Cost of Care

Key Factors in Cath Lab Financial Performance

October 10, 2018 7:57 am

By evaluating patients for same-day discharge, healthcare organizations could save $3.6 million for every 1,000 elective PCIs performed in labs.

Today’s catheterization labs are multi-dimensional, complex environments that struggle to cope with rising costs and declining payments. At the time of this article, the Centers for Medicare & Medicaid Services (CMS) is proposing, through the Outpatient Prospective Payment System rule, the inclusion of 12 cardiac diagnostic procedures to the ambulatory service center (ASC) covered surgical procedure list. This will have negative effects on hospital cardiac diagnostic procedures as these services migrate to less costly ambulatory centers.

The answers to these challenges lie in several areas, all of which can be summarized in the idea of removing unwanted care variation. C-suite executives around the country are continually pointing to eliminating care variation as a means to reduce and control costs, and they aren’t wrong. But what does this process really mean?

Same Day Discharge = Higher Margins

Modern cath labs are pushing the boundaries of procedures that were heretofore performed in surgical suites via open procedures. The challenge is in understanding whether the care delivery model for these new procedures is profitable. The answer lies in eliminating redundancies, new scheduling models, alternative staff compensation models, reducing length of stay, and standardizing delivery of care around specific procedures—in other words, structured care pathways.

For many hospitals, the management of the outpatient PCI—percutaneous coronary intervention or coronary angioplasty—still involves an overnight stay for the majority of patients. However, for elective PCI procedures, same-day discharge has been shown to be safe and effective and offers considerable cost savings. Same-day discharge also heads off payment problems that result from CMS’s two-midnight rule. As a result of the rule, hospitals may not be paid for elective Medicare PCIs that involve a one-night stay.

It’s imperative that cath lab programs match patients to the proper care pathways—outpatient versus inpatient—and, when and where possible, eliminate overnight stays for elective PCI patients. Savings for discharging patients same day can be $3,600 per patient (Amin, A.P., Patterson, M., House, J.A., et al., “Costs Associated with Access Site and Same-Day Discharge Among Medicare Beneficiaries Undergoing Percutaneous Coronary Interventions: An Evaluation of the Current Percutaneous Coronary Intervention Care Pathways in the United States, JACC Cardiovascular Interventions, Feb. 27, 2017). That would mean for every 1,000 elective PCIs that are performed in labs, healthcare providers could be adding $3.6 million to their bottom lines

Some hospitals that have started successful same day discharge programs have also seen an increase in their HCAHPS patient satisfaction scores. These scores directly affect hospital bottom lines, as they make up 25 percent of overall value-based payment scores. Depening on a hospital’s scores, it could be penalized or rewarded up to 2 percent of its overall Medicare DRG payments. With 57 percent of hospitals seeing bonuses in FY18, up from 55 percent in FY17, according to Modern Healthcare, it is important to pay attention to patient satisfaction.

Other added benefits of same day discharge programs in addition to increased payments and higher patient satisfaction include freeing up resources for post-op patient management and freeing up valuable bed space for incoming patients.

Savings Through Access Site Selection: Transradial Access

Since 2007, the use of transradial access has gained steady adoption and currently accounts for more than 40 percent of all cardiac catheterization procedures. Using the radial artery in the wrist affords clinicians and patients benefits that the once more popular femoral artery in the leg offers. Physicians and healthcare workers can more easily identify and manage potential bleeding complications. Patients are able to sit up, eat, and ambulate without being confined to a bed. Nursing staff resources are much less involved when managing the radial access site compared with that of the femoral.

These advantages can be translated into an improved patient experience, improved procedural throughput, improved staff satisfaction, and cost containment. The latest studies have shown that radial access has a $916 lower cost than femoral access. If a facility performs 1,000 PCIs, the savings for the hospital approaches $1 million. This savings is mainly the result of reduced bleeding complications and a lower length of stay (Amin and Patterson, et al., JACC Cardiovascular Interventions).

Ratio of Transradial Procedures by Country

Recent studies continue to show the clinical benefit of radial access versus femoral. These studies reinforce the benefits of radial access in terms of less bleeding and cardiovascular mortality, which not only have a positive financial impact, but also social impact (Valgimigli, M., Gagnor, A., Calabro, P., et al. “Radial Versus Femoral Access in Patients with Acute Coronary Syndromes Undergoing Invasive Management: A Randomized Multicenter Trial,” The Lancet, March 16, 2015.)

Cath Lab Potential Savings

Financials Tell the Story

Many hospitals believe their cath lab costs are not a source of concern. However, when they dig into their financials, they see another story. Financial information is key to making long-term strategic decisions. The following are common areas where insufficient information may hinder decision-making.

Overnight costs. Many hospitals are not properly allocating elective PCI patient overnight costs. This leads to incorrect assumptions about what are the true costs of procedures. Propensity score-adjusted costs for elective PCI, including direct (fixed and variable), indirect, and total costs are greater than $7,000 less for same day discharge, saving costs for patients, providers, and health plans (Amin, A. Crimmins-Reda, P., Miller, S., et al., “Novel Patient-Centered Approach to Facilitate Same-Day Discharge in Patients Undergoing Elective Percutaneous Coronary Intervention,” Journal of the American Heart Association, Feb. 15, 2018).

In addition, eliminating overnight stays frees beds for other revenue generating opportunities.

Payment shifts. The cath lab has historically been a profitable, revenue-generating clinical area, but with recent changes in Medicare and health plan payments, care redesign is essential to maximize margins. We may well continue to see lower revenue growth moving forward as the cath lab is vulnerable to an increasing shift to outpatient care and the rise of ambulatory clinics and office-based labs.

Combine this with decreasing payment, and labs may be operating with negative margins. If acute care facilities wish to compete with the growing ASC environment, managing costs and profitability are essential.

Aging population. With a growing baby boomer population, managing Medicare patient profitably will be a major challenge for hospitals, and private health plans won’t continue to compensate for Medicare patient losses. According to research from Definitive Healthcare, the average cath lab program generates a negative profit margin on Medicare patients, and that population is growing.

Analyzing cath lab care pathway design can help hospital leaders bend the cost curve back to operating profitability.

John Yanuzzelli, MBA, is strategic account manager, Terumo Business Edge.


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