The Electrophysiology Advantage at Naples Community Hospital - Research Paper Example

? Dr. Andrew Yin & Heart Rhythm Specialists The Electrophysiology Advantage at Naples Community Hospital Executive Summary Dr. Andrew Yin is a seasoned Electrophysiologist just beginning his tenure in Naples, FL. Dr. Yin is skilled in a variety of advanced mapping procedures, particularly with regard to the left atrial procedures. This proposed collaboration between the NCH and Heart Rhythm Specialists will enable the large number of the local population in need of this type of procedure to avail of Dr. Yin’s unique expertise, while simultaneously providing a viable financial opportunity for the NCH. This report will discuss the financial gains NCH stands to realize per ablation procedure, highlighting cost and reimbursement. The material will show that by having Dr. Andrew Yin performing these procedures, the hospital’s reputation will be enhanced by Dr.Yin’s service, and its financial condition benefitted by the favourable cost-to-charge ratios that redounds to a significant profit contribution for the hospital. Additionally, the radiology department at NCH has been asked by Dr. Yin to upgrade their CT equipment to have the ability to do gated studies, giving Dr. Yin the ability to do Atrial Fibrillation procedures and incorporate the CT images into the St. Jude Medical Ensite mapping system. This amounts to an $ 80,000 capital investment to the hospital. The financial analysis will show the return on this investment from Dr. Yin’s ability to perform these specific cases. Table of Contents Page Executive Summary………………………………………………………………….2 Table of Contents…………………………………………………………………….3 Proposal………………………………………………………………........................4 Recommendations………………………………………………………………..….12 Proposal Naples Community Hospital’s position as a leader among healthcare institutions in the country will be well served by its acquisition of the services of Dr. Andrew Yin and the additional capital equipment needed to support these services, for his advanced cardiac ablations. Dr. Yin and his group have a highly realistic forecast of expected case volume and also a very cost effective approach. The fiscal opportunity that NCH has to benefit is significant. The following information will show a breakdown of Dr. Yin’s specific cases, costs to the hospital per case, and the profits they will generate to the facility. Purchasing the additional capital needed in the radiology department will be well spent funds and the ROI’s will show the speed in which this investment will be returned and the additional profits these cases will generate to NCH. Dr. Andrew Yin, M.D. Dr. Andrew Yin is a physician with 6 years of experience and has established a renowned practice in Internal Medicine, Clinical Cardiac Electrophysiology, Cardiovascular Disease, and Cardiology. Dr. Yin’s specialty is in cardiology and clinical cardiac electrophysiology. He obtained his medical degree at The State University of New York, Downstate - Brooklyn, NY. He completed his residency and fellowship at Thomas Jefferson University Hospital- Philadelphia, PA. He has special expertise in ICD Devices, CRT Devices, Pacemaker Devices, Atrial Fibrillation Ablation, VT Ablation, SVT Ablation, all types of complex ablation procedures and heart rhythm disorders. Dr. Yin is also a Health grades recognized doctor. Among all the physicians practicing in the United States, Dr. Yin ranks among the top 20% in terms of procedures costs to the hospital. His ROI’s to a facility are some of the best in the country when comparing the national averages. Cost projections Dr. Yin is very experienced in cardiac ablation procedures, and very much steeped in all complex left sided procedures-i.e., atrial fibrillation. While the medical benefits to the patients of these procedures are of themselves worthy of favorable consideration, the financial advantages provide further motivation. Below are some of the procedure costs for Dr. Yin’s cases. Atrial Fibrillation Procedure Specific Costs Coronary Sinus Catheter Inquiry 4French Ref# 81531 $400 Spiral Mapping Catheter Inquiry Optima 1,200 Velocity Patches Ref# 100003331 950 Needle BRK Ref #407200 150 Intracardiac echo ICE Catheter 2,100 Ablation Catheter Irrigation ablation catheter 1,300 Total case cost to hospital for Atrial Fibrillation $6,000 SVT Procedure Specific Costs Coronary Sinus Catheter Inquiry 4French Ref# 81531 $400 Velocity Patches Ref# 100003331 900 Ablation Catheter Irrigated Ablation Catheter 1,700 Total case cost to hospital for SVT $3,000 Right Atrial Flutter Case Specific Costs Coronary Sinus Catheter Inquiry 4French Ref# 81531 $400 Velocity Patches Ref# 100003331 950 Ablation Catheter 8MM Ablation Catheter 900 Total case cost to hospital for SVT $2,250 AV Node Ablation Case Specific Costs