R. Duane Davis, MD MBA. Reasons that health systems want a flourishing lung transplant program ◦...
25
Finance and Regulatory 101— What You Need To Know To Build and Run a Lung Transplant Program R. Duane Davis, MD MBA
-
Upload
shon-mccarthy -
Category
Documents
-
view
223 -
download
0
Transcript of R. Duane Davis, MD MBA. Reasons that health systems want a flourishing lung transplant program ◦...
Finance and Regulatory 101—What You Need To Know To
Build and Run a Lung Transplant Program
R. Duane Davis, MD MBA
Reasons that health systems want a flourishing lung transplant program◦ Profitability– $35-90 K/ case– transplant
admission- almost 10 million in profit ◦ Potential Growth– demand >>> supply- but may
be able to substantially grow the supply◦ Life years added◦ Down stream revenues◦ Research/Academic
Finance Basics
Regulatory Requirements◦ UNOS◦ CMS
Revenues◦ Professional ◦ Technical◦ Medicare Cost Report
Transplant Program Basics
Expenses ◦ Physician and Surgeon ◦ Coordinators◦ Social Work◦ Psychology◦ Pharmacist◦ Administrators◦ Data◦ Secretaries/schedulers◦ QAPI◦ Donor Call◦ Procurement/SAC fees
Transplant Program Basics
UNOS requirements--http://optn.transplant.hrsa.gov/ContentDocuments/OPTN_Bylaws.pdf
◦ Program Director◦ Primary Transplant Surgeon
least 15 lung or heart/lung transplants at least 10 lung procurements current working knowledge of all aspects of lung transplantation,
defined as a direct involvement in lung transplant patient care within the last 2 years
◦ Primary Transplant Physician ◦ Outcome triggers for review◦ No volume criteria– functionally inactive if no
transplants in 6 months
Regulatory Requirements
1. Transplant programs must have transplant surgeons and transplant physicians available 365 days a year, 24 hours a day, 7 days a week to provide program coverage, unless a written explanation is provided that justifies the current level of coverage to the satisfaction of the MPSC.
2. Transplant programs must provide patients with a written summary of the Program Coverage Plan when placed on the waiting list and when there are any substantial changes in the program or its personnel.
3. A transplant surgeon must be readily available in a timely manner to facilitate organ acceptance, procurement, and transplantation.
4. A transplant surgeon or transplant physician may not be on call simultaneously for two transplant programs more than 30 miles apart unless the circumstances have been reviewed and approved by the MPSC.
5. Unless the MPSC provides an exemption for specific reasons, the primary surgeon or primary physician cannot be designated as the primary surgeon or primary physician at more than 1 transplant hospital unless there are additional transplant surgeons or transplant physicians at each of those facilities.
6. Additional Transplant Surgeons must be credentialed by the transplant hospital to provide transplant services and be able to independently manage the care of transplant patients, including performing the transplant operations and organ procurement procedures.
7. Additional Transplant Physicians must be credentialed by the transplant hospital to provide transplant services and be able to independently manage the care of transplant patients
Program Coverage Plan
Transplant surgeon Transplant physician Clinical transplant coordinator Transplant team--center must identify a multidisciplinary transplant team
(composed of individuals from medicine, nursing, nutrition, social services, transplant coordination, and pharmacology) and describe the responsibilities of each member of the team. CMS is becoming more prescriptive
Annual volume of 10 transplants◦ Implications for starting up a transplant program
A center’s (risk-adjusted) expected 1-year patient survival and 1-year graft survival will be compared to its observed 1-year patient survival and 1-year graft survival, based on the following non-compliance thresholds
O - E >3. O/E >1.5. 1-sided p <0.05.
CMS Requirementshttp://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/GuidanceforLawsAndRegulations/Downloads/TransplantFinalLawandReg.pdf
Centers whose number of patient deaths or organ failures exceed 150 percent of what would be expected for their mix of patients are flagged. Multiple flags within a 2 1⁄2-year period trigger CMS action.
Centers have 210 days to explain the mitigating factors that led to their low survival rates. If programs can improve by the end of that period, they are allowed to continue operating as usual. In other cases, CMS will acknowledge the mitigating circumstances and grant exceptions.
