Procedures may save money by reducing length of stay, complications

November 1, 2007

Persuading cash-strapped hospitals to commit resources for a clinical interventional radiology service may seem a hard sell. But 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 (DRGs) used in the U.S.

Persuading cash-strapped hospitals to commit resources for a clinical interventional radiology service may seem a hard sell. But 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 (DRGs) used in the U.S.

Although reimbursement systems differ widely across Europe, speakers at the 2007 Cardiovascular and Interventional Radiological Society of Europe (CIRSE) meeting in Athens agreed that DRGs, which are already in place in some countries, will be coming to others as soon as 2009 or 2010.

"That means you have a flat reimbursement rate for each diagnosis. So the hospital is very interested in efficient resource allocation and not just doing everything possible but doing what is reasonably possible," said Dr. Christof Binkert, who operates an interventional radiology service at Kantonsspital Winterthur in Winterthur, Switzerland.

How does interventional radiology play into that? In two ways, he said. Interventional procedures not only are less expensive than open surgery, but minimally invasive procedures also are ideal for helping to reduce hospital length of stay. Keeping inpatient days to a minimum will be a major goal for hospitals operating under DRGs.

Performing procedures under image guidance may also decrease the risk of complications, which is the main thing that benefits the hospital. By eliminating additional procedures needed to manage complications, costs are reduced, Binkert said.

Dr. Franco Orsi, who heads an interventional radiology program at Instituto Europeo di Oncologia in Milan, advised interventional radiologists to learn a second language.

"We have to learn the language of finance to have a relationship with the hospital administrative staff," he said.

The first step for interventional radiologists, Orsi said, 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 that obtain revenue from customers, such as outpatient services, from intermediate cost centers that are complementary to final cost centers, such as interventional radiology. A clinical service would move interventional radiology from an intermediate to a final cost center, he said.

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 break-even 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. Economic data from the inpatient unit were presented at the CIRSE meeting by Dr. Daniel Konda.

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 Euro 5077 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 ( Euro 6860) reflected the high cost of materials, Konda said.

By comparing reimbursements and final costs, the interventional radiology service calculated yields for each inpatient procedure. With a reimbursement of Euro 8190 and cost of Euro 5077, limb salvage had the highest yield ( Euro 3112.24). Next was uterine artery embolization, with a reimbursement of Euro 7305 and cost of Euro 4620 for a positive yield of Euro 2685.

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 Euro 497,881, Konda said. He thinks radiologists must provide incentives for the hospital administration by offering economic data that will justify establishing the service.

"Telling hospitals about the requirements for an interventional radiology service is the toughest part of the convincing process because you need resources, you need dedicated clinical space and personnel, and that costs them money," Binkert said.