Matt Pesesky: How do you anticipate value-based payment will affect the CV space moving forward?
David Vuletich: Within the CV space, the push towards value-based payment and population health management has been years in the making. While mandatory bundling programs for coronary artery bypass graft (CABG) and acute myocardial infarction (AMI) were cancelled at the end of 2017, there does seem to be a trend toward outcomes-driven payment systems.
For instance, CABG rates are assessed under the Hospital Readmissions Reduction Program. And on a broader level, MACRA, which passed with bipartisan support, holds physicians accountable for the cost and quality of care delivered—including CV physicians, whether they own a solo practice, belong to an independent medical group, or are employed by a multi-hospital system. CMS' newest bundled payment program, Bundled Payment for Care Improvement Advanced, may allow some CV programs that invested in preparing for mandatory bundles to qualify and reap the benefits of being an Advanced APM under MACRA.
This shift toward-value based care has implications for CV leaders. For instance, while CV leaders generally have outcomes reporting down pat, they still face challenges keeping stakeholders aware of newly added quality metrics and aligning care delivery to inflect quality in those areas. And these programs could also affect consolidation in the CV space: The more expensive compliance becomes, the less likely it is that smaller practices will be able to survive. However, it's not clear how much longer physicians will be somewhat shielded from the risks of episodic payment models and may need to seek shelter through employment.
Pesesky: With downward pressure on CV program revenue, how are leaders staking claim in their markets?
Vuletich: When it comes to growth, CV leaders now need to think outside of their historic profit centers. For instance, although outpatient CV procedures tend to be less profitable, changes in technology and patient preferences are pushing CV leaders to offer more outpatient services. Take electrophysiology as an example: This procedure is growing in volume and now can be done without opening the chest cavity, which pushes a lot of traditionally inpatient volume to the outpatient space. Moving forward, technological advances like this—as well as better short-stay management—are going to be big driver of the outpatient shift. Overall, over the next five years, we're projecting around a 12% increase in outpatient cardiology cases.
Consumer studies have also shown that patients are willing to travel farther for a specialized CV service center than they are for a particular hospital or physician. In response, we're seeing CV leaders consider investments in spaces and technologies that will help them stand out as centers of excellence. For example, CV service line leaders consistently ask us about investing in a transcatheter aortic valve replacement (TAVR) program. TAVR is a minimally invasive surgical procedure that doesn't yet have a huge patient base, making it a somewhat restrictive investment for many service areas. Nonetheless, we keep getting questions about TAVR programs—likely because providers see TAVR as an opportunity to build a strong reputation as a cutting-edge or specialized center. In fact, 61 more programs offered TAVR in 2015, bringing the total up to 430 sites.
Pesesky: What technology and facility investments are top of mind for CV leaders?
Vuletich: Over the last year, we've seen new stent technology that is either absorbable or drug eluting, and the first FDA approval of a fully bio-absorbable stent really piqued people's interest. But while these technologies are promising, CV physicians have voiced concerns about their five- and ten-year outcomes. Ultimately, a more complete clinical picture of these products will be essential before they truly take off. So while these products may eventually become market standard, many of the physicians we talk to are not ready to convert a majority of their volumes here.
That said, we do expect accelerated adoption of new remote monitoring tools designed to help providers prevent unnecessary inpatient admissions. This technology is particularly impactful for heart-failure patients whose doctors can now monitor their blood pressure on a day-to-day basis and avoid unnecessary chest pain admissions, for example.
CV leaders are also mulling investments in hybrid operating rooms (OR), particularly as physicians' increasing interest in new structural heart technologies drives demand for such facilities. But CV leaders thinking about hybrid ORs should be sure to think of the investments as facility improvements; the returns are important, but they often intangible. For instance, while it can be hard to justify hybrid ORs in terms of an increase in patient volumes, the facilities can make physician recruitment easier and are becoming necessary to establish a hospital's reputation as a cutting-edge facility in the region.