1. Cardiovascular Market Trends
Cardiovascular Roundtable & Service Line Strategy Advisor
Cardiovascular Market Trends
Ready to Use Presentation Slides
Prepared April 2016

2. Growth Outlook Payment Updates Reform & Payment Transformation
Service Line Strategy
Clinical Innovation
Additional Resources

3. Enduring Pressures Escalating New Pressures Emerging
Market Forces Impacting CV Strategy
Enduring Pressures Escalating
New Pressures Emerging
Decelerating Reimbursement Growth
Increase in Risk-Based Contracts, P4P1
Shifting Demand to Less Profitable Services
Empowered Patient Consumers
Heightened Utilization Scrutiny
Pay-for-performance.
Source: Advisory Board Research and Analysis.

4. Cardiovascular Disease Projected to Grow
CV Programs Focusing Investments to Meet Increasing Disease Burden
Projected HF, CHD Prevalence in the U.S.
, Percentage of Total Population
Projected AF Prevalence in the U.S.
, In Millions
Source: Colilla, S., Crow, A., Petkun, W., Singer, D. E., Simon, T., Liu, X. (2013). Estimates of Current and Future Incidence and Prevalence of Atrial Fibrillation in the U.S. Adult Population. American Journal of Cardiology. Oct 2013; 112(8): Heidenreich, P. A., et al. Forecasting the Future of Cardiovascular Disease in the United States: A Policy Statement from the American Heart Association. Circulation. Jan : Advisory Board research and analysis.

5. A New CV Growth Paradigm
Forecasting Growth in CV Outpatient, Medical Services
CV Volume Growth Projections by Sub-Service Line
A Dual Mandate
All-Payer,
Build and expand ambulatory, medical services
Maintain and defend declining procedural volumes
Outpatient Cardiac Cath
Inpatient Arterial Disease
Inpatient Other Vascular
Inpatient Cardiac EP
Inpatient Medical Cardiology
Inpatient Cardiac Cath
Note: Access the Cardiovascular Roundtable’s inpatient and outpatient market estimators for five-year forecasts specific to your market.
Source: The Advisory Board’s Inpatient and Outpatient Market Estimator tools; Advisory Board Research and Analysis.

6. Inducements and Barriers
Assessing Drivers of CV Subspecialty Growth
Five Year Growth Trajectories
Inducements and Barriers
Demographic
Improved ambulatory disease management reduces HOPD volumes
Technology advancements expand minimally invasive treatment options
Poor patient compliance with lifestyle and prevention options
Increasing prevalence of obesity, high cholesterol, diabetes and hypertension
Aging population
RAC audits discourage inappropriate utilization
Emphasis on readmission prevention
Clinical
Market
Focus on population health shifts demand toward early diagnosis and intervention
Percutaneous coronary intervention.
Coronary artery bypass grafting.
Cardiac resynchronization therapy with defibrillation.
Peripheral vascular intervention.
Transcatheter aortic valve replacement.
Source: The Advisory Board’s Inpatient and Outpatient Market Estimator tools; Advisory Board Research and Analysis.

7. -5% 51% 11% PCI Declining as Providers Proliferate
Competition Increasing for Cath Volumes
Number of PCI1 Programs Nationally
PCI Volume and Provider Trends
Decrease in PCI volumes nationally
-5%
Portion of PCI hospitals experiencing contracting demand for PCI
51%
Portion of PCI hospitals performing <25 inpatient Medicare PCI procedures in 2014
11%
Percutaneous coronary intervention.
Source: Advisory Board Research and Analysis.

8. Decrease in total number of CABG admissions between 2008 and 2012
CABG Reaching a Tipping Point
For First Time, More Open Heart Surgery Programs Closing Than Opening
Low-Volume Programs Feeling the Pressure
18,000
CABG Volume Change by Program Volume1
Decrease in total number of CABG admissions between 2008 and 2012
20% with Lowest Volume
CV Forced to Make Difficult Decisions
Leading Indicators for Programs Evaluating Consolidation
Declining program, physician volumes
Low performance on outcomes measures
Inability to secure coverage
Strong, high-quality competitor activity
Conflicting system priorities
Significant market activity in risk-based contracts
Number of U.S. Open Heart Surgery Programs
16 programs closed
Based on 2014 volume.
Note: For additional analyses on open heart program closure and impact, please access the Roundtable blog post “What Happens When Hospitals Shutter Open Heart Programs.”
Source: Advisory Board Research and Analysis.

