SONOGRAPHERS’ COMMUNICATION

HEALTHCARE REFORM: WHAT IS THE IMPACT ON ECHO LABS?

Marti L. McCulloch,BS, MBA, RDCS, FASE

Recently, I was asked if there were any best practices or documentshighlighting the potential impact of healthcare reformon echo labs—anexcellent, forward-thinking question. Although healthcare reform andthe impact it may have on echocardiography labs is largely unknown,there are several details we do know that can assist us in forecastingwhat the future may hold. First of all, cardiology is a target because ofthe costs associated with the disease process—total medical expendi-tures for cardiovascular disease are estimated at $503 billion in 2010($324 billion for direct costs and $179 billion for indirect costs).1

Imaging is targeted, in part, due to new imaging capabilities/technolo-gies, which can promote a layering effect in cardiovascular imaging thatwarrants a reduction in utilization.With that in mind, let’s review a fewother key facts and postulate the short term effects.

Insurance companies are the first to bear the consequences ofhealthcare reform. The timeline for healthcare reform implementa-tion is incremental; however, a few major elements begin in 2010,with substantial changes in 2014 (Healthcare Reform). In 2010, dueto caps on indirect costs, expanded coverage for young adults (upto 26), and new insurance rules (restrictions on annual limits, banon rescinding coverage, and lifetime caps), we may see an increasein premiums, lack of coverage, and small businesses dropping cover-age. As a result (short-term), volume within the echo lab may plateau,with projected volume growth lower than in previous years.

Payer mix is shifting with growing older population. Payer mixrefers to the office/hospital percentage of patients with managedcare, Medicare/Medicaid, and self pay (uninsured). For example,a facility may average 28 cents on the dollar for managed care, 13cents on the dollar for Medicare, 5 cents on the dollar for Medicaid,and nothing for the uninsured. Let’s say that today, the facility’s pa-tients are 50% managed care, 48% Medicare/Medicaid, and 2%uninsured, but tomorrow there is 2% shift from managed care toMedicare/Medicaid. The financial impact would be significant.Bottom line: regardless of the current percentage ratio, any increasein Medicare/Medicaid implies a significant reduction in revenue.2

The recession and economic downturn have stalled or reducedvolumes. Although the recession was reported to have ended July2009 (pit of despair), many states are still feeling the effects of highunemployment rates, which can impact volumes within healthcareand in the echo lab. The overall volume may be small, but essentiallya percentage of the managed care population who had jobs and lostthem have now become uninsured. In the short-term, the impact canincrease the percentage of self-pay patients seen in hospital settings.

KEY MESSAGES

There is always good news and bad news, but with healthcare reformthe news is just challenging. Volumes in the short term may be softerthan in previous years; however, in the long-term, there will begrowth, with an increase in insured patients. Overall reimbursementwill likely mirror that of Medicare, with the newly insured paying rates

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far lower than the insured of the past.Therefore, with sustained or increasedvolume growth and reduced reimburse-ment, the focus should be on cost con-trol. Variable areas of cost controlinclude efficiency, utilization, andlabor.3,4 In order to improveefficiencies, the entire process shouldbe analyzed for gaps, from registrationto report turn-around time and billing.Improved efficiency may involve hiringa third party company to precertify pa-tients, thereby reducing the amount of

time and energy physicians and staff spend on precertification. Exam-ining how and why studies have always been done can also identifyareas for improved efficiency. For example, some facilities have fourpeople in the room throughout a stress echo test (echo tech, RN,NP/physician, and stress tech); there may be an opportunity to im-prove efficiency. Currently, utilization is being reviewed on an inpa-tient basis by hospitals due the DRG payment structure. CMS plansto roll out outpatient DRGs which will eventually have an impacton clinics and the outpatient diagnostic volume. However, as longas productivity and staffing is optimized for core volume, labor shouldbe the last area to look to for improvement. There are staffing modelsthat look to staffing up as opposed to staffing down. Studies haveshown that staff members prefer to be called in when needed as op-posed to showing up and being sent home.5 Additionally, the staffing-up model would utilize more PRN and/or part-time staff, which mayalso be a financial benefit. Obviously, we havemany challenges aheadof us, but as long as we are prepared the impact should be mini-mized.4

Please visit the ASE Website, www.asecho.org, to read about theSonographer Volunteer of the Month—Rita Novello.

REFERENCES

1. Lloyd-Jones D, Adams RJ, Brown TM, et al. Executive summary: heart dis-ease and stroke statistics—2010 update: a report from the American HeartAssociation. Circulation 2010 February 23;121:948-54.

2. CBO Cost Estimate of H.R. 4872, Reconciliation Act of 2010, Mar. 20,2010, http://www.cbo.gov/doc.cfm?index=11379. Accessed October 28,2010.

3. Asch SM, Kerr EA, Keesey J, et al. Who is at greatest risk for receivingpoor-quality health care? N Engl J Med 2006;354:1147-56.

4. Jencks SF, Williams MV, Coleman EA. Rehospitalizations among patientsin the Medicare fee-for-service program. N Engl J Med 2009;360:1418-28.

5. Workforce Prescriptions, ‘‘The Economics of Labor in Not-for-Profit Health-care,’’ November 15, 2008; Health Care Advisory Board interviews andanalysis. www.advisory.com. Accessed October 28, 2010.

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