ELECTRONIC BOARD PACKET

Transcription

1 ELECTRONIC BOARD PACKET LEE MEMORIAL HEALTH SYSTEM BOARD OF DIRECTORS ORTHOPEDIC IMPLANT WORKSHOP Thursday, January 17, :30-7:30 p.m. Lee Memorial Hospital Auditorium 2776 Cleveland Avenue Fort Myers, FL TENTATIVE AGENDA 1. CALL TO ORDER by Chairman John Donaldson, MD 2. Background (Jim Nathan, CEO/President and John Wiest, Chief Financial Officer) 2. Industry Overview Factors that Impact Implant Pricing (Marshall Steel, MD, President & CEO/Marshall Steele & Associates) 3. History and Current Status of LMHS Orthopedic Implant Pricing (William Tousey, RN, MBA, Vice President/Cooperative Services of Florida) 4. Facilitated Discussion (Marshall Steel, MD, President & CEO/Marshall Steele & Associates) 5. Next Steps 6. ADJOURNMENT Bf/BOD/Presentations/ Orthopedic Implant Workshop

2 Lee Memorial Health System Orthopedic Education Workshop January 17, 2008

3 History and Current Status of LMHS Orthopedic Implant Pricing William Tousey RN, MBA Vice President Cooperative Services of Florida

4 LMHS consistently in Top 10 Medicare hip and knee replacement (volume) hospitals LMHS Orthopedic implant pricing challenges date back to the late 1990 s Current discussions deal with data collected beginning in October 2004

5 In Orthopedics, nothing is apples to apples No pricing authority or sanctioned database No absolute metrics to benchmark against Orthopedics is a moving target

6 Tools We Have to Gauge LMHS Status Our own implant cost data Our own reimbursement data Published average selling price - ONN Independent benchmarking services SVA CSF accessed all of the above in order to set volume based implant pricing objectives

7 Benchmarking Table Strategic Value Analysis: Benchmark Range Exceeded Low Procedure Low High ¹LMHS By Exceeded High By Total Knee $3,400 $4,444 $4,887 $1,487 $443 Total Hip $3,400 $5,200 $5,618 $2,218 $418 ¹Eight Months of Data Ending 05/31/05 Implant $/Procedure ONN, July 2005 Florida Hospital, Orlando FL LMHS Difference $ Difference % Total Knee $3,828 $4,656 $828 22% Total Hip $4,257 $5,308 $1,051 25% Medicare 63% 57% -6% -10% Hip & Knee Volume 2,022 2, %

8 Key Events Discussions with vendors of record began in November 2005 Initially one company acknowledged a desire to work with LMHS on implant pricing as well as a Total Joint Center of Excellence Subsequently LMHS initiated a comprehensive effort to develop a Center of Excellence

9 Pricing objectives were established based on the LMHS market size Total Hip $ $4600 (45%) Total Knee $ $3600 (35%) ()LMHS Medicare Reimbursement for DRG 209 $10,300/procedure in 2006

10 Based Upon a Range Objective Pricing concessions negotiated Annual price increases rescinded New technology economic review initiated Attitude of savings for improvements Common Denominator is PRODUCTIVITY

11 Implant cost as a percent of reimbursement has evolved into the internal benchmark Given the constant variation required to individualize patient care, it is a target that everyone involved can aim for Some have achieved and some have not

12 Vendor vs. Reimbursement Average Implant Cost vs. Average Reimbursement Total Knee Total Hip 44% 39% 43% 41% 36% 33% 49% 53% 57% 47% 45% 44% Reimbursement Vendor F Vendor E Vendor D Vendor C Vendor B Vendor A

13 Major savings has occurred with high volume vendors Surgery Services Orthopedic Implant budgets have experienced savings in FY 06 and FY 07 Have not achieved pricing parity It is now time to revisit pricing

14 Next Steps Validate baseline usage with vendors Conduct Request for Proposal via CSF Determine Preferred Vendor pricing Determine Alternate Vendor pricing Initiate new contracts through CSF Monitor for status revision

15 Goal Implement competitive and sustainable pricing protocol commensurate with current and future Regional demand

16 Thank You