9. Payment Updates Growth Outlook Reform & Payment Transformation
Service Line Strategy
Clinical Innovation
Additional Resources

10. CV Inpatient Reimbursement Staying Relatively Flat
Mixed Bag of Payment Changes with Final 2016 Rule
Inpatient Cardiac Payment Changes
Payment Updates for Select Services
Final FY 2016 Versus Final FY 2015
Final FY 2016 Versus Final FY 2015
CV Service
Payment Change
DES
2.4%
Peripheral Vascular Intervention/Bypass
1.6%
CAS
1.5%
CABG
1.1%
Bare Metal Stent/Other PCI
1.0%
Arrhythmia
0.9%
ICD
0.8%
Pacemaker
0.6%
Amputation
0.5%
CEA
(0.3%)
AMI
(0.6%)
Heart Failure
(1.0%)
Valve
TAVR
(3.2%)
Cardiac Cath1
Cardiac Surgery
Medical Cardiology
EP1
Cardiac Overall
Inpatient Vascular Payment Changes
Final FY 2016 Versus Final FY 2015
Amputation
Arterial Disease
Other Vascular
Venous Disease
Vascular Overall
Change in payment is primarily a result of ablation codes moving from cath to EP sub-service line.
Source: FY 2016 Inpatient Prospective Payment System Final Rule, CMS; Advisory Board Research and Analysis. .

11. For First Time, Outpatient Payments Will Fall
Payment Decrease Reflective of Expected Efficiency Gains
Hospital Outpatient Payment to Decline
APC Payment Rates for Select CV Services2
Final CY
Final CY 2016
APC
Description
2016 Payment
5188
Diagnostic Cardiac Cath
$2,549
51911
Level 1 Endovascular Proc.
$4,592
51931
Level 3 Endovascular Proc.
$14,612
52121
Level 2 Electrophysiologic Proc.
$4,698
52131
Level 3 Electrophysiologic Proc.
$15,561
52221
Level 2 Pacemaker & Similar Proc.
$6,697
52311
Level 1 ICD and Similar Proc.
$21,930
5561
Level 1 Echo Without Contrast
$454
5181
Level 1 Vascular Proc.
$863
5182
Level 2 Vascular Proc.
$2,247
5183
Level 3 Vascular Proc.
$3,795
5592
Level 2 Nuclear Medicine
$441
5593
Level 3 Nuclear Medicine
$1,108
2016
2013
2014
2015
Significant Restructuring of Nine APC Clinical Families 1
Vascular Procedures 5
Imaging Services 2
Diagnostic Tests 6
Ortho Procedures 3
GI Procedures 7
Skin Procedures 4
Excision/Biopsy and Incision and Drainage Procedures 8
Urology 9
Air Endoscopy
Comprehensive-APCs.
Complete CV outpatient payment updates table available on the online Resource Page.
Source: CY 2016 Hospital Outpatient Prospective Payment System Final Rule, CMS; Advisory Board Research and Analysis.

