Download - Economics in Medical Imaging: Implications For Research and Development and Clinical Practice
Economics in Medical Imaging: Implications For Research and
Development and Clinical Practice
James H Thrall, MDChairman, Department of Radiology
Massachusetts General HospitalProfessor of RadiologyHarvard Medical School
Utilization
New transformative technologies are driving increased utilization of services
and costs in diagnostic radiology
1998 2000 2002 2004 2006 2008 2010
CT colonography gets started
with spiral CT
Multi-detector CT-New era of CTA
and CT Colonography
Reimbursement begins for limited
applications of coronary CTA
ACRIN DMIST trial establishes value of digital
mammographyPicard study and ACRIN trial
confirm efficacy of CT colonography—AGA, ACR and ACS endorse its
use for screening
Reimbursement for CT
colonography and lung cancer
screening ?
Breast MRI starts to become important
Reimbursement for PET from CMS
Positive results from NLCST
Polyp3D Endo-luminal view
PET/CT Diverticulitis
MD/CT Acute MI
False aneurysmCTA for Pulmonary emboli
CCTA
CTC
Total Medicare Imaging Costs are Rising:GAO Report 2008
~14%Of Part BSpending
In 2006Compound annual growth (CAGR) rate of > 14%
Economics Of Medical Imaging
Effects of legislative initiatives and the recession
Legislative assault on imaging reimbursement
Regulatory assault on imaging reimbursement
•DRA 2005– CT, MRI, PET reduced to HOPPS rate
•PPACA– Utilization rate increased to 75% from 50%
•Contiguous body part reduction increased to 50%
•CMS—2010 MPFS Final Rule•Bundling of CT codes•Expansion of MPPR•Decrease in practice expense reimbursement
CMS rejection of CTC and most CCTA for reimbursement
Direct effects
Aggregate impact is several billion dollars per year
Recession linked decrease in capital
spending by hospitals and imaging centers
Economic uncertainties related
to health reform
Public and professional concerns about
radiation exposure and risk
Indirect effects
Impossible to directly monetize these issues but clearly impactful
Attack on screening mammography by
USPSTF
Increase in co-pays and deductibles by
insurance companies
Legislative and Regulatory Cuts to Imaging Reimbursement
• Deficit Reduction Act of 2005 – Capped the Technical Component (TC) at the lesser of
the Medicare Physician Fee Schedule (MPFS) rate or Hospital Outpatient Prospective Payment Schedule (HOPPS) rate
– Congressional Budget Office (CBO) projected a decrease of $1.3B in Medicare Technical (TC) payments for 2008
– $1.23 Billion from DRA in first year = 3X projected cuts of $2.8 Billion over 5 years
• Additional losses as private payers adopt CMS policies and DRA cuts
• Especially heavy blow to outpatient centers, the fastest growing part of imaging
Health Reform Legislation 2010
• Patient Protection and Affordable Care Act of 2010 (PPACA)
• $940 Billion over 10 years• 32 million more covered– 95% of legal US residents• Individual mandate– up to $695 penalty• Employer mandate– up to $2000 per employee penalty• Medicaid expansion– up to 133% of Federal Poverty
Level• Private insurance reforms
PPACA Imaging Provisions: Contiguous Body Part Reduction and Change in Utilization Assumption
• TC contiguous body part reduction increased to 50% from 25%
• Utilization:– Obama Administration legislative proposal– 95%– CMS 2010 MPFS Final Rule– 4 year phase in to 90%– Initial reconciliation proposal– 90%
• Final legislative provision– 75%-- effective in 2011 for higher cost imaging devices—CT&MRI
2010 MPFS Final Rule
• Utilization assumption of 90% for higher cost Diagnostic Imaging-- now moot through PPACA
• Medicare Final Rule for 2010– Practice expense cuts—phased in over 4 years 2010-
2013• 18% for dx• 4% for RO
• ACR assessment is that practice expense data used are statistically invalid.
