2. Introduction About the Case
• Drug eluting Stent(Cypher) was a major
breakthrough in treatment of heart disease,
when the United States FDA approved it for
surgical procedures.
• This case deals with the aftermath of increase
in demand of such stents, in terms of cost and
quality of medical services.
• It presents the effort to bridge the effect of
high cost on its stakeholders – Patients,
Hospitals/Doctors and Insurance Companies.
3. Coronary Heart Disease
• Coronary artery disease (CAD) also known as
atherosclerotic heart disease, coronary heart
disease, or ischemic heart disease (IHD), is the most
common type of heart disease and cause of heart
attacks.
• The disease is caused by plaque a waxy substance
builds up inside the coronary arteries
6. What is Stents ?
A stent is a small mesh tube that
used to treat narrow or weak arteries
to keep the arteries open in the
treatment of coronary heart disease
7. Case Facts
• Heart Disease is the number one cause of death in
United States.
• In 1968 , Medical Researchers developed a technique
called Bypass Surgery to treat blocked artery.
• More than 5,40,000 bypass procedures were done in
U.S. till year 2000.
• Since 1996, decline in Bypass procedures
8. Case Facts
s ty t
a
p l en
g io c s t in
n
f a rdia ccur in 3
%o ca s o ts
0
-8 lve osi tien s
70 vo en pa th
in est % on
R 30 6 m
20
an
e th
siv
inva
ys
L e ss ss
r da
a
we
byp ires fe ve
i
u
Req expens appen
Less nosis h s
h
te
Res 6 mont
in 3
First discovered – cypher stent – 2002 approved in
– 2003
Taxus expressed – 2004
Restenosis occur in 8% of patients in 3-6 months
12. Relative Trend between Life Expectancy
of People and Government Expenditure
on Health of the citizens
$ 4539
$ 2671
35.5 %
US
Germany
Per Capita Health
Expenditure
35.6 %
Life Expentency at Age 65
13. What Is Medicare?
A health insurance
program for
– People 65 years of
age and older
– People under age 65
with certain
disabilities
14. The Medicare….
• A Health insurance plan
funded by US Government is
a major purchaser of stents
• It would increase the amount
of reimbursement for an
angioplasty procedure
involving coated stents
15. Role of Medicare
Annual Survey- To determine
the costs of
procedures, products and
services. Then determines
the amount to be reimbursed
and pays to the provider of
the service
The amount reimbursed is
relatively low to the actual
cost of the procedures
16.
17. Cost for Medicare
Cost to run a medical
practice has risen
every
year
while
reimbursements from
Medicare goes down
every year
19. EFFECTS ON INSURERS
(MEDICARE)
• Increase in cost due to improvement in quality by
providing drug eluting stents
• Lesser bypass surgery, save money in future
• More expenditure by medicare, for public’s demand
and increased usage by physicians and hospitals
20. EFFECTS ON HOSPITALS
• In short run, lose money on each procedure as
reimbursement by medicare is not sufficient
• In long run, decline in profits and revenue due lesser
bypass procedures
• Hospitals have to ensure their competitive
advantage and use drug elluting stents
• Bypass surgeries could decline upto 20% of the
profits
21. EFFECTS ON PATIENTS
• Patients would prefer as they would not have to
repeatedly go or get a bypass surgery done
• The case of restenosis has been declining with the
use of cypher stents as more and more people are
getting aware of it
• The reaction of patients to drug eluting stents also
has impact on MEDICARE’S BUDGET
22. EFFECTS ON DOCTORS
• The doctors will focus on providing quality of care to
the patients
• The doctors especially the cardiologists will have a
fall in income as the angioplasties and bypass
surgeries will reduce with increase in drug eluting
stents
24. Budgetary Impact
• Drug eluting stents has caused a problem to
both the private insures and for medicare.
• Drug eluting cypher stent as compared to
incoated stents, the cost of procedure has
increased by $2800.
THIS IS PRIMARILY DUE TO TWO REASONS :
25. Budgetary Impact
• Thus this has driven medical care cost up in short run
• Approx 50% of all stent procedures are covered by medicare
• Medicare decisions of using stents would have an impact on its
budget of approx $100billion for inpatient hospital care in 2003.
• Medicare said that it would reimburse the amount only if
FDA approves that the total amount for the drug eluting
stent cost more that the amount given by the Medicare .
26. Increase in cost
• The short run cost increase by $2800.
• This cost is offset in the long run as the CYPHER
STENT saves $2500 in an year.
REASON :- 1.Reduced level of restenosis
2. Reduces the number of bypass surgeries
• Net loss $300 per procedure.
• Which makes it ecnomically unfeasable.
29. INCREASE IN MEDICARE’S EXPENDITURE
TOTAL NUMBER OF PROCEDURES
454000
PROCEDURES INSURED BY MEDICARE
(50%)
227000
INCREASE IN REIMBURSEMENT
$1,800
TOTAL INCREASE IN REIMBURSEMENT
$408,600,000
Increase in expenditure approx. $400
million
