Calculating Financial Outcomes for Hospital Palliative Care

1. Calculating Financial Outcomes for Hospital Palliative Care Steven Pantilat, MD Associate Professor of Clinical Medicine Director, Palliative Care Program and Palliative Care Leadership Center (PCLC) University of California, San Francisco stevep@medicine.ucsf.edu

2. March 14, 2007 www.CAPC.org 2 Palliative Care ��comprehensive, interdisciplinary care, focusing primarily on promoting quality of life for patients living with a [serious, chronic, or] terminal illness and for their families� assuring physical comfort [and] psychosocial support. [It is provided simultaneously with all other appropriate medical treatments]�

3. March 14, 2007 www.CAPC.org 3 What Palliative Care Teams Do Symptom management Communication clarify or change goals of care conduct family meetings Discharge planning Advance care planning Spiritual support Psychosocial support

4. March 14, 2007 www.CAPC.org 4 What Kinds of Patients do PC Teams See? CHF, 3rd admission in a year Breast cancer and malignant pleural effusion Brain metastases Dementia and aspiration pneumonia New diagnosis of idiopathic pulmonary fibrosis Cirrhosis and 3rd admission for altered mental status

5. March 14, 2007 www.CAPC.org 5 A Distinct Population Severe, chronic often terminal illnesses Deaths and live discharges Resource utilization High costs per case Longer lengths of stay More admissions Payer mix More Medicare (case rate payments)

6. March 14, 2007 www.CAPC.org 6 Evident at State Level State of California Office of Statewide Health Planning and Development (OSHPD). California Patient Discharge Data: January-December 2004. (Public version, supplied on CD-ROM) Resource Utilization among 2.7 Million Adult Patients Discharged from California Acute Care Facilities in Calendar Year 2004 �Target population� = patients discharged alive who were assigned to one of the 25 most common DRGs for patients who died in the hospital. About half of the patients seen by a hospital-based palliative care service will come from this group. The team would not see all or even most of those cases, they simply represent the population from which live-discharge PC service patients will come from. Private coverage includes payment covered by private, non-profit, or commercial health plans, whether insurance or other coverage. Excludes workers compensation, county indigent programs, and other government payers, all of which are included in the All Other Payers category.State of California Office of Statewide Health Planning and Development (OSHPD). California Patient Discharge Data: January-December 2004. (Public version, supplied on CD-ROM) Resource Utilization among 2.7 Million Adult Patients Discharged from California Acute Care Facilities in Calendar Year 2004 �Target population� = patients discharged alive who were assigned to one of the 25 most common DRGs for patients who died in the hospital. About half of the patients seen by a hospital-based palliative care service will come from this group. The team would not see all or even most of those cases, they simply represent the population from which live-discharge PC service patients will come from. Private coverage includes payment covered by private, non-profit, or commercial health plans, whether insurance or other coverage. Excludes workers compensation, county indigent programs, and other government payers, all of which are included in the All Other Payers category.

7. March 14, 2007 www.CAPC.org 7 � And at Individual Hospitals Data from a 200-bed community hospital that participated in PCLC training. �Target population� = patients discharged alive who were assigned to one of the 25 most common DRGs for patients who died in the hospital. About half of the patients seen by a hospital-based palliative care service will come from this group. The team would not see all or even most of those cases, they simply represent the population from which live-discharge PC service patients will come from.Data from a 200-bed community hospital that participated in PCLC training. �Target population� = patients discharged alive who were assigned to one of the 25 most common DRGs for patients who died in the hospital. About half of the patients seen by a hospital-based palliative care service will come from this group. The team would not see all or even most of those cases, they simply represent the population from which live-discharge PC service patients will come from.

8. March 14, 2007 www.CAPC.org 8 Medicare Profitability and LOS High costs and high proportion of Medicare cases mean many mortality cases and many target population cases result in financial lossesHigh costs and high proportion of Medicare cases mean many mortality cases and many target population cases result in financial losses

9. March 14, 2007 www.CAPC.org 9 How Palliative Care Can Help Reduced ICU utilization Shorter LOS in ICUs More transfers out of, fewer into, ICUs More admissions directly to PC (vs. to ICU) Lower inpatient daily costs Reduced utilization of labs, radiology, pharmacy, blood Better care coordination, more hospice Reduced readmissions

10. March 14, 2007 www.CAPC.org 10 Analysis Process Identify changes/differences in resource utilization that can be attributed to PC Assign value to those changes/differences Calculate net benefits

11. March 14, 2007 www.CAPC.org 11 Calculation Challenges Savings from cost avoidance, not revenue generation Need to define �what would have happened� had PC team not become involved Most complex, sickest patients, and a relatively small proportion of hospital population, so comparisons can be difficult Extensive costs in the period before PC involvement often means good result is smaller loss, not loss to profit For many cases (exception patients seen by PC service very early in stay) PC involvement will reduce loses, but will not convert money losing cases into money making cases For many cases (exception patients seen by PC service very early in stay) PC involvement will reduce loses, but will not convert money losing cases into money making cases