New Mischief From CMS• CMS is proposing to extend the contiguous body part concept• Officially called the “Multiple Procedure Reduction Rule”
(MPRR)• Applies to CT, MRI and Ultrasound• CMS is proposing to apply the rule whenever more than one
test is done in a day• MPRR would then apply across modalities and for non
contiguous body parts• CMS has just (1/1/2011) bundled CT abdomen and CT pelvis
with drastic cuts in reimbursement• CMS believes this action is in the “spirit” of Congressional
intent to decrease reimbursement for “over valued” services
FINANCE
CMS Timeline
RADIOLOGY ASSOCIATES 2010
DRA
Note:Source: ACR Data – P. Kassing Payment Policies 2011 presentation
??Health reform and CMS policy
changes
5.80%6.00%6.20%6.40%6.60%6.80%7.00%7.20%7.40%
2000
2002
2004
2006
2008
Dx Rad
Allowed Charges for Medicare Physician and Supplier Services, by Physician Specialty (Percentage of Medicare Part B FFS total
only)DRA—(Took effect 1/1/2007)Decrease> $1.0B
Assembled from CMS sources by ACR staff
Medicare Professional Fee Schedule --2009
• Number of advanced imaging exams (CT, PET, MRI, NM) declined by 0.1%– MRI 1.2% – CT 1.6%
• Spending for advanced imaging increased by 1.2% versus 2.6% for all physician services
• Overall imaging services declined 7.1%– Mammography 0.3%
Impact of DRA and CMS Policy Cuts on Industry and Radiology Practice
• ACR member survey—600 respondents– 41% laid of staff or altered hiring plans– 49% cancelled or postponed equipment
acquisitions• DI Magazine reported:
– Many imaging centers closed and valuations plummeted
– “The medical device industry saw sales of CT, MR and PET fall $125M”
3,000
3,500
4,000
4,500
5,000
Q42007
Q32008
Q32009
Q32010
Quarterly Revenue GE Health Care
Revenue inBillions
Impact on Industrial Revenue: GE
Market for CT Scanners
• US market– 2007= $2.1 Billion– 2010= $585 Million
• Number of devices 2010– US~ 700– Europe~ 1200
Personal communication from major vendors
Future Directions For Imaging– Clinical Practice And Technology
Development Will Medical Imaging Survive and
Flourish?
Factors That Will Continue To Propel Imaging Forward
• Economic recovery• Emerging markets• Consumer demands for better, safer, more
effective technology– baby boom generation– All dependent on new technology
• Example: Lower radiation exposure• Competition–
– Inexorable advance of technology per se – Change in the business model– market share to
market space• Regulation– requirements for more data and
clinical trials prior to FDA approval
500
700
900
1100
1300
1500
1700
1900
Q4 2007 Q3 2008 Q3 2009 Q3 20103,000
3,500
4,000
4,500
5,000
5,500
S&P 500Revenue in Billions
GE Health Care Quarterly Revenue Versus S&P 500
S&P 500 GE Revenue
Economic recovery is a tide that will lift industry’s boats
Potential Impact of Emerging Markets
• BRIC countries’ populations– China 1,342M– India 1,192M– Brazil 191M– Russia 142M
• United States, Europe and Japan– 800M
42% of the worlds population and < 20% of medical products consumption
12% of worlds population and 2/3rds of medical products
consumption
3,000
3,500
4,000
4,500
5,000
Q42007
Q32008
Q32009
Q32010
Quarterly Reveue GE Health Care
Revenue inBillions
•China +19%
•India +8%
•Orders -9%
•Profit -20%
•Equip +8%
•Profit +14%
Supported By Emerging Markets, General Electric Healthcare Raises Growth
Projection To 10% Per Year Kaiser Health News 11/10.10
Growth
Time
DRA, P-4-P, RBMs, NSF,
radiation scare, recession
Organic growth with aging population
Reimbursement for CCTA CTC
and Lung Cancer Screening etc
DRA 2, new 3rd party initiatives
and Medicare cuts
“Golden age” of imaging growth
with MDCT, CTA, MRA, 3D, PET/CT, digital mammo etc
Future Growth Of Clinical Medical Imaging In The United States
2000 2007 2010 2015
MIPPA and PPACA
Technology development
Massive computing
Increased cost
Hybrid imaging systems
Increased regulations
Simplified devices
Decreased cost
Single organ
devices
Competition
Development of New Technology
Technology development
Massive computing
Increased cost
Hybrid imaging systems
Iterative reconstruction
Lower doses
Increased regulations
Clinical trials
moved offshore
Simplified devices
Decreased cost
Single organ
devices “Defeatured” devices
R&D moved
offshore
Emerging markets
Competition
Market share
Market space
Extended product offerings
•PET/CT•PET/MRI•US/Angio
•Extremity CT•Head CT•Extremity MRI•Breast PET
•Handheld US•CT•MRI
•BRIC countries•SE Asia•Africa
Percentage share for a product or
service
Number of products “footprint” in the marketAll major
companiesIncreasingly difficult to
initiate trials in US versus evidence based medicine
FDA under the gun
Radiation concerns = number one non financial risk to radiology
Information Technology
•Data mining•CPOE•CAD
Radiation Exposure
• Concerns about high radiation exposure represent the number one non financial risk to radiology
• New technology can reduce exposures by 90%
• Should be among the highest priorities of all people associated with medical imaging
Why Now?• BEIR VII (Biological Effects of Ionizing Radiation) endorsed the
linear no-threshold model for extrapolating cancer induction• NCRP (National Committee on Radiation Protection)
– Medical exposures have increased by 7 fold over last 25 years• Multiple journal articles and editorials
– Cancer risks– 29,000 CT related cancers per year– Increasing population exposure over time
• Highly publicized cases of errors resulting in over exposures of patients in both diagnostic and therapeutic radiology practices
Beir VII: Health Risks from Exposure toLow Levels of Ionizing Radiation
Figure 2. In a lifetime, approximately 42 (solid circles) of 100 people will be diagnosed with cancer from causes unrelated to radiation. The calculations in this report suggest approximately one cancer (star) in 100 people could result from a single exposure 100 mSv of low-LET radiation.