12. Interventional Radiology
Physician Payment Updates Holding Steady
SGR Replacement Locks in Slow Payment Growth Going Forward
Estimated Impact on Select Specialties
Payment Changes for Select CV Services
MPFS Final CY 2016
MPFS Final CY 2016 Versus CY 2015
CPT
Procedure Description
Payment Change
93458
Left heart cath (26)
0.0%
78452
Heart muscle image spect, mult (TC)
33208
Insertion of heart pacemaker
33430
Replacement of mitral valve
33533
CABG, arterial, single
(0.1%)
93650
Ablate heart dysrhythm focus
93306
Transthoracic echo with spectral and color flow Doppler (TC)
93015
Cardiovascular stress test
(1.2%)
Cardiology
Cardiac Surgery
Thoracic Surgery
Interventional Radiology
Annual Physician Payment Updates Established by MACRA1
0.75%
APM2 Track
MIPS3 Track
2026 Onward
Medicare Access and CHIP Reauthorization Act of 2015; the bill repealing and replacing the SGR.
Advanced alternative payment models.
Merit-Based Incentive Payment System.
Source: CY 2016 Medicare Physician Fee Schedule Final Rule, CMS; H.R.2: Medicare Access and CHIP Reauthorization Act of 2015; Advisory Board Research and Analysis.

13. A Dramatic Shift to Risk for Physician Payments
SGR Repeal and Replacement Imposes Mandatory Value-Based Models
Two Physician Payment Tracks Established by MACRA, Beginning 2019
Key Takeaways for CV Leaders 1
Merit-Based Incentive Payment System (MIPS)
Consolidates existing P4P programs into one program with a single payment
Score based on quality, resource use, clinical improvement, and EHR use
Payment adjustments hit -9% to +27% at risk for 2022 and onward
More Risk Is on the Table
MACRA places more payment at risk than hospital P4P programs
Aligns Physician and Hospital Incentives
New payment models encourage strong partnership to succeed on similar value-based goals 2
Alternative Payment Models (APMs)
Requires physicians have significant share of revenue in contracts with two-sided risk
Provides financial incentives (5% participation bonus ), exemption from MIPS
APMs yet to be defined by CMS; must involve downside risk, quality measurement
But Still a Few Years to Go
Until MACRA models take effect in 2019, PQRS and VBPM programs will continue to roll out
Note: For additional details, please see the Advisory Board’s webinar on the SGR Repeal.
Source: H.R.2: Medicare Access and CHIP Reauthorization Act of 2015; Advisory Board research and analysis.

14. 140% Increasing Support for Site-Neutral Payments
Unbalanced Volume and Payment Growth by Setting Captures Attention
Higher Reimbursement at HOPD1 Versus Freestanding Physician Office
Historic Support for Site-Neutral Payments
MedPAC Urges Site-Neutral Payments
First recommended in June 2013
Reiterated earlier recommendations in March 2014 and August 2014
140%
Medicare payment differential for a level II echo performed in HOPD vs. physician office setting
CMS Begins Collecting Site-of-Service Data
Finalized in CY 2015 HOPPS rule
Hospitals billing under HOPPS will report modifier, providers will use new POS3 codes on claims
Reporting voluntary in 2015, mandatory 2016
Disproportionate HOPD Volume Growth
Echo2 Volume Change by Setting,
Included in Bipartisan Budget Act of 2015
Physician Office
Signed by President Obama on Nov. 2
Prohibits newly opened or acquired off- campus HOPDs from billing on HOPPS beginning January 1, 2017
Hospital outpatient department.
CPT
Place of service.
Source: MedPAC, CY 2015 Hospital Outpatient Prospective Payment System Final Rule, CMS; H.R Bipartisan Budget Act of 2015; Advisory Board research and analysis.

15. CV Services Vulnerable to Short-Stay Scrutiny
Two-Midnight Rule Focuses Attention on Appropriate Site of Service
Service Lines with Highest Proportion of Cases At-Risk for Short Stay Scrutiny
Length of Stay for Common CV Cases
Medicare, FY 2014
Cardiac Services
Vascular Services
Medicare FFS Short Stays, FY 2014
CV Condition
1-Day LOS
1 or 2-Day LOS
Arrhythmia
23%
48%
Heart Failure 9%
26%
Hypertension
30%
59%
ICD
15%
PCI
20%
47%
PPM1
12%
33%
PVI2
14%
29%
Chest pain
75%
Permanent pacemaker.
Peripheral vascular intervention, transcatheter or bypass.
Note: Access the Two-Midnight Rule Impact Assessment tool for an institution-specific assessment of short-stay services at-risk for payment denial.
Source: Medicare Provider Analysis and Review File, CMS, February 18, 2015; Advisory Board Research and Analysis.

