The Business of Liver Transplantation

Robert S. Brown, Jr., MD, MPH Associate Professor of Medicine & Surgery Chief, Division of Liver Disease & Transplantation Columbia University College of Physicians & Surgeons New York-Presbyterian Hospital

Robert S. Brown, Jr., MD, MPH

I have no financial relationships to disclose with in the past 12 months relevant to my presentation My presentation does not include discussion of off-label or investigational use

Motto of Transplant Hepatology

Now
Whoever you are--I have always depended on the kindness of strangers

Tennessee Williams

Clinical Hepatology in 2005

Challenges
Shortage

hard work and cognitive-fellows want more procedures Cognitive collections<cost Need to depend on other income sources
GI Division revenue Doing GI--cannibalize procedures from referring MDs Research Transplantation

Clinical Hepatology in 2005

Solutions
Transplant

is the best answer as it provides a full range of tools to hepatologist but need to make the numbers work Adequate staffing -- prevent burnout Adequate finances If you build it (right) they will come

Liver transplantation: why?

Hospitals

want this service -comprehensive transplant center Liver transplant programs make hospitals money and improve quality of care Catalyze translational and basic research

Liver Transplantation
How to afford it?
Hepatologists

collections<cost Drain on GI can leads to significant rifts Hepatologists generate significant income for
Hospital Surgery, anesthesia Radiology Endoscopists, cardiology

Liver Transplantation
How to afford it?
Have

only surgeons Get Hospital support for hepatologists Improve contracting Create an integrated business unit with surgeons and hospital Need to move beyond piece-work mentality

Liver Disease Center

Organizational goals
Medical/Surgical

Group Practice Long term partnership with hospital Global contracting Service line concept

Liver Disease Center

Why would partners want it?
Surgeons like to operate--a lot Inpatient and Outpatient patient care needs are high and growing

In MELD era need to care for very sick patients for transplant program to survive HCC--need to screen and manage

List management and outreach are critical Theres enough money--share with partners not poorer divisions in surgery

Liver Disease Center

Why would partners want it?

Surgical model 7 Surgeons 1 hepatologist 100 OLT Surgeons <15 cases/yr Only can evaluate 10 cases/week

Medical Model 3 Surgeons 4 hepatologists 100 OLT Surgeons >30 cases/year Can evaluate >40 cases/week Savings = 1 FTE + salary differential

Liver Disease Center

Inpatient care

Medical and Surgical patients, not limited by diagnosis (e.g. HCC) Need dedicated team for continuity of care and education Dedicated unit improves quality of care and education of patients and families Housestaff - ideally medical and surgical residents PA/NP ARE needed Ensure compliance with protocols and clinical pathways, educate housestaff Daily rounds with two attendings

Liver Disease Center Outpatient care

Joint practice-hepatology and surgeon Each patient assigned to primary hepatologist and NP/PA Transplant Coordinators--preferably NP/PAs
Routine management of pre-OLT candidates and Postoperative immunosuppression Hepatology practice and research patients Patient education, both pre and post

Clerical support and electronic data essential Surgeons participate in evals, hepatobiliary surgery and immediate post-op period

Contracting for Transplant

How to estimate cost
Cost

driven primarily by length of stay--ICU and total Hospital costs are largest component Medication costs relatively constant except for IV infusions

Liver Transplantation
Components of cost
Evaluation Candidacy (per month) Procurement Hospital (to discharge) Physician fees Follow-up Immunosuppressants Total Average Charge ($) 11,000 10,600 24,700 188,900 42,600 26,400 10,300 314,500

From Milliman and Rob ertson, Inc., R. Hauboldt, 1996 . accessed at: http://www .gao.gov/spec ial.pubs/ organ/ chapt er7.pdf# search ='gao%20a nd%20c o sts%20and%20or gan%20tr ansplant'

Liver Transplantation
Components of cost
Hospital

Hepatology
M e dications Physicia n Labs Organ procur e me nt

Cost of Liver Transplantation

Pre-transplant factors
Recipient
Dialysis Mechanical

Age

ventilation Advanced liver disease, high MELD Retransplantation

Cost of Liver Transplantation

Peri-transplant factors
Preservation

time Surgical complications CMV infection Rejection treatment

Contracting for Transplant

3 Phases
Phase I--pre-OLT. Can separate initial evaluation Phase II--OLT admission +/- 30-90 days post-OLT Phase III--post-OLT care

Hepatologists involved in all 3 phases Phase I and III usually reimbursed as % charges Phase II usually contracted amount with outlier provision Hepatologist is poorly reimbursed, particularly in Phase II (or any inpatient care)

Contracting for Transplant

Phase I

Evaluation
Medical Surgical Tests (radiology, laboratory, cardiac)

Pre-transplant management
Mostly medical care Hospitalizations for complications lucrative for hospital, not physicians Variable based on waiting time Other than discounted charges, difficult to contract for Eliminating/reducing this phase major advantage of living donation

Contracting for Transplant

Phase II
Transplant

Admission

Surgery, anesthesia, radiology well reimbursed Often money loser for medicine Hospital profit most marked
Post-op

care (up to 90 days on average)

Often included in global Only a problem if readmission or iv infusions given in clinic Surgical post-op visits traditionally not billed

Contracting for Transplant

Phase III
Long-term post-op care by physician or surgeon No good reimbursement for lab review Most cost-effective strategy is to limit care to immunosuppression and transplant related care and defer other issues to primary/referring MD More limited hospital profit (except for biopsies, readmissions)

Contracting for Transplant

Example $25 K Profees, LOS 8 days
Charges
Surgery Hepatology Anesthesia Radiology Others $20,000 $1000 $7000 $4000 $5000

%
54% 2.7 19 11 15

Reimbursement
$13,500 675 4700 2700 3300

Contracting for Transplant

Solutions
Charges and RVU based allocation of contracted amount will be insufficient for hepatology Majority will go to surgery, anesthesia and radiology--50 OLT will pay for 1 FTE anesthesia and 0.5 FTE of hepatology NP Solutions

Joint practice with surgery Management fee--~20% (~$5K) removed from risk pool

Economics of Transplantation
How to make a profit

Strategy 1-Dont do hard cases

Strategy 2-Do hard cases but do them right
Shot selection-donor/recipient matching No sympathy transplants

Minimize complications and rejection

Better outcomes are lower cost

Know your costs and dont contract at a loss

Volume will equalize outliers but if mean cost>reimbursement cannot make it up with volume Be wary of market share arguments, rumors about competition Risk-based contracting

Transplant Hepatology
The future
Reclaim procedural revenue Comprehensive care like cardiology

Ultrasound--probably all GIs should do Transjugular biopsies and pressures Percutaneous tumor therapy Laparoscopy Probably no colonoscopy, just EGD +/- ERC, ESO

Better care and more appropriate decisions Reason for additional year for CAQ--will attract more fellows ASHE

Transplant Hepatology
Summary
Hepatology requires an integrated business unit that recognizes downstream revenue Surgery and hospital are necessary business partners--deliver value to partners Know your costs, make the money work and embrace collaboration The future will bring more procedural revenue into hepatology Motto for tomorrow -- the futures so bright I gotta wear shades--Timbuk3