Cost-Effectiveness of Referring Patients to Centers of Excellence for Mitral Valve Surgery

28 Pages Posted: 29 May 2015 Last revised: 28 Oct 2015

See all articles by Guihua Wang

Guihua Wang

University of Texas at Dallas - Naveen Jindal School of Management

Jun Li

University of Michigan, Stephen M. Ross School of Business

Wallace J. Hopp

University of Michigan, Stephen M. Ross School of Business

Franco Fazzalari

University of Michigan Hospitals

Steven Bolling

University of Michigan Hospitals

Date Written: May 27, 2015

Abstract

BACKGROUND The 2014 American Heart Association/American College of Cardiology Valvular Heart Disease Guidelines state that mitral valve diseases should be repaired at a Center of Excellence (CoE). We evaluate the cost-effectiveness of such referrals.

METHODS We estimate patients’ life expectancy based on projected survival of patients after mitral valve surgery and develop a cost model to calculate short- and long-term benefits and costs to both patients and payers. Benefits include increased life expectancy and avoidance of medical complications for patients. Short-term costs include all upfront payments by patients and payers at the time of discharge. Long-term costs include all payments associated with the condition that prompted the surgical procedure incurred during the remainder of a patient’s life. We assess cost-effectiveness of treating patients with various ages and major comorbidities at CoEs vs non-CoEs. RESULTS Full implementation of the guidelines would result in an increase in the percentage of patients obtaining mitral valve repair instead of valve replacement from 58% to 72%. Depending on the patient’s age and comorbidities, it would also result in a 6.64% to 12.47% reduction in mortality, 7.85% to 9.97% reduction in reoperation, 9.97% to 17.16% reduction in stroke, and an average gain of 3.77 to 9.88 months of life expectancy. Finally, greater reliance on CoEs results in financial savings to payers, due to avoidance of the costs of future complications.

CONCLUSION Patients benefit from mitral valve surgery at a CoE regardless of their age or comorbidities. Payers may incur additional short-term costs when patients are referred to a CoE, but these are fully offset by long-term savings at the current repair rate gap of 24% between CoEs and non-CoEs in New York State. Redesigning co-pay structures and/or refining the set of patients who are referred to CoEs could further align the incentives of patients and payers on a case-by-case basis and achieve an even more desirable social outcome.

Keywords: Cardiac Surgery, Healthcare Outcomes, Cost Effectiveness

JEL Classification: I12

Suggested Citation

Wang, Guihua and Li, Jun and Hopp, Wallace J. and Fazzalari, Franco and Bolling, Steven, Cost-Effectiveness of Referring Patients to Centers of Excellence for Mitral Valve Surgery (May 27, 2015). Ross School of Business Paper No. 1281, Available at SSRN: https://ssrn.com/abstract=2611186 or http://dx.doi.org/10.2139/ssrn.2611186

Guihua Wang (Contact Author)

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Jun Li

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

Wallace J. Hopp

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

Franco Fazzalari

University of Michigan Hospitals ( email )

1500 E. Medical Center Drive
Ann Arbor, MI 48109
United States

Steven Bolling

University of Michigan Hospitals ( email )

1500 E. Medical Center Drive
Ann Arbor, MI 48109
United States

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