Electrophysiology Program Development: The Business Rationale

Lorraine Buck, Senior Consultant Corazon, Inc. Pittsburgh, Pennsylvania
Lorraine Buck, Senior Consultant Corazon, Inc. Pittsburgh, Pennsylvania
Electrophysiology (EP) as a subspecialty of cardiac care dates back 2 millennia ago, when a physician by the name of Pien Ch’iao reported variations of what seemed to be heart block. Since that time, the field of EP has grown astronomically, with many clinical milestones providing options for lifesaving therapy to those who would have otherwise died from heart rhythm-related conditions. From the 1930s to the 1980s, rapid expansion of the field led to the development of artificial pacemakers, implantable defibrillators, epicardial lead systems, transvenous pacing electrodes, and the use of direct current mapping for diagnosis and treatment planning. Advances in these therapies continued through the 1990s, with radiofrequency ablation replacing direct current mapping. As we entered the 20th century, cardiac resynchronization therapy, as well as the use of magnetic navigation systems, has further evolved to give patients with heart rhythm disorders both better quality of life and longer life expectancies. But with advances in medicine and technology, and continued pressure from the marketplace for all hospitals to be all things, comes confusion about whether or not to become ‘full service’ and offer these advanced services. Given the complexity of this subspecialty — in clinical, operational, and financial terms — what, if anything, should hospitals be doing in EP? How should leaders determine if offering EP is a viable strategy? If choosing to enter the field, what is the best means for determining the scope of services to offer? As a nation, we continue to be plagued by an ever-increasing incidence of heart disease. According to the American Heart Association, coronary artery disease accounts for 1.2 million heart attacks yearly, and there are 5.5 million cases of congestive heart failure, 335,000 sudden cardiac deaths, and 2.5 million cases of atrial fibrillation recorded each year as well. Because of this epidemic, EP services have grown exponentially, and Corazon believes this will continue into the long term. However, growth trends alone will not give any organization the “green light” to move forward with EP services. With the large investments required to start an EP program, we advise waiting on the recruitment of an EP physician, any facility upgrades, and equipment purchases until a thorough business plan has been completed — one that incorporates industry trends, a market analysis, and volume projections for this service. With the rising costs related to the EP field and constant pressure from third party payors, hospitals need to be confident that the program will not only meet an identified need and provide quality care, but that it will be viable, meaning that it is revenue producing and not a negative influence on the hospital’s overall bottom line. Corazon’s recommendations for completing a sound business plan related to EP services are outlined in the following list of “Top Ten Steps for Success”: Step 1. Determine what scope of services to offer. Electrophysiology services are classified into four different levels, each building on the previous. Since EP is such a complex subspecialty, there are various implications to consider regarding each level. Level I facilities implant simple devices such as pacemakers and automatic implantable cardiac defibrillators. This is a viable option for programs with limited cardiac cath lab capacity; however, we advise that the proper air handling/exchange system is in place prior to implementing Level I services. Level II adds diagnostic EP studies and simple ablations, which require the purchase of mapping equipment and increased cath lab capacity due to procedure times of one to three hours. Although surgeons and interventional cardiologists may perform some of these procedures, some organizations choose to recruit and hire an electrophysiologist. The addition of complex ablations at Level III requires the skills of an electrophysiologist, expert clinical staff, and increased cardiac cath lab capacity for procedures that can take anywhere from four to eight hours. The most advanced program, Level IV, adds a magnetic navigation system, which can approach $2 million or more in cost, depending on the technology selected. Centers that offer this high level of EP service will need to outfit a dedicated EP lab, and acquire trained staff, state-of-the art equipment, and expert physician talent. Step 2. Check state regulations. Each state dictates the stipulations for hospitals offering advanced EP services. Some states require open-heart surgery on site, especially if the program will involve placing implantable cardiac defibrillators. Some states also mandate the types of physicians and/or the credentials they must have in order to provide these services. Step 3. Consider disease prevalence. Disease prevalence is defined as the total number of cases of a particular disease existing in a population at a specific point in time. When making volume-related projections for a new or expanded EP program, a clear understanding of the disease prevalence related to atrial fibrillation, congestive heart failure, ventricle and atrial dysrhythmias, and syncope in the surrounding market area is an absolute must. These conditions are those most likely to require EP services as treatment and can be the driver of program volume. Step 4. Understand population demographics. According to American Heart Association statistics, the most prevalent need for cardiovascular care is among those aged 45 years and older. More specific to EP, one in 20 patients over the age of 70 and one in 10 over age 80 are living with a heart rhythm disorder that makes them ideal candidates for EP services as treatment. Analyzing both the primary and secondary markets in terms of the residents’ ages and any expected change in the short and long term will provide valuable information about the need for cardiovascular services. This analysis should include a review of overall demographics, gender, and race of the population. Increasing your knowledge base related to population statistics will help to identify strategies that can increase market capture and drive strategies and tactics to identify the at-risk population. Step 5. Measure mortality from cardiovascular disease. Mortality is defined as the number of deaths from a given disease in a population during a specific interval of time, usually one year. Pulling mortality statistics for your market will explain the extent to which patients are dying from cardiovascular disease. In some cases, more detailed information about exactly what type of cardiovascular disease is causing the deaths is available through a review of ICD-9 and ICD-10 data. Taking the time to appraise this information can provide a wealth of information about cardiovascular-specific conditions and their effect on patients in your market area. For instance, mortality rates above the state average may indicate lower-than-average standards of care delivery, lack of patient access to quality care, or inadequate community outreach/education activities. Step 6. Evaluate utilization rates. The utilization rate is the number of times a hospital performs a specific procedure on a specific population. By reviewing the utilization rates of certain cardiovascular, or more