pathway as the patient moves through the system.  

Conclusion

There is a compelling need for cardiac programs to continue to explore and pursue the necessary avenues to address care variation. A patient-centered approach, utilization of reduced length-of-stay models such as same-day discharge, and greater attention to use of transradial access and the importance of mitigating acute kidney injury are but a few of the more impactful measures a lab can employ to reduce costs, increase patient satisfaction, and improve quality outcomes. Payers will continue to attempt to lower the cost of healthcare and providers will continue to feel the pressure. 

References

  1. Preliminary 2016 medians skew lower as revenue and expense pressures hinder profitability. Moody’s Sector In-Depth. May 16, 2017. Available online at https://www.moodys.com/research/Moodys-Preliminary-FY-2016-US-NFP-hospit.... Accessed March 7, 2018.
  2. Pearl R. Why major hospitals are losing money by the millions. Forbes. Nov 7, 2017. Available online at https://www.forbes.com/sites/robertpearl/2017/11/07/hospitals-losing-mil.... Accessed March 7, 2018. 
  3. Amin AP, Crimmins-Reda P, Miller S, et al. Novel patient-centered approach to facilitate same-day discharge in patients undergoing elective percutaneous coronary intervention. J Am Heart Assoc. 2018 Feb 15; 7(4). pii: e005733. doi: 10.1161/JAHA.117.005733.

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