16. Reform & Payment Transformation
Growth Outlook
Payment Updates
Reform & Payment Transformation
Service Line Strategy
Clinical Innovation
Additional Resources

17. Payment Reforms Target CV Services
Bundled Payment Initiatives
Accountable Care Organizations 17
of the 48 conditions in BPCI1 are CV-specific
97%
of the costliest 20% of Medicare beneficiaries have at least one CV diagnosis3
93%
of BPCI participants in Models 2, 3, and 4 are bundling for at least one CV condition2
ACOs target cost-reduction efforts toward these costliest populations
Pay-for-Performance Programs
CV-Specific Alternative Payment Model
50%
of the six conditions included in the Hospital Readmissions Reduction Program for FY 2017 are CV-related
CMS launches Million Hearts®: CV Disease Risk Reduction Model in January 2016
New cost per episode of care and excess days utilization measures added to IQR4 for HF, AMI, signaling potential future inclusion in VBP5
First pilot payment innovation model tying payment to CV risk reduction, incentivizing primary prevention
Bundled Payment for Care Improvement Initiative; 2) As of July 15, 2015; 3) Medicare, 2011.
4) Hospital Inpatient Quality Reporting program; 5) Value-Based Purchasing program.
Source: CMS, “Bundled Payment for Care Improvement Initiative,” CMS, Advisory Board Research and Analysis..

18. Scope of CV Accountability Expanding
New Metrics, P4P Up the Stakes for Long-Term Care Management
Key Drivers Expanding CV Accountability for Cross-Continuum Outcomes
Hospital Readmissions Reduction Program
Excess Days in Acute Care Metrics for HF, AMI
Alternative Payment Models
Adding CABG in FY2017
Maximum penalty now 3% of all inpatient Medicare revenue
Added to IQR for 2018
Measures all acute use 30- days post-discharge (e.g., ED, observation, inpatient)
BPCI including episodes of 30, 60, 90 days
ACOs further expand target care episode
Expands conditions
Expands utilization scrutinized
Expands timeframe
Source: Advisory Board Research and Analysis.

19. Ready or Not…CABG Added to HRRP for FY 2017
Breaking Down the New 30-Day CABG Readmissions Metric
CABG Added to Current HRRP Conditions
Claims-based, risk-adjusted metric
All-cause, unplanned readmissions
Hospital penalized for excess CABG readmissions even if it performs well for other conditions
Targeting the Admitting Hospital
Penalizes index admitting hospital vs. discharging hospital
This is different from the other HRRP measures (e.g., HF, AMI), which target discharging hospital
Hospitals Are Already Under the Microscope
Penalties start with FY payment (October 2016)
Will likely be based on performance from July 1, 2012 to June 30, 20151
Possibly Excluding the Most Vulnerable
Procedure Criteria: Isolated CABG only; does not include CABG + valve or valve surgeries
Hospital Criteria: Programs with >25 CABGs over three-year measurement period (excluding Medicare Advantage)
Will not be finalized until FY2017 IPPS ruling, yet this timeframe is consistent with past years.
Source: Suter SG, et al., “Hospital-Level 30-Day All-Cause Unplanned Readmission Following CABG: Updated Measure Methodology Report,” Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html; Advisory Board Research and Analysis.

20. 93% CMS Aiming to Expand Bundled Payment Initiatives
Placing Even Greater Emphasis on Total Cost Controls
Providers Involved in BPCI Phase II
Inpatient Ruling Makes Clear CMS’ Intent to Continue Bundling in Future
As of August 2015
CMS is committed to testing new payment and service delivery models… The primary goal for this solicitation of public comments is to receive information about a potential expansion of the BPCI initiative.
CMS FY 2016 IPPS Proposed Rule
Majority of BPCI Programs Involve CV Bundling
Areas CMS Requested Input Regarding BPCI
Breadth and scope of expansion
Episode definitions
Setting bundled payment amounts
Administering bundled payments
Quality measurement, payment for value
Transitioning from FFS to bundled payments
Percentage of BPCI participants in models 2, 3, 4 that are bundling for at least one CV condition1
93%
As of July 15, 2015.
Source: CMS, “Bundled Payment for Care Improvement Initiative,” CMS, FY 2016 Inpatient Prospective Payment System Final Rule, CMS; Advisory Board Research and Analysis.