12. March 14, 2007 www.CAPC.org 12 Measuring Changes in Costs By days Before and after PC PC vs non-PC Costs & LOS By admission Typically only used if PC service responsible for entirety/majority of hospital stay Generally NOT appropriate for consultations or late transfers to a PC unit By patient Resource utilization over a defined period of time (i.e., the last six months of life) Common to use a combination of methods depending on service type (unit or consult patient) and disposition (deaths vs. others)Common to use a combination of methods depending on service type (unit or consult patient) and disposition (deaths vs. others)

13. March 14, 2007 www.CAPC.org 13 Which Costs to Measure?

14. March 14, 2007 www.CAPC.org 14 Which Cases to Use? Do you want to include: Patient discharged or dies on day of consult (PC LOS = 0) Patient seen intermittently thru discharge Patient signs off service

15. March 14, 2007 www.CAPC.org 15 Tallying the �Before� Costs Need date of PC consult/transfer Data on costs (or charges) per day by category (room and care, pharmacy etc.) Decide which �before� days to count All? Exclude first two (high-cost surgeries), or back out peri-operative costs? Only use day immediately prior to consult/transfer?

16. March 14, 2007 www.CAPC.org 16 �After� Costs Can compare: All �before� to all �after� Or subset of �before� to all �after� Or can limit number of �after� days Difficulty of forecasting what would have happened beyond a certain point, say 5 days May exclude day of consult or transfer (transitional day)

17. March 14, 2007 www.CAPC.org 17 Simple Before and After Comparison

18. March 14, 2007 www.CAPC.org 18 PC vs. non-PC Comparison Possible variables to use in defining a comparison group: DRG or APR-DRG (APRs include severity-of-illness and risk-of-mortality indices) Major illness type (e.g., metastatic cancer) Number of co-morbidities and/or complications Number of organ systems involved Age (perhaps 10-year cohorts) Attending or clinical service Disposition (e.g., death)

19. March 14, 2007 www.CAPC.org 19 PC vs. non-PC Cost Comparison Decide on Comparison Period Entire stay Entire �after� period A portion of the stay, i.e. last 3-5 days Common to align with average LOS on PC service

20. March 14, 2007 www.CAPC.org 20 VCU Case Control Study

21. March 14, 2007 www.CAPC.org 21 UCSF Subsequent Day Control Group Control group patients (65) all died in the hospital, spent the entirety of their stay on a med/surg unit (no critical care or step down unit costs), had no anesthesia or OR charges, and had no procedures indicative of resuscitive efforts (e.g., no closed chest massage, heart countershock, cardiopulmonary resuscitation, etc.) A comparison of PCS average daily variable costs to control group average daily variable costs shows similar Room and Care costs but lower PCS daily costs in all cost categories Control group patients (65) all died in the hospital, spent the entirety of their stay on a med/surg unit (no critical care or step down unit costs), had no anesthesia or OR charges, and had no procedures indicative of resuscitive efforts (e.g., no closed chest massage, heart countershock, cardiopulmonary resuscitation, etc.) A comparison of PCS average daily variable costs to control group average daily variable costs shows similar Room and Care costs but lower PCS daily costs in all cost categories

22. March 14, 2007 www.CAPC.org 22 UCSF Last 3 Days of Stay PCS Deaths vs. Others

23. March 14, 2007 www.CAPC.org 23 How UCSF uses PC vs. non-PC Calculations Savings for first day on service: Difference between average �before� daily cost and average �after� daily cost Savings for subsequent days: Difference between control group average daily cost and PC �after� daily cost

24. March 14, 2007 www.CAPC.org 24 A Different Approach for Deaths Savings for first day on service: Difference between actual cost of day prior to consultation or transfer and actual cost of day after consultation Savings for subsequent days: Difference between average daily cost of final three days of stay for non-PC patients who died and average daily cost for final three �after� PC days

25. March 14, 2007 www.CAPC.org 25 LOS Savings More difficult than per-day savings estimates Most patients have a substantial pre- PC stay Analysis begins at time of referral to PC If avg. pre-PC LOS is 14 days, your question is �Once we reach the 2-week mark, what is the difference in LOS for the two groups from that point until discharge?� Matching to comparable pts critical Consider variation in referral patterns by service or clinical condition

26. March 14, 2007 www.CAPC.org 26 Time to PC Referral Varies by Specialty

27. March 14, 2007 www.CAPC.org 27 The Value of Saved Days Consider limiting to case rate payers Program could be credited with: Avg. variable costs for �after� PC day x number of saved days, or Avg. total costs for �after� PC day x number of saved days, or Total up saved days; divide by hospital ALOS; multiply by avg. profit per case

