Disclosures Cost and Value Considerations in Adult Deformity - PDF document

11/4/16 Disclosures Cost and Value Considerations in Adult Deformity Surgery • Research/Institutional Support: – NIH, AO Spine, OREF AOA The Role of Innovations and Bending the Cost Curve • Honoraria: – Medtronic, DePuy, Stryker, Globus, RTI • Ownership/Stock/Options: – Providence Medical, Simpirica Sigurd Berven, M.D. • Royalties: Professor in Residence – Medtronic University of California San Francisco Overview Healthcare Deficiencies • Sustainability Challenges in Deformity Surgery – Quality and Complications – Costs • Bending the cost curve – Disruptive Technologies/Cost-saving interventions – Physician Leadership/Stewardship and Cost Awareness • Payment reform as a disruptive innovation – Alternative Payment Models – Appropriate Use Criteria – Transition from Fee for Service to Value-based care – Improve quality and value through integrated care pathways 1

11/4/16 Cost of Healthcare What do we get for what we spend? • 2009 US Healthcare budget= $2.5trillion – 17.3% of GDP • What are we willing to pay? • What do we Value? You Get What you Pay For Rajaee SS, Bae HW, Kanim LE, Delamarter RB. Spine (Phila Pa 1976). 2012 Jan 1;37(1):67-76. 2

11/4/16 Correlating Spending and The Quality Chasm Outcomes • Patients in higher spending regions are: • IOM identified deficiencies of quality of care, and little financial reward for improvement of quality of care (2001) – Less likely to receive evidence-based treatments (effective care) • Alternative Payment Models: – No more likely to receive elective major surgical – Performance-based payments procedures (preference-sensitive care) – Bundled Payments- Shared Risk – Accountable Care • Wennberg 2004 • Patients with selected serious conditions such as • Intent is to provide a financial incentive for an evidence-based heart attacks over time found that survival was approach to care slightly worse in the higher spending regions • Fisher, 2003 Pay for Performance Measuring Quality is Challenging • Pay for Performance Initiatives may provide a financial • Choosing Appropriate Dashboards incentive for high quality care • Setting appropriate standards – Transition from Volume to Quality Metrics • Controlling for covariates • Challenge is to define parameters that best represent • Risk adjustment and stratification quality care and consensus practices 3

11/4/16 Evidence for Quality of Care • Process Variables – Antibiotic Dosing – DVT Prophylaxis – Documentation • Utilization Variables – Rates of surgery – Rates of imaging • Complications – Unscheduled return to OR – Revision within 180 days – Infection 4

11/4/16 Optimizing Value Value Proposition Improve outcomes • The right goal of healthcare is to provide and quality of care superior patient value – Porter and Teisberg, 2006 The value proposition in healthcare is an analysis of Decrease the benefits of care relative to the direct cost and risk costs of care of providing the care Value= Fxn(Benefit/Cost) Bending the cost curve in Musculoskeletal Optimizing Value Innovations • Rapidly increasing spending is largely accounted for by the Improve outcomes widespread adoption of new technologies that do not provide an incremental improvement in clinical outcomes 1,2 and quality of care Ondra’s Two cardinal rules for the value equation: Current trend $60,000 Current trend $50,000 • Geometric rate 1) The numerator can NEVER be decreased $40,000 of rise in cost Decrease $30,000 without 2) The absolute value must increase costs of care $20,000 corresponding $10,000 benefit $0 2010 2015 2020 2025 2030 2035 5

11/4/16 Bending the cost curve in Musculoskeletal Care • Rapidly increasing spending is largely accounted for by the widespread adoption of new technologies that do not provide an incremental improvement in clinical outcomes 1,2 • 5% reduction $60,000 Current trend Short-term cuts across the board $50,000 for $40,000 reimbursement $30,000 for healthcare $20,000 $10,000 SGR Repeal: Encouraging APM $0 2010 2015 2020 2025 2030 2035 Participation 22 Bending the cost curve in Musculoskeletal Care Sustainable Deformity Surgery • Rapidly increasing spending is largely accounted for by the widespread adoption of new technologies that do not provide • Bending the Cost Curve/Optimizing Value an incremental improvement in clinical outcomes 1,2 – Adopt Technology in response to ICER • A technology may add $60,000 Current trend value if it improves – Surgeon Awareness of Cost Short-term cuts outcomes or reduces $50,000 Early investment for long-term savings • Cost Minimization costs $40,000 – Develop Appropriate Use Criteria • A short-term investment $30,000 in value-adding – Establish Systems to Promote Good Outcomes $20,000 technologies and • Multidisciplinary Conferences systems may bend the $10,000 cost curve and reduce – Reduce Complications spending over time $0 2010 2015 2020 2025 2030 2035 – Reduce Reoperations/Readmissions – Improve Durability 6

11/4/16 The Promise of New Technology The Promise of New Technology • Save Lives • Improve Access to Information • Increase Productivity • Reduce Errors • Improve Quality of Life Moore’s Law Applied to Medicine • Every 2 years would result in a halving of: – Infant mortality – Implant failure – Readmissions – Reoperations – Complications 7

11/4/16 Moore’s Law Applied to Technology in Healthcare Medicine • Every 2 years would result in a halving of: – Infant mortality – Implant failure – Readmissions – Reoperations – Complications Drivers of Increased Healthcare Technology in Healthcare Expenditure in the US Ginsberg PB. Controlling health care costs. N Engl J Med. • 2004;351:1591–1593. • Development of New Technologies that add cost without clear improvement outcome or performance • Enthusiastic adoption of New Technologies – Pharmaceuticals – Surgical Techniques – Medical Devices 8

11/4/16 Value assessment of new technologies Line of clinical equipoise: Determines what “value-destroying” society is willing to pay for a change in health status Cost/QALY = Incremental cost of “value-adding” gaining one Quality Adjusted Life Year Courtesy of Lloyd Hey • Surgery for Adult Deformity is cost-effective at $140,000 • Avg hospital cost $120,394 – Assumptions • Primary surgery cost $103,143 • 10 year durability of surgery without revision • Readmission cost $67,262 • Maintenance of improvement in health status with surgery • OR costs avg $70,154 • Deterioration of health status with non-operative care 9

11/4/16 Spending Drivers in Spine Surgery pa Surgical group had improvement of 0.19 well-yrs c/w non-op Significant variability in costs for common surgical procedures DRG: $54,000 for operative reimbursement – Lumbar Discectomy: $4700-8100 Non-op Care: $10,800 – Single level lumbar fusion: $8,900-72,800 ICER (2 yrs) = $121,579 Improvement would need to be maintained 5 yrs to be cost effective • Independent Drivers of cost include: 0.8 – Devices 0.7 0.6 – Techniques 0.5 – Length of Stay/ICU stay Operative 0.4 – Staged surgery 0.3 Non-op 0.2 – Readmission/Reoperation 0.1 0 Baseline2 year F/U Patient Population Financial Data: Summarized • N=109 patients • Mean cost of all fusions was $78,899 • 36 upper thoracic, 63 lower thoracic • Upper = $88,091 • Lower = $74,366 • 51% of fusions were circumferential (N=56) • 50 pts fused in same visit, 6 pts fused in 2 visits • Mean cost of all circumferential fusions was $90,231 • Upper = $96,658 • Lower = $85,752 • Mean cost of posterior only fusions was $66,926 • Upper = $72,935 • Lower = $64,973 • 5 Fold variance in the overall cost of care PROPRIETARY INFORMATION PROPRIETARY INFORMATION PROPRIETARY INFORMATION 10