21. 1 2 3 Are CV Services Next for Mandatory Bundling? 532% 800K 230K
CMS’ Criteria Used to Select Joints Applicable to Many CV Services
Three Criteria Used to Select Joint Replacement Bundle 1 2 3
Significant Cost Variation
High Prevalence In Medicare Beneficiaries
Services Bundled in BPCI Program
532%
800K
Most Common Bundles Among BPCI Participants Bundling for CV
Cost variation of PCIs in one sample market
Discharges with heart failure as primary diagnosis, 2014
Rank
CV Condition/Procedure 1
Congestive heart failure 2
Acute myocardial infarction 3
Cardiac arrhythmia 4
Pacemaker 5
Coronary artery bypass graft
230K
CABG procedures in 2014
Source: Blue Cross Blue Shield, “A Study of Cost Variation for PCI in the US,” July 16, 2015; CMS, “Bundled Payment for Care Improvement Initiative,” CMS, Advisory Board Research and Analysis.

22. Impact of Care Delivery Transformation on CV
Leap in Cardiologists Reporting Participation in ACOs !
Possible Impact on CV Programs
Market Scenarios 1
PCP-led ACO develops
ACO limits access to high-end CV procedures
PCPs refer to CV later in disease progression
PCPs take a greater role in ongoing care management of CV patients
Hospitals deemphasize investment in high-end acute care to focus on ambulatory, population health
CV program locked out of referral network 2
Competitor hospital forms an ACO 3
Your institution becomes part of an ACO
Self-Reported Cardiologists Participating in ACOs
Source: and 2013 Medscape Physician Compensation Reports: Advisory Board Research and Analysis.

23. Year 1 Years 2+ “Million Hearts” Nudging CV into Prevention
CMS Introduces First Pilot Specifically for CV Primary Prevention
Screen Medicare beneficiaries who have not yet had heart attack or stroke for ten year risk
Million Hearts®: CV Disease Risk Reduction Initiative
Year 1
CMMI1 initiative announced May 2015
Will run five years, beginning January 2016; CMMI hopes to enroll 720 practices
Targets for risk management are panel-wide, not per-patient, emphasizing development of holistic health management strategies
Only includes patients who have not yet had a heart attack or stroke
Ultimate goal is to prevent 1 million heart attacks and strokes across next five years through clinical- and community-based strategies
Identify highest-risk patients
Manage highest-risk patients
Years 2+
Submit data biannually to CMS
CMS provides payment for medical management
Center for Medicare and Medicaid Innovation.
Source: “Million Hearts,” CMS, Advisory Board Research and Analysis.

24. Service Line Strategy Growth Outlook Payment Updates
Reform & Payment Transformation
Service Line Strategy
Clinical Innovation
Additional Resources

25. Snapshot of the CV Service Line Today
Current Programs Range in Sophistication
Spectrum of Features Characterizing CV Service Lines
Percentage of Service Line Respondents with Each Feature
Foundational
Progressive
Dedicated administrator (85%)
Dedicated strategic plan (77%)
Joint physician/business administrator leadership (71%)
Standardized clinical protocols1 (65%)
Standardized operational policies, procedures (61%)
Majority of CV specialists contractually affiliated2 (60%)
Managed against a defined dashboard (60%)
Infrastructure for multidisciplinary care, treatment planning (55%)
Defined governance structure with purview over strategy, operations (54%)
Dedicated budget (52%)
Shared performance metrics across all divisions (52%)
Integrated reporting structure for inpatient and outpatient services (50%)
Reporting structure organized around specific disease states (38%)
Collocated services (38%)
Unified identity across sites3 (36%)
Single, integrated profit/loss statement (29%)
E.g., implementation of evidence-based practice.
E.g., via employment or comanagement.
E.g., recognized by physicians and patients as one cohesive collection of services.
Source: 2014 Cardiovascular Roundtable CV Organizational and Leadership Structure Survey; Advisory Board Research and Analysis.

