The Changing Face of Cardiac Care

Physician's Money Digest, December31 2003, Volume 10, Issue 24

Wall Street Journal

While coronary bypass surgery has helped millions of patients over the past 3 decades, it has also placed cardiac surgeons at the top of the earnings chart. The golden years may be over, however, done in by a combination of advances in medical science, shrinking reimbursements from Medicare and managed care firms, and the fiscal realities of cardiac care. According to a recent article, the resulting financial squeeze is putting pressure on cardiac surgeons and shedding light on the complex relationship between the surgeons and the cardiologists who refer patients to them.

New Cardiac Procedures

One of the reasons for the decrease in bypass surgeries is the stent. The stent is a metal device that a cardiologist can insert into an artery to keep it from closing. Depending on the patient, this procedure can postpone the need for cardiac bypass surgery or even eliminate the need. In the decade since the stent was introduced, bypass surgeries have plunged by more than 20% to less than 300,000 annually. A recently approved drug-eluting stent, which has a medicinal coating that keeps the blood vessel from reclosing, is expected to cut even deeper into the number of bypass surgeries.

Also putting cardiac surgeons under financial pressure are declining reimbursements from third party payers like Medicare and managed care firms. Fifteen years ago, a cardiac surgeon received $4000 from Medicare for the average bypass surgery. By 2002, that fee had dropped by more than half to $1850.

The effect of these changes has spread beyond the world of cardiac surgeons. For example, some hospitals have closed their open-heart surgery units. Medical students are also starting to back away from choosing cardiac surgery as a specialty. Only 124 medical students applied for the 144 heart surgery residency slots this year. Back in 1994, 168 students applied for heart surgery residencies. The decline in bypass surgery also means fewer jobs for heart surgery residents once they complete their training.

Doctor Referral Angst

Journal

The problem:

In the new world of cardiac care, cardiologists are gaining more clout in their referral relationships with cardiac surgeons. In fact, they're beginning to wield it to hammer out more beneficial arrangements. The article highlights a bitter battle between a group of Maryland cardiologists and a group of cardiac surgeons with whom the cardiologists had a long-standing referral relationship. The cardiologists hired their own cardiac surgeons and started referring patients to them.

In a recently filed lawsuit, the surgeons accused the cardiologists of violating state unfair-competition laws and trying to drive the surgeons out of business. As referrals from the cardiologist group dried up, the number of bypass surgeries performed by the surgeon group plummeted from 110 a month back in the late 1990s to 25 a month today.

This dispute throws a spotlight on referral and financial relationships between the two specialties. Although medical ethics frown on reimbursing a referring doctor, physicians within a cardiologist surgeon group, or any other multispecialty group, are generally exempt from anti-kickback and self-referral laws. The doctors also don't have to tell patients about any financial relationship they may have with the surgeons in the group.

Today's Fiscal Reality

The economics of cardiac care have also hit cardiologists in the wallet. According to the Medical Group Management Association, revenue per physician for cardiologist groups went up an average of 6% in 2001—a year that saw operating costs rise by an average of 16%. At the same time, Medicare reimbursement for cardiology procedures like angioplasties has declined by more than 30% since 1998. To combat today's fiscal problems, some cardiologist groups are recruiting cardiac surgeons.

Surgeons usually have low overhead costs and command large fees. Therefore, creating a multispecialty medical group by adding surgeons to the line-up can lead to a much healthier bottom line. In the Maryland case, however, paying higher overhead costs in return for a merger with the cardiologists struck the cardiac surgeon group as a subtle form of kickback, and the merger talks broke down. The cardiologist group claimed it was merely trying to reapportion the group's income, as it is legally permitted to do.

Although the surgeons proposed other merger options, the cardiologists insisted that there must be some transfer of income for the merger to be viable— a requirement that ended merger talks. The cardiologist group then began recruiting surgeons, hiring at least one surgeon from the group they tried to merge with. The new surgeons began getting the lion's share of referrals from the cardiologists, which incited the current legal conflict.