A Revolution Is Coming in Heart-Disease Treatment


by Bobby Jindal and Neil M. Gheewala

A cancer-care revolution that started in the 1980s is spreading to cardiac care. In the 1980s, cancer was treated almost exclusively in hospital settings. These days, more than 80% of all cancer care happens in community outpatient centers, which achieve better outcomes, keep costs low, and offer a more agreeable environment to both patients and caregivers.

Heart disease is poised for a similar revolution, with the potential to have an enormous positive effect on the U.S. healthcare system. Cardiovascular disease already…

A cancer-care revolution that started in the 1980s is spreading to cardiac care. In the 1980s, cancer was treated almost exclusively in hospital settings. These days, more than 80% of all cancer care happens in community outpatient centers, which achieve better outcomes, keep costs low, and offer a more agreeable environment to both patients and caregivers.

Heart disease is poised for a similar revolution, with the potential to have an enormous positive effect on the U.S. healthcare system. Cardiovascular disease already accounts for 1 out of 7 healthcare dollars spent, and the total cost is expected to double and then some, to $1.1 trillion by 2035. Advances in cardiovascular medicine are creating a shift toward preventive care, shorter hospital stays, lower costs and better outcomes.

The Centers for Medicare and Medicaid Services recently approved 14 new reimbursement codes for outpatient ambulatory surgical centers, or ASCs, with more codes likely to be approved in the coming years. The reimbursement rates for these new codes are an average of 50% cheaper for ASCs than they are for hospital outpatient departments. In addition to significant savings for payers, patients will benefit from fewer physician visits, same-day treatments and better outcomes. (We are both board members, and Dr. Gheewala is a staff member, of a company that owns an ASC and has two more under development.)

Medicare has paid hospital outpatient departments nearly twice as much as it pays independent physicians or ASCs for the same services. Even off-campus facilities, which are hospital-owned but otherwise identical to independent physicians, have until recently enjoyed higher rates. Making payments site-neutral and shifting more services to outpatient settings would reduce Medicare spending by more than $150 billion in the next decade. It would reduce beneficiary spending on premiums and cost sharing by more than $90 billion over that time.

Moving patient care to outpatient settings will require new investments in information technology and billing systems as well as record-keeping and care protocols. Hospitals claim they need higher margins to compensate for costly, complicated cases and to subsidize other departments, but the accounting to support these claims is often opaque. Indirect subsidies are inefficient and subject to manipulation. They have led to a lack of price transparency and large cost variability. It would be better to replace these subsidies with targeted direct payments for outlier patients with more complications and unprofitable services such as pediatrics. Cardiovascular physicians will have to do what oncologists did—invest millions in new facilities, treatment protocols and patient-outcome monitoring systems.

The expense and complexity of this undertaking might drive cardiologists to aggregate into larger groups. The resulting economies of scale would strengthen their negotiating hand with payers and help them secure favorable financing for new buildings and technology. More than 80% of the nation’s cardiologists currently work for integrated health systems, and the largest independent practices have fewer than 100 physicians. Many doctors will welcome an alternative to the bureaucratic, misaligned hospital-employed model. They’ll love not being treated like assembly-line workers trapped in logistical labyrinths.

Cardiovascular physicians who derive a significant portion of their income from services like imaging tests will have to be careful. So-called Stark laws prohibit self-referrals. Doctors will need to guard against this by adopting compensation protocols and other compliance safeguards.

The main obstacle to the transformation of heart healthcare isn’t medical but political. Despite moves by CMS to encourage outpatient care and site-neutral payments, many states either ban certain cardiac procedures outside hospitals or require certificates of need for new ASCs. California, New York, Pennsylvania, New Jersey, Virginia and Massachusetts limit many procedures to hospitals, while North Carolina, Tennessee, Illinois and Washington require certificates of need.

There has been incremental movement toward competition and freedom. Michigan and Mississippi recently moved to allow procedures in ASCs that obtain a certificate of need. State legislators need to update their laws to keep up with modern medical practices. Regulatory capture isn’t unique to healthcare, but it imposes both financial and medical costs on patients.

Cardiac care is on the cusp of a major transformation, but hospitals need not be left behind. They can forge symbiotic partnerships with cardiovascular groups that allow them to secure referrals without the financial and management burdens of owning the practices. Heart patients will benefit most, but only if lawmakers have the courage to take on entrenched interests.

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