26. New Service Line Structures Align with Strategic Aims
Adapting Org Structure in Unique Ways in Response to Market Dynamics
Multiple Priorities for Service Line Reorg1
Leading to New Service Line Models
Rank
Priority 1
Enabling greater market capture 2
Enabling more cost-effective care delivery 3
Embedding physicians into leadership 4
Improving multidisciplinary care delivery 5
Developing a disease-based model 6
Integrating acquired/affiliated physician offices 7
Incorporating multiple hospitals into a system-wide service line 8
Merging cardiac and vascular services 9
Integrating ambulatory, inpatient services 10
Supporting adoption of value-based contracts
Integrating ambulatory services under service line umbrella
Incorporating physician practices into reporting structure
Organizing services around disease states across service line
Developing a system-wide CV service line
Grouping services by care redesign focus
Of respondents who indicated they have or plan to reorganize; respondents were asked to rank top three priorities for their service line reorganization. Rank determined by a weighted calculation: items ranked first are valued higher than the following ranks; the score is the sum of all weighted rank counts.
Source: 2014 Cardiovascular Roundtable CV Organizational and Leadership Structure Survey; Advisory Board Research and Analysis.

27. How Your Peers are Organizing their Service Line
Reporting Relationship to CV Service Line for Hospital CV Services and Units
Percentage of Respondents
CV Service Line
Noninvasive CV Diagnostics
Cath Lab
EP Lab
Cardiac/Vascular Rehab
Cardiac Surgery
Hybrid OR
Direct 85%
Indirect 11%
External 4%
Direct 84%
Indirect 12%
External 4%
Direct 83%
Indirect 13%
External 4%
Direct 71%
Indirect 14%
External 14%
Direct 52%
Indirect 38%
External 10%
Direct 43%
Indirect 32%
External 25%
Vascular Surgery
Inpatient Cardiac Units
Thoracic Surgery
CV Nursing
Interventional Radiology
Direct 35%
Indirect 33%
External 32%
Direct 27%
Indirect 37%
External 37%
Direct 29%
Indirect 35%
External 36%
Direct 29%
Indirect 32%
External 39%
Direct 16%
Indirect 16%
External 68%
Note: Direct = directly reports to CV service line; indirect = indirectly reports to CV service line; external = does not report to CV service line.
Source: 2014 Cardiovascular Roundtable CV Organizational and Leadership Structure Survey; Advisory Board Research and Analysis.

28. CV Service Line Purview Expanding Definition of Core Services
More of the Continuum Reporting to CV Service Line
Purview Often Extending Outside the Acute Arena
Reporting Relationship to CV Service Line for Key Ambulatory Services
Percentage of Respondents
CV Service Line Purview
Acute CV Services
Outpatient CV Clinics
Cardiac Wellness & Prevention
CV Physician Offices
Direct 65%
Indirect 16%
External 19%
Direct 61%
Indirect 18%
External 21%
Direct 39%
Indirect 19%
External 42%
Expanding Definition of Core Services
Source: 2014 Cardiovascular Roundtable CV Organizational and Leadership Structure Survey; Advisory Board Research and Analysis.

29. Traditional Responsibilities Emerging Strategic Responsibilities
Service Line Administrator Role in Transition
Expected to Take on Expanded Purview, More Strategic Focus
Market Forces Transforming CV Administrator Role
Yielding New Challenges
Traditional Responsibilities
Emerging Strategic Responsibilities
Skillset not aligned with new role
Managing inpatient setting
New business development, volume growth
CV operations (e.g., throughput, personnel management)
Aligning full CV continuum
Total cost management
Capturing market share
Aligning with physicians
Defining CV’s care redesign strategy
Building partnerships with new entities (e.g., ACOs)
Strategy more complex due to reform, new care models
Unfamiliarity with new sites under CV purview (e.g., ambulatory)
“I used to be a program builder—I started the cath lab, the EP lab, figured out what equipment to buy. Now, my role is to understand where to direct patients in the system, develop risk-based contracts, contract with physicians, etc.”
Workload becomes unmanageable as new responsibilities added
VP of CV Services, System in the East
Source: Advisory Board Research and Analysis.