specifically, EP procedures, you will be able to ascertain if some procedures are above or below when compared to regional and/or national use rates. National use rates do not exist for every procedure; therefore, it is important to obtain the use rates within your particular state and compare them with your market. These use rates will then give an accurate estimate of the number of procedures your program can expect to perform. But, keep in mind that access to care drives utilization; if EP services aren’t readily available, these types of procedures could be significantly underutilized for patients who need them the most. Step 7. Review payor mix. Within any business planning process, understanding case mix is essential, as it drives overall reimbursement, and thus, projected revenue. To do this, you should work with the chief financial officer, keeping in mind that there can be significant variations in the amount of reimbursement per payor. For example, certain commercial payors may pay a percent of charges or agree to cover the entire cost of the device implant while also providing reimbursement for the actual procedure. On the other hand, reimbursement by Medicare for “primary prevention” placement of automatic implantable cardiac defibrillators requires data submission to the ACC/NCDR ICD National Registry. Further, as the Recovery Audit Contractors (RAC) begin to sweep the country, factoring projections related to inpatient versus outpatient status for these procedures will be imperative. So far, there has been no national coverage determination; the decision is still being left up to the local carriers. Programs should consider InterQual criteria in determining inpatient versus outpatient status, and should work with physician advisors to establish clinical criteria that will drive decision-making related to patient classification. It is best to discuss this with your assigned local fiscal intermediary for their definitions related to inpatient versus outpatient status. Volume assumptions for inpatient and outpatient status will need to be determined for simple ablations, pacemakers, automatic internal cardiac defibrillators, and lead and generator changes. Step 8. Assess resource and capital investments. No doubt, providing EP services comes with a high price tag. Furthermore, hospitals are pressured to provide the latest and greatest up-to-date therapies and technology — high expectations, especially for a start-up program. Overall, the level of services to be offered will dictate the equipment, supplies, staffing, and facility needs. In terms of equipment, intracardiac echo has been important in reducing the risk of perforation, but unfortunately, the cost has been a deterrent for many. Additionally, various cryoballoons can reduce procedure times by one to two hours, though the cost may be twice as much as a conventional cooled-tip catheter that yields the same result. Corazon’s advice is to work alongside your physicians in determining the items that are necessary in order to provide the utmost in quality care. In addition to equipment needs, you will need to hire the appropriate experienced staff as well as secure the necessary medical/physician coverage and mix of electrophysiologists, interventional cardiologists, or cardiac surgeons to support the full spectrum of EP services. Lastly, you may have to evaluate the need to expand bed capacity for pre-, intra-, and post-procedure patients, as the requirements for these areas should be proportional to the projected volume and associated projected length of stay. Step 9. Verify the market. “If you build it, they will come”…this phrase may hold true in some cases; however, rarely does building a successful, high-volume program rely on only the physical space. This is especially true for EP, a subspecialty in which penetration of the primary market area can be challenging, mostly due to the blurring of physician boundaries as to who cares for known or suspected patients. Those who have suffered a sudden cardiac death, or those who have known complex atrial or ventricular arrhythmias, are already under the care of an electrophysiologist. However, patients with congestive heart failure and/or atrial fibrillation usually remain under the care of their primary care physician and/or general cardiologist. They may not make a referral to an electrophysiologist when it is most optimal for the patient to receive alternative treatment. Education for these groups of specialists is necessary in order to increase their knowledge base related to the progression of cardiac conditions, alternative treatments, and when referrals to an electrophysiologist is appropriate. For these reasons, gaining patients for a new or expanded EP program can be difficult, even if the market review and demographics support such a strategy. Competition can bring additional difficulties. It is important to understand local/regional competitors, including the services they offer, the quality of care they provide, their market share, and any growth strategies. Determining the extent of your competition in the local/regional area and how best to approach it are key elements of this process. Step 10. Determine projections. Lastly, after taking all of the above information into consideration, projections as to the anticipated volumes for the new or expanded program can be developed. Projections for Years 1–5 and beyond can reveal much about what your organization needs to do to launch and sustain a viable EP service. Begin by using medical cardiac market share. Hospital Planning departments can usually help to obtain information related to internal/existing market share, utilization rates, mortality, and population statistics. Once you have gathered all the necessary information, you can make your projections, factoring in all expenses and revenue projections. This analysis will provide you with a return on investment for the program, giving a high-level financial view of whether or not to move forward with the implementation or expansion into EP. Other considerations as your program matures include the integration of EP physicians into an already established device implant program (i.e., interventional cardiologists as the implanter). Programs that are already in the ‘EP Game’ and even those just starting need to understand the implications and the overall programmatic and whole-hospital impact of adding new physicians into the mix. For instance, the addition of an electrophysiologist may cause concerns related to the implant volume, preferring the EP physician to concentrate on ablations. Finding balance between keeping the EP physician working at a highly-productive level while not threatening the existing implanter base can be a significant challenge. Programs that can overcome such issues are best positioned to succeed and experience growth in all types of procedures. Electrophysiology is a field expected to grow over many years. Following our top ten ‘steps for success’ outlined here will assist in providing the business rationale for implementing or expanding EP at your organization. Using these steps will result in a sound decision-making process, and eventually, a quality EP service. Lorraine Buck is a Senior Consultant at Corazon, a national leader in consulting, recruitment, and interim management for the heart, vascular, and stroke specialties. To reach Lorraine, email lbuck@corazoninc.com. For more information, please visit www.corazoninc.com or call 412-364-8200.