ECMO: Breaking the unprofitability mythNovember 28, 2023
ECMO: Breaking the unprofitability myth
By Ara Balkian, MD, MBA, Chief Medical Director of Inpatient Operations, Children’s Hospital Los Angeles; Senior Strategic Advisor, Innovative ECMO Concepts
Extracorporeal Membrane Oxygenation (ECMO) is a life-saving treatment for critically ill patients with severe respiratory or cardiac failure. Although the technology was initially developed to facilitate open heart surgery, ECMO use expanded in the 1970s to support non-surgical patients whose organs were critically compromised. Similar to the transformative impact of dialysis or other groundbreaking medical advancements, the effectiveness of ECMO has consistently improved over time. This progress is largely attributable to technological enhancements, streamlined education for healthcare providers, and an abundance of rigorous research dedicated to optimizing patient outcomes. In the last decade, survival rates for ECMO have reached 73% for veno-arterial (VA) ECMO and 71% for veno-venous (VV) ECMO for patients who survived the first 30 days, providing a second chance at life to patients who would have otherwise died.
Despite the fact that nearly 1 million Americans could benefit from ECMO every year, only 10,000 currently receive it—this represents a mere 1% of the potential patient population. Yet, even coupled with the promising survival rates and the opportunity to be at the forefront of medical innovation, many hospitals have been reluctant to establish ECMO programs. This reluctance is largely fueled by persistent misconceptions about the profitability of such programs, leading to an unfortunate hesitation to embrace this life-saving technology. This reluctance not only prevents potential life-saving treatment for critically ill patients but also bypasses a significant untapped revenue source that could bolster the financial stability of these healthcare institutions.
The reality of ECMO’s financial impact paints a different picture from the prevailing myth of economic impracticality. ECMO is, in fact, one of the most profitable services a hospital can provide. Among Medicare-covered admissions, ECMO receives the third-highest payment possible within their Diagnosis-Related Group (DRG) payment model. For patients covered by Medicaid, the reimbursement for this life-saving service is consistently in the top 5 and often the highest reimbursed intervention in most states. The net revenue of ECMO is often hundreds of thousands of dollars per case for Medicare and Medicaid, and can be over one million dollars per case with commercial payers. In addition to the DRG or per diem rate, many ECMO cases fall into “outlier” or “stop-loss” status due to the high charges associated with this care. That status adds additional payments to the baseline rate, which can add significant revenue per case.
Every hospital, from small community hospitals to large academic medical centers, routinely cares for patients that would benefit from ECMO. Using ECMO on these common critical care diagnoses significantly improves their survival and also enhances the reimbursement of that care. Conditions such as respiratory failure, acute myocardial infarction, cardiac arrest, trauma, and sepsis are a few of the common conditions amenable to ECMO.
As a case study example, the reimbursement difference from Medicare for a patient with a pulmonary embolism that was managed by ECMO is 45 times higher than the standard Medicare reimbursement for a pulmonary embolism admission managed without ECMO. This vast difference underscores ECMO’s potential to dramatically elevate a hospital’s financial performance while simultaneously providing life-saving care. Similar examples of significant differences in reimbursement can be shown for a number of clinical conditions. This increase in payment far exceeds the increased cost associated with providing ECMO care, which leads to the positive net revenue seen in this service line.
Beyond the direct financial benefits, an ECMO program can significantly enhance a hospital’s reputation and standing in the community and wider healthcare field. Known as the ‘halo effect,’ the establishment of an ECMO program can signal a hospital’s commitment to cutting-edge treatments and technologies, thereby attracting a higher caliber of staff, more research funding, increased patient referrals, and enhanced philanthropic support from the community. Furthermore, ECMO can serve as a cornerstone that drives referrals and transfers for other high-margin services like cardiovascular surgery, trauma, critical care, and neonatology. The integration of ECMO into these services contributes to a comprehensive continuum of care, further reinforcing the hospital’s position as a leader in advanced healthcare delivery.
As we move into an era where ECMO becomes an increasingly crucial component of critical care services, it’s essential for hospitals to reevaluate their perceptions of ECMO’s profitability. They must also ensure their revenue cycle functions are optimized to fully realize the economic impact of ECMO through contract carve-outs, appropriate charges, proper documentation, coding and billing, and optimized length-of-stay. Ultimately, it’s not about the revenue; it’s about providing the highest level of care for patients and giving those who are critically ill a fighting chance at survival. Given ECMO’s effectiveness in treating life-threatening conditions and its substantial financial return on investment, the key question for all healthcare institutions is not whether to incorporate an ECMO program, but rather how to do so effectively and efficiently.