28. March 14, 2007 www.CAPC.org 28 Profit/Loss for PC Unit Admissions Cost avoidance measured in terms of direct costs only: the difference between pre-transfer dircost/day and post-transfer dircost/day times the # days on PCU after transfer. Not sure whether one could also claim the lower cost / day of the direct admits also as cost-avoidance. May be double-counting, so did not include it here. We do know that both direct admits and transfers are reducing utilization of ICUs by this population, which has financial benefits beyond those tallied here. 2001-2003, VCU Health System fixed managed care contracts and other system-wide revenue cycle issues. PC program dropped hospice contracts which had encouraged hospices to send acute cases here without disenrolling them from hospice, and opened unit to overflow patients, increasing the census and thus decreasing the cost per day per patient. Cost avoidance measured in terms of direct costs only: the difference between pre-transfer dircost/day and post-transfer dircost/day times the # days on PCU after transfer. Not sure whether one could also claim the lower cost / day of the direct admits also as cost-avoidance. May be double-counting, so did not include it here. We do know that both direct admits and transfers are reducing utilization of ICUs by this population, which has financial benefits beyond those tallied here. 2001-2003, VCU Health System fixed managed care contracts and other system-wide revenue cycle issues. PC program dropped hospice contracts which had encouraged hospices to send acute cases here without disenrolling them from hospice, and opened unit to overflow patients, increasing the census and thus decreasing the cost per day per patient.

29. March 14, 2007 www.CAPC.org 29 Savings per Patient Will PC intervention change resource utilization down the road? Avoid admissions entirely Change goals and costs of subsequent admissions (i.e. direct admit to PC vs. ICU)

30. March 14, 2007 www.CAPC.org 30 Kaiser Permanente RCT Inpatient PC 512 pts followed for 6 months No differences in survival between cases and controls PC pts had: Significantly fewer ICU stays (p = 0.04) Significantly longer hospice LOS�s (p = 0.01) Significantly lower costs for hospital readmissions (p =0.001) Investigators at Kaiser Permanente recently conducted a randomized controlled trial of an inpatient palliative care service. Outcomes were evaluated for 512 patients enrolled in three regions, including San Francisco, CA. Patients were randomized to receive care from an inpatient palliative care service (IPCS) consisting of a palliative care physician, nurse, social worker, and chaplain, or usual care from a hospitalist. Subjects were followed for six months after the index hospital admission. There were no differences in survival between the IPCS and usual care groups. IPCS patients reported better pain management as well as greater satisfaction with symptom management, Compared to controls, IPCS patients had: Significantly fewer ICU stays (p = 0.04) Significantly longer hospice lengths of stay (p = 0.01) Significantly lower costs for hospital readmissions (p =0.001) Significantly lower costs for outside referrals (provider services outside of the health plan, durable medical equipment, O2 services, radiology, physician consults) (p = 0.03). Compared to IPCS patients, usual care patients had: Significantly fewer home health visits (p = 0.02) Significantly fewer outpatient visits (p = 0.001) Significantly lower outpatient pharmacy costs (p = 0.04) Significantly lower outpatient costs (p = 0.05). Overall there was a $65.18 per patient per day (p = 0.07) cost savings for IPCS patients (roughly $2,280 in total cost savings per enrolled patient). IPCS teams are now operating as ongoing, inpatient consultative services at all three sites. Investigators at Kaiser Permanente recently conducted a randomized controlled trial of an inpatient palliative care service. Outcomes were evaluated for 512 patients enrolled in three regions, including San Francisco, CA. Patients were randomized to receive care from an inpatient palliative care service (IPCS) consisting of a palliative care physician, nurse, social worker, and chaplain, or usual care from a hospitalist. Subjects were followed for six months after the index hospital admission. There were no differences in survival between the IPCS and usual care groups. IPCS patients reported better pain management as well as greater satisfaction with symptom management, Compared to controls, IPCS patients had: Significantly fewer ICU stays (p = 0.04) Significantly longer hospice lengths of stay (p = 0.01) Significantly lower costs for hospital readmissions (p =0.001) Significantly lower costs for outside referrals (provider services outside of the health plan, durable medical equipment, O2 services, radiology, physician consults) (p = 0.03). Compared to IPCS patients, usual care patients had: Significantly fewer home health visits (p = 0.02) Significantly fewer outpatient visits (p = 0.001) Significantly lower outpatient pharmacy costs (p = 0.04) Significantly lower outpatient costs (p = 0.05). Overall there was a $65.18 per patient per day (p = 0.07) cost savings for IPCS patients (roughly $2,280 in total cost savings per enrolled patient). IPCS teams are now operating as ongoing, inpatient consultative services at all three sites.

31. March 14, 2007 www.CAPC.org 31 Summary of PCLCs� Cost Avoidance Analyses

32. March 14, 2007 www.CAPC.org 32 Variables that Influence Financial Performance Baseline resource utilization Capture rate Service case mix Influence on care Quality of service Level of institutional support

33. March 14, 2007 www.CAPC.org 33 PC Financial Analysis Do�s and Don�t Do�s Create clinical team-administration partnership Present financial outcomes in context of operational, clinical, & satisfaction outcome data Don�ts Analyze and present data prematurely Quibble

34. March 14, 2007 www.CAPC.org 34 Conclusions and Questions Most PC services can show adequate if not excellent financial outcomes This is not why you have a palliative care service, but how you get, grow and sustain one