Interventional units win over managers on value

February 7, 2008

Persuading cash-strapped hospitals to commit resources for a clinical interventional radiology service may seem a hard sell. But European interventional radiologists can make a strong case by concentrating on economics, especially now that more and more hospitals in Europe will be adopting the flat-rate reimbursement system based on diagnosis-related groups used in the U.S.

Persuading cash-strapped hospitals to commit resources for a clinical interventional radiology service may seem a hard sell. But European interventional radiologists can make a strong case by concentrating on economics, especially now that more and more hospitals in Europe will be adopting the flat-rate reimbursement system based on diagnosis-related groups used in the U.S.

Although reimbursement systems differ widely across Europe, speakers at the 2007 Cardiovascular and Interventional Radiological Society of Europe meeting agreed that DRGs, which are already in place in some countries, will be coming to others as soon as 2009 or 2010. Minimally invasive procedures are less expensive than open surgery and help reduce hospital stay. Keeping inpatient days to a minimum will be a major goal for hospitals operating under DRGs, said Dr. Christof Binkert, who operates an interventional radiology service at Kantonsspital Winterthur in Switzerland.

The first step for interventional radiologists, according to Dr. Franco Orsi, who heads an interventional radiology program at Instituto Europeo di Oncologia in Milan, is to understand the overall process of hospital financial management, beginning with the cost center approach for measuring costs. The cost center approach distinguishes final cost centers, such as outpatient services, that obtain revenue from customers from intermediate cost centers, such as interventional radiology, that are complementary to final cost centers. A clinical service would move interventional radiology from an intermediate to a final cost center.

Interventional radiologists also need to know how much each procedure costs by determining the amount in fixed costs for existing facilities and staff and the variable costs for devices, etc. And they need to set a breakeven point to tie total income with total cost.

The interventional radiology service at Policlinico Tor Vergata in Rome has been gathering information on mean procedure costs, mean hospital costs, and total costs per patient for various procedures since 2005. The service includes a four-bed inpatient unit and a four-bed day hospital.

For the inpatient portion of the interventional radiology service, which treated 609 patients from June 2005 to June 2006, the two highest cost procedures were limb salvage and iliac artery stent grafting. The total cost of $7334 for limb salvage was due to prolonged hospitalization.

Average hospital length of stay was 3.2 days, which accounted for 40% of the total cost. Iliac artery stenting had a relatively short hospital stay of 2.25 days, but its high cost ($9914) reflected the high cost of materials, according to Dr. Daniel Konda, an interventional radiologist at the clinic.

By comparing reimbursements and final costs, the interventional radiology service calculated yields for each inpatient procedure. With a reimbursement of $11,837 and cost of $7334, limb salvage had the highest yield ($4503). Next was uterine artery embolization, with a reimbursement of $10,558 and cost of $6677 for a positive yield of $3881.

All interventional procedures ended up with a positive financial yield, and the inpatient interventional service as a whole had a final yield for the year of $719,60. Konda said that radiologists must provide incentives for the hospital administration by offering economic data that will justify establishing the service.

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