Sponsored by the US National Academies of Science
Medical radiation exposure found equal to non medical sources—ubiquitous background, consumer, occupational
Radiation overexposures have undermined the public’s trust in radiology
Sub mSv Goal
Regulation/ National
Standards
Use of appropriateness criteria—PACA
2010
Mandatory accreditation—MIPPA
2008
More requirements for clinical trials
data (FDA)
Standard reference doses, registries,
patient dose tracking
Clinical practice
Education
Technology development
Optimization of CT protocols
Department governance
Quality assurance programs–
surveillance and audit
Physics of CT—what makes an
acceptable scan?
Radiation biology– effects of ionizing
radiation
Inclusion of all stakeholders
How to interpret relatively noisy images
Adoption of appropriateness
criteria
More efficient detectors
Iterative reconstruction
Dual source devices
Image post processing
Better filters and multi-spectral
imaging
Gating and motion correction
Technology for Sub mSv CT
• More efficient detectors—garnet based• Dual tube– high pitch fast scanning CCTA• Post processing– noise reduction• Better filters—reduce low energy photons• Better tubes• Multispectral imaging• Iterative reconstruction
– Partial– 30% dose reduction– Full– 70-90% dose reduction
Low-dose H&N CT
Dx: Bilateral Peritonsillar AbscessesCTDIvol = 2.75mGy, DLP = 51mGy.cm
Estimated Dose = 0.27mSv
3D Volume rendering
17 yo male with chest pain,
elevated troponnin
Negative CTA obviated need for invasive angiography. Cardiac MRI confirmed myocarditis (arrows).
FLASH-mode radiation dose: 0.76 mSv
MRI
Diffuse lung disease chest CT reconstructed with FBP and ASIR high definition mode
FBPB25f FBPB46f IRT
Body Part NCRP Report 1602006
Annals of Internal Medicine2009
MGH2010Adult
Mean Eff Dose (mSv)
Mean Eff Dose (mSv)
Mean Eff Dose (mSv)
Abdomen 10 12 6.9
Chest 7 7 3.4
CTA Heart 20 3.3
Head 2 2 1.0
Spine, Cervical
10 5 3.4
CTC 10 8 5.9
CT Dose Comparison
Change in Business Model
From Market Share to Market Space
What Sticks in Customer Relationships and What Doesn’t?
Commodities and devices that come into a hospital on a forklift are not “sticky”
The strongest bonds to a customer derive from integration of products into the work process, especially
transfer of information
Integrated solutions that stitch together multiple products with information systems to facilitate work and meet compliance requirements are the most
valued by providers
3D image processing
Contrast media
Injector
Ordering Physician’s
desktopOrder entry Results reporting
Radiology Work Flow
HIS RIS Imaging device
PACS HISRISWork station
Voice report
•Market share-- % of “X” sold by company
•Market space– Size of company “footprint” in the work flow
3D image processing
Contrast media
Injector
Ordering Physician’s
desktopOrder entry Results reporting
GE Market Space: Early 1990s: “Forklift” Relationship with Customers
HIS RIS Imaging device
PACS HISRISWork station
Voice report
•Market share-- % of “X” sold by company
•Market space– Size of company “footprint” in the work flow
3D image processing
Contrast media
Injector
Ordering Physician’s
desktopOrder entry Results reporting
GE Market Space 2010: “Sticky’ Relationship Through Integration
HIS RIS Imaging device
PACS HISRISWork station
Voice report
•Market share-- % of “X” sold by company
•Market space– Size of company “footprint” in the work flow
Conclusions• The European and American markets are
mature• Growth in the US in medical imaging is at a
standstill or even contracting regionally• Multi-national corporations will increasingly turn
to emerging markets for growth and to do R&D• Large corporations will seek to increase their
market space for accretive growth and to become more important and more indispensible to their customers
Conclusions• New technology for imaging will continue to be
developed at a robust pace• Radiology will enter an era of massive computing• Rapid advances in reducing radiation dose will
largely take radiation risk out of the discussion• New technology and applications will counter
downward economic pressures• However, the Golden era of combined high rates of
procedure growth and high per unit reimbursement for imaging are gone