By Megan Tooley, Practice Manager, Cardiovascular Roundtable and Sebastian Beckmann, Consultant, Service Line Strategy Advisor
From 1999 to 2004, health spending for the elderly was growing quickly—3.8% or $500 per person per year. However, in 2005 this growth started to slow—spending increases fell by over half to 1.1% growth each year and growth rates fell by two-thirds. By 2012, actual spending was $2,899 (or 12%) less than would be expected.
Policy analysts quickly hopped on the spending slowdown, devoting articles, think pieces, and policy reports to what might be behind it. Now, a new study might have found an intriguing answer.
Researchers in the study broke down spending (for Medicare and non-Medicare services by all payers) from 1999 to 2012 by condition. The surprising result? Over half (56%) of the slowdown was due to reduced spending on cardiovascular and cerebrovascular diseases. By 2012, elderly patients were spending $1,629 less than would be expected on cardiovascular disease events and risk factors.
While the trend in record-low Medicare spending growth appears to be reversing somewhat as of 2017, this slowdown—and the surprisingly large role of reduced cardiovascular spending—has important implications for providers.
Let's break down why this spending may have decreased and then explore how providers should best respond today. And, to learn more about the trends impacting the cardiovascular space in 2019, make sure you register for our upcoming webconference on Feb. 19th.
Explaining the heart disease spending slowdown
If you dig into the data one trend is clear: The elderly were spending less money on cardiovascular disease largely because they weren't having as many acute events like heart attacks. This decrease is supported by other data. Since 1999, hospital admissions for ischemic heart disease have decreased by 56% and admissions for stroke have fallen by 41%.
This decline in acute events is likely driven by an increased use of cardiovascular medications, especially off-patent preventive medications like statins and the rise of daily Aspirin use. A number of medications went generic around 2004, pushing down prices and making them more affordable for seniors. The researchers calculate that this increase in preventive medications accounted for 51% of the cardiovascular spending slowdown (or one quarter of the total slowdown).
The researchers also tied advances in surgery and medical devices to the decrease in acute events. We'd add in that the push toward more medical and conservative care options also led patients to detect heart disease earlier and to treat it before a serious event occurred.
Why we're not off the hook yet
Sure, the decrease in spending is encouraging, and due to the initiatives we know work in population health: preventive treatments and more medical management. Yet that doesn't mean that we're off the hook as a country in regards to cardiovascular disease spending.
In fact, we expect that it will continue to be one of the major cost drivers in the U.S. health system—and likely rise more than other spending drivers. Cardiovascular care is resource-intensive, in terms of both costly procedures and clinician demand. And patients are becoming increasingly costly and comorbid, resulting in more complex, acute inpatients. One projection estimates that 45% of the U.S. population will have some form of cardiovascular disease by 2035. And many of these patients have comorbid conditions, leading to increasingly cross-continuum, expensive care needs. As a result, the American Heart Association forecasts that the cost of cardiovascular disease will go from $555 billion in 2016 to $1.1 trillion in 2035.
What this means for providers
With costs still increasing, patients growing more complex and comorbid, payers are putting increasing pressure on cardiovascular (CV) providers to manage spending. The continued push towards conservative care further changes how providers manage CV patients. Taken together, this means a more challenging landscape with a greater emphasis on lower-cost settings of care.
Here are three ways CV providers can respond:
Define a clear outpatient strategy to address payer pressure for lower-cost care.
Payers are increasingly pushing patients to the lower-cost outpatient setting. We've seen that trend in the past—for example with Recovery Audit Contractor (RAC) audits on inpatient percutaneous coronary intervention (PCI) procedures. What's different today is the shift towards the freestanding environment. CMS will reimburse ambulatory surgical centers (ASCs) for 17 diagnostic cath codes starting this year, and some commercial insurers have already gone further to cover PCI and catheter ablations. This is a particular challenge because the freestanding setting opens the door to competition from office-based labs and ASCs.
As a result, CV service line leaders need to define a clear, forward-thinking outpatient strategy. Whether investing in new ambulatory sites, shifting services to the outpatient department, or building a new comprehensive ambulatory facility, it's clear that CV leaders must strategically rationalize service location to proactively adjust to changes in the market.
Manage patients across the care continuum to reduce spending and improve outcomes for complex patients.
“It's no longer enough to treat heart failure patients in the hospital and discharge them home”
As patients grow more complex and comorbid, CV programs need to ensure they can manage their diseases beyond the inpatient setting. Organizations need to build a care network across settings of care to manage patients across the continuum. For instance, it's no longer enough to treat heart failure patients in the hospital and discharge them home.
A next generation approach will treat patients in the community and home settings leveraging telehealth and virtual visits; provide more clinic services to reduce ED visits; target comorbidities and non-clinical needs; and provide clinical decision support tools to referring physicians. To make this cost effective, programs should equip APPs and nurses to work to top-of-license. The impact is reduced spending for payers, avoided cost for health systems, and more upstream access to patients earlier in their disease progression.
Match service offerings to market need and program identity to avoid unnecessary spending.
Demand for inpatient CV services continues to decline—we don't anticipate national growth in any inpatient subservice line over the next five years. As a result, programs will have to be more strategic about the types of high-end services they choose to invest in. That should be informed not only by market dynamics, but also by each program's ability to draw patients with the relevant diseases and manage those patients cost-effectively before and after their hospital-based treatment. CV providers need to carefully select the disease-based programs that will serve as differentiators in their market and build a comprehensive program around those conditions. Failure to do so risks overspending on inpatient investments that fail to have an impact on the market.
We'll be speaking in far greater depth about these strategies on Feb. 19th at 1 p.m. EST for our webconference on Cardiovascular Market Trends. We'll be covering the important trends CV leaders need to know that are impacting demand and the service line's financial outlook. We'll also be sharing the implications for providers and the need-to-know strategies you can take to respond.
Register for the Webconference
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