30. 11% 35% A Steady Trend of CV Physician-Hospital Alignment
ACC1 Outlines Recent Trends in Employment
Percentage of Cardiologists Employed by Hospitals, 2007 vs. 2012
2007
2012
11%
35%
Continuing to Engage in Formal Affiliation
Roundtable Members Using Each Alignment Strategy, by CV Specialty, 20142
American College of Cardiology.
Hospitals instructed to select “yes” response if any CV specialist is employed or under co-management.
Source: 2012 American College of Cardiology Physician Practice Census, Cardiovascular Roundtable CV Physician Alignment Strategy Survey; Advisory Board Research and Analysis.

31. Prevalence of CV Service Line Leadership Models
Programs Embracing Shared Leadership at the Top
Dyad, Triad Models Common for Managing CV Service Lines
Prevalence of CV Service Line Leadership Models
Percentage of Respondents, 2014
n=97
Dyad (e.g., business administrator and physician leader)
Other
Business Administrator Only
Triad (e.g., business administrator, two physician leaders from different CV specialties)
Source: 2014 Cardiovascular Roundtable CV Organizational and Leadership Structure Survey; Advisory Board Research and Analysis.

32. Key Responsibilities for Administrative and Physician Leaders
Dyad Leaders Sharing Management Responsibilities
Joint Leadership Capitalizes on Each Individual’s Expertise
Key Responsibilities for Administrative and Physician Leaders
Administrator Dyad
Shared
Physician Dyad
Clinical operations
Budget management
Supply chain management
Coordination with related hospital functions (e.g., nursing, finance)
Labor relations
Strategic planning
Performance scorecard development, monitoring
Marketing, referral strategy
CV care redesign strategy
Cross-continuum care coordination
New clinical program development, partnerships
Quality improvement
Protocol development, evidence-based practice
Resource utilization management, cost control
Advocating service line initiatives to physician peers
Medical staff relations
Reviewing technology, clinical program requests
Source: Biga C et al., “Developing and Managing a Successful CV Service Line,” American College of Cardiology, 2012; Advisory Board Research and Analysis.

33. Elapsed Time Since Merger
CV an Afterthought of Macro-Level Market Strategy
Network Realignment of High-End CV Services Often Occurring Later
Common Action Items Following Health System Merger or Acquisition
Primary Options for More ‘Rationale’ Deployment of CV Services
Consolidate senior corporate management
Consolidate Services
Reduce redundancy in services and sites to eliminate excess capacity, streamline operations
Immediate
Eliminate duplicative contracts, renegotiate with suppliers
Reallocate Services
Distribute services in a more principled manner that aligns with market demand, supply
Elapsed Time Since Merger
Consolidate administrative departments (e.g., IT, finance)
Substitute Services
Downsize or consolidate one service while expanding another, allowing for more specialization
Consolidate ancillary services (e.g., radiology, lab, pharmacy)
Reallocate, consolidate CV services
Expand Services
Grow service offerings in markets with identified portfolio gaps
Long Term (3-5 Years)
Source: Advisory Board Research and Analysis.

34. Purchasers’ Geographic Preferences for CV Services
Feeling Obligated to Offer a Full Suite of CV Services
Yet Difficult to Balance Access Demands for Core, High-End Services
Purchasers’ Geographic Preferences for CV Services
Balancing Demand for Convenience with Willingness to Travel
Neighborhood Conveniences
Local Offerings
Regional/National Destinations
Consolidated, collocated CV outpatient centers
Virtual visits, remote monitoring
Disease management, care navigation
Disease-specific clinics (e.g., HF, valve, a-fib)
Same-day, urgent clinics
Transplants
VADs3
Robotic surgery
TAVR4
Potential Differentiators
Clinic consultations, device checks
Routine cardiac, vascular diagnostics
Labs and medication management
CV non-invasive imaging
Coronary CTA1
Diagnostic caths
PCI
PVI2
ICD, pacemaker insertions
Cardiac rehab
Open heart surgery
Surgical aortic, mitral valve repair/replacement
EP ablation
Core Services
Computed tomography angiography.
Peripheral vascular interventions.
Ventricular assist device.
Transcatheter aortic valve replacement.
Source: Advisory Board Research and Analysis.