Ablation Catheter 8MM Ablation Catheter $900 Total case cost to hospital for AV Node Case $900 Revenue projections Dr. Yin’s cost efficient approach provides attractive gross profit potentials for the hospital. This is because current reimbursement well exceeds defrayal of the specific costs to the hospital of undertaking the procedures. The following table illustrates the potential high revenue margins that the procedures can generate for the hospital with the use of the 3D Mapping equipment and its disposable catheters and supplies. National average procedure costs are below: Cost Comparison: The National Average and Dr. Yin’s procedures National Average Dr. Yin SVT ablation $ 4,500 $ 3,000 Atrial fibrillation ablation $ 8,200 $ 6,000 Atrial flutter ablation $ 4,000 $ 2,250 AV node ablation $ 2,000 $ 900 Specific Costs of Procedures Revenue (Cost) SVT Procedure Right Atrial Flutter Procedure AV Node Ablation Atrial Fibrillation Procedure Medicare reimbursement $ 11,145 $ 11,145 $ 3,922 $ 11,145 Case cost to hospital ($ 3,000) ($ 2,250) ($ 900) ($ 6,000) Gross profit to hospital $ 8,145 $ 8,895 $ 3,022 $ 5,145 Gross profit margin 74% 80% 76.5% 46% The proportion of the case cost to gross profit to the hospital for the four procedures tabulated above are graphically rendered in the pie charts following. The current CPT codes for the respective chest scans would fall under one of the following: -75571-26 modifier $ 27.22 -75572-26 modifier $ 83.02 -75573-26 modifier $ 120.78 -74474-26 modifier $ 113.98 These codes can be cross referenced by the facility and the most suitable utilized accordingly. The calculation for gross profit provided above is premised on the possible reimbursement from Medicare and the direct cost for the procedure. It did not account for the cost of room, nurses’ salaries, and other overhead which, when combined with the direct cost for the procedure, should comprise the total cost per procedure. According to NCH cost center statistics, the following information has been determined for cardiac catheterization procedure: Cost Center Statistics dated October 2, 2013 NCH Downtown Naples Hospital Cardiac Catheterization Annual Total Costs Gross salaries 2,728,637 Total costs 9,129,776 In-patient charges 37,840,888 Out-patient charges 34,703,840 Ratio Cost/Charge 0.1259 The foregoing data provides useful information about the ratio of the cost to the charge associated with cardiac catheterization, where cost is the amount the hospital defrays while the charge is the amount that the hospital bills the patient. The differences in in-patient and out-patients charges indicates that the total costs against which the charges are compared already include cost of rooms, salaries of nurses, and the necessary use of facilities included in the treatment. The table preceding juxtaposes costs and charges, from which the amount of net profit contributed by this particular service. The amounts charged by the hospital to both in-patients and out-patients exceed the total costs of the procedure. The fact that the ratio of cost to charge is less than 13% indicates that a large contribution margin of 87% is realized by the hospital in the case of Naples, from the point of view of a total cost analysis. Recommendations Physicians with highly specialized skills perform complex ablations and cardiac device implantation. Throughout our ever changing medical environment some physicians can lead the pack in not only developing these skills, but by being a significant leader in hospital spending sensitivity and profit margin results. The national procedure cost averages are shattered by Dr. Yin and having him partner with an institution and perform these procedures is tremendously profitable. Please analyze Dr. Yin’s skills and profitability. Directing the attention to specifically atrial fibrillation procedures, Heart Rhythm Specialists have forecasted a conservative propensity to perform an average of 7 cases per month. This would mean utilizing the new purchased radiology equipment for each case. The profit to the Hospital per atrial fibrillation procedure is $ 5,145. At 7 per month and 84 per year that generates an average profit margin of $ 432,180 at the end of the fiscal year. This breaks down to $ 36,015 profit per month. The initial capital investment of $ 80,000 in radiology will be recovered after 2 and ? months. The case forecast of 7 is being very conservative and is a figure on the lower end of the group’s future projections. 8-10 cases are very feasible in the near future. Please take the figures and the profitability that atrial fibrillation cases can bring to the facility under advisement. This is a great opportunity to partner together with Heart Rhythm Specialists and service advanced arrhythmia disease states and generate significant profits to NCH. Read More