That’s why it’s paramount that hospitals adopt a team approach in assessing, developing and managing rhythm management services. By working together, physicians, service line managers, administrators and materials managers can ensure that a complete cost-benefit analysis is conducted before the hospital commits time, money and reputation to a pacemaker program.

If this analysis reveals that offering pacemaker services makes economic sense, the team will be in a position to anticipate, monitor, influence and control program expenditures going forward.

Failure to conduct due diligence and create some kind of oversight structure around a rhythm management program can have dire financial consequences, given the soaring costs of pacemaker technology and reimbursement changes that make it harder for hospitals to recover cardiac care costs. In a worst case, an ill-conceived and poorly controlled program could bankrupt a hospital.

Pacemakers are breakthrough electronic devices that establish and maintain a regular heart rhythm in individuals with degenerative heart disease. Early pacemakers were large, cumbersome and externally mounted. By 1960, however, transistors were enabling the first completely implantable pacemakers. Since then, approximately two million pacemakers have been implanted worldwide.

Recent years have seen dramatic improvements in both pacemaker functionality and implant techniques. Today’s devices provide a range of capabilities designed to mimic the performance of a healthy heart. These include the ability to detect abnormal rhythms and correct them through electric shock, pace multiple heart chambers and even adjust the heart’s rhythm to the individual’s activity level.

As the functionality of pacemakers has improved, the size of the devices has decreased, thus reducing the complexity and risk of the implant process. Procedures that used to require major thoracic surgery and lengthy hospital stays are now being done with minimally invasive techniques and often in same-day surgery centers. Importantly, this change has allowed a growing number of cardiologists to begin performing procedures that used to be done exclusively by surgeons. In addition, simpler implant techniques have enabled smaller hospitals, not previously considered capable of offering high-technology cardiology services, to consider adding them.

It’s no surprise that the recent improvements in pacemaker quality and performance have been matched by rising costs. Today, a relatively simple dual chamber pacemaker can cost between $5,000 and $7,000, while prices for the most sophisticated, multi-functional devices can reach $35,000.

Medicare reimbursements have not kept pace with rising expenses, particularly for new technology. Private payer reimbursements for rhythm management care can range from a percentage of Medicare to carve-outs that pay some or all of the pacemaker expense. Generally speaking, however, third-party pacemaker reimbursements have remained flat or decreased in recent years.

The combination of rising costs and falling reimbursements creates treacherous terrain for hospitals interested in launching a rhythm management service line. Unfortunately, these risks frequently are overlooked in the rush to meet perceived demand and capitalize on easier business entry. This is particularly true if the pacing initiative is led by physicians with little understanding of projected costs or cash flow.

That’s why hospitals and material managers must undertake a clear-eyed assessment of demand, competition and reimbursement before moving forward. A cooperative approach that includes physicians, key hospital leadership and, if necessary, outside consultants, will greatly reduce financial risk. The team should include billing managers and contract specialists able to provide accurate information about the organization’s
reimbursement mix.

If a pacing program gets the go-ahead, creating a list of pre-approved devices that can meet the full range of anticipated clinical needs becomes another important financial safeguard. Requiring physicians to buy only from the list eliminates expensive, maverick purchasing and helps administrators control costs. In addition to meeting regularly to assess the program’s performance, the team should periodically discuss emerging technologies and make decisions about which devices will likely be utilized in the near future.

Properly conceived and managed, rhythm management programs can be an important addition for both hospitals and the communities they serve. Currently, five million Americans suffer from congestive heart failure and about 1.5 million are candidates for rhythm management devices. The numbers will only increase as the Baby Boomer generation moves deeper into its senior years.

Materials managers can play an invaluable role by advocating a team approach to pacemaker services development and management. Admittedly, this stance may be politically dicey if high-powered physicians have other ideas. Yet the stakes are too high to do otherwise. In any case, even physicians are capable of making sound business decisions if presented with the appropriate information.