The centers that can’t improve quickly or convince CMS to grant an exception are given three options:
◦shut down voluntarily, ◦shut down involuntarily◦enter into a systems improvement agreement,
or SIA. Estimated cost between $1-4 million
CMS consequences
Know and own your outcomes
If things are looking south, intervene early
internal reflection, outside assessment
If looking at a job, know their outcomesSRTR.ORG
Accounting 101– an overly simplistic look
All Programs Discharges Payor Mix Net Revenue Collection % Var Direct Cost Total Cost Var Direct Contribution Margin Net Margin
Duke Select 2 0.3% 238,760 53.1% 159,886 291,672 78,874 (52,912)
Managed Care 107 40.4% 35,431,190 63.0% 15,131,369 25,870,596 20,299,821 9,560,594
Medicare Advantage 39 11.1% 8,349,471 53.8% 4,301,820 7,328,872 4,047,651 1,020,599
Medicare 126 40.7% 14,087,064 24.9% 14,976,050 25,798,503 (888,986) (11,711,439)
Medicaid 16 5.8% 1,528,474 18.9% 2,209,516 3,635,743 (681,042) (2,107,269)
Other 6 1.5% 1,206,586 54.0% 722,078 1,228,454 484,508 (21,868)
Subtotal 296 60,841,545 37,500,719 64,153,840 23,340,826 (3,312,295)
Pass Thru 15,112,504 15,112,504 15,112,504
Total $ 75,954,049 43.7% $ 38,453,330 $ 11,800,209
Heart Discharges Payor Mix Net Revenue Collection % Var Direct Cost Total Cost Var Direct Contribution Margin Net Margin
Managed Care 14 20.7% 4,608,950 63.8% 1,802,445 2,993,364 2,806,505 1,615,586
Medicare Advantage 6 13.2% 2,297,597 49.8% 1,156,436 1,857,177 1,141,161 440,420
Medicare 25 54.3% 5,533,773 29.2% 4,504,220 7,593,334 1,029,553 (2,059,561)
Medicaid 8 11.8% 709,749 17.3% 4,108,167 1,052,968 (3,398,418) (343,219)
Subtotal 53 13,150,069 11,571,268 13,496,843 1,578,801 (346,774)
Pass Thru 2,223,389 2,223,389 2,223,389
Total $ 15,373,458 37.7% $ 3,802,190 $ 1,876,615
Lung Discharges Payor Mix Net Revenue Collection % Var Direct Cost Total Cost Var Direct Contribution Margin Net Margin
Commercial 2 0.9% 450,092 67.7% 210,772 364,772 239,320 85,320
Managed Care 48 49.8% 21,825,883 62.1% 8,986,429 15,327,059 12,839,454 6,498,824
Medicare Advantage 12 8.5% 3,047,324 50.8% 1,700,353 2,817,328 1,346,971 229,996
Medicare 40 35.5% 6,004,596 23.9% 6,424,881 10,929,616 (420,285) (4,925,020)
Medicaid 2 3.1% 362,742 16.7% 551,091 893,446 (188,349) (530,704)
Other 4 2.2% 756,495 48.2% 511,306 863,682 245,189 (107,187)
Subtotal 108 32,447,132 18,384,832 31,195,903 14,062,300 1,251,229
Pass Thru 6,879,532 6,879,532 6,879,532
Total $ 39,326,664 45.9% $ 20,941,832 $ 8,130,761
Know your costs Know your margins—Variable contribution
margin should be your focus Willie Sutton rule– go where the money is
Be a partner
Professional ◦ Transplant procedure related◦ Procurement◦ E &M services– evaluation◦ ECMO both procedure and daily management
Technical– where the real $$ exist◦ Evaluation, pre-transplant, transplant and post transplant◦ Amount of profit is dependent upon
Contracts– somewhat tied to outcomes data and competition Case mix– managed care> Medicare>>Medicaid Cost– LOS usually a good surrogate for expense
◦ Most profitable admissions cardiac and lung transplant, pediatric bone marrow
Medicare Cost Report◦ Transplant DRG does not include the cost of the organ◦ Complicated but general rules– all expenses incurred for evaluation
and procurement of donor organs are included and reimbursed by CMS at the % of Medicare beneficiaries
Revenues
Why??◦ Large amount of administrative time◦ Outreach◦ Non-billable clinical activity
How??– Depends on relationship with the hospital◦ Employee– straightforward◦ Non-employee ( Stark Laws)– need legal input
Purchase service agreements (PSA) Co-management
Transfers from the Hospital
Procurement◦ Dry runs– we have a 30+% rate◦ OPO non-compensation◦ This can be part of the Cost Report
Transfers from the Hospital
Expenses ◦ Physician and Surgeon ◦ Coordinators◦ Social Work◦ Psychology◦ Pharmacist◦ Administrators◦ Data◦ Secretaries/schedulers◦ Donor Call
Transplant Program Basics
One surgeon/one pulmonologist programs don’t work
Have to be > 10/year to stay out of CMS hell
30/year is probably the size threshold ◦ Team resources are justifiable◦ Volume sufficient for system learning◦ Profitability threshold
Sizing a Program
Orlando Regional Healthcare System, Inc. (CON #10027): ◦ The financial impact of the project will include the
project cost of $1,781,632◦ Year two incremental operating costs of
$3,615,786.◦ Does not include physician and surgeon salaries
in this estimate
Cost of Starting a Program
Lung Transplantation
• 3rd leading cause of death >142,000 per year • 2000 lung transplants/year• Large centers perform 100• Organ utilization of 17%
• Knowledge gap in the community is tremendous with respect to the applicability of lung transplant as a treatment for end-stage lung disease
Size of the program is proportional to the ability to obtain organs
Procurement surgeons/professionals tends to be the limiting factor◦ Competing demands and interests◦ Under valued
Direct compensation Alternative ways of spending time
Intellectual/quality of life financial
Procurement Function
Almost all of the team will be expenses to the program◦ Pulmonary if they do enough procedures-
bronchoscopy, biopsy, airway intervention will be profitable otherwise no
◦ Alignment across the various constituents Medicine/Pulmonary CT Surgery Hospital
Importance of the Team
Referrals, evaluations, listing can/often is rate limiting
Coordinator Schedulers MD review Outreach Referral relations Web presence-- SRTR.org
Intake Function
Transplant is highly regulated and consequences of underperformance are real
Fully publically reported Highly profitable for the hospital, less so for
the MD’s◦ Dependent on Volumes
Summary