35. Referring Physician Preferences Steadily Evolving
High-Value Specialist Partners Succeed in Changing Market
Source of CV Patient Referral Still Physician
Referring Physician Preferences for Specialist Partners
Respondents to Specialist Consumer Choice Survey1
Can assure quality, patient-centered care
n=12,610
Low cost, ensuring only appropriate use
Gives timely feedback on consults, referral requests
Provides easy-to-use guidelines on when and how to refer
Physician Referral (PCP or Specialist)
Self- Referral
Guarantees to return patient once appropriate
Provides support for ongoing care
Drivers of Shifting Preferences
Alternative payment models (e.g., ACOs) place PCPs at risk for total cost
New physician reimbursement mechanisms (e.g., MIPS) place PCPs accountable for cross-continuum coordination with specialists
Online survey of 12,610 patients who had specialist appointments in the past 12 months.
Source: 2015 Marketing Innovation Center Specialist Consumer Choice Survey; Advisory Board Research and Analysis.

36. Market Characteristic
What Does the Market Want From You?
Defining a Growth Strategy that Meets Your Unique Market Needs
Market Characteristic
Growth Approach
Highly competitive CV market
Prioritize access, designing patient-centered services to keep patients within network
Strengthen partnerships with PCPs, ACO, to secure and enhance referral streams
Significant ACO presence
Pervasive payer steerage and/or patients with HDHPs
Ensure care provided in lowest-cost setting; consider moving diagnostics to physician clinics to lower co-payment
Rapid transition to population health models in market
Develop CV wellness, prevention clinics affiliated with the CV service line
Strong retail clinic presence
Double-down on convenience and access; enhance partnerships with clinic’s affiliated PCPs to capture downstream referrals
Presence of large, accountable (e.g., self-insured) employers
Propose risk-based, direct-to-employer contracts for CV to capture employee volume
Source: Advisory Board Research and Analysis.

37. Clinical Innovation Growth Outlook Payment Updates
Reform & Payment Transformation
Service Line Strategy
Clinical Innovation
Additional Resources

38. Interventional Cardiology
Technology Pipeline for Cardiovascular Services
Future-Looking Technologies and Procedures in CV
Cardiac Surgery
Interventional Cardiology
EP/Heart Failure
Vascular
Move Toward More Advanced Heart Assist Devices
Innovative Therapies Show Promise for Intervention
Remote Monitoring Aids Heart Failure Management
High-End Endovascular Techs Expand Treatment
Third Generation VADs1
Next-gen VADs aim to be smaller and fully implantable, eliminating the driveline
VADs also to be magnetically levitated, eliminating wear and tear on the device and allowing longer device life in patients
Interventional Valve Repair/Replacement
Transcatheter aortic and mitral valve interventions fill treatment gap for patients at surgical risk
Left Atrial Appendage Closure
Catheter-delivered device seals off left atrial appendage, providing an alternative therapy for mitigating stroke risk in AF2 patients
Implantable Pulmonary Artery Sensors
Permanent implantable sensors measure pulmonary artery pressure to monitor heart failure progression
Sensor requires no batteries, leads, or replaceable parts; sends data to electronic system that can be accessed daily
Fenestrated Stent Grafts
Grafts with holes align with intended branch vessels, permitting incorporation of the visceral and renal arteries into the endovascular repair
Advancements open up endovascular therapy to patients with short or angulated necks
Ventricular assist devices.
Atrial fibrillation.
Note: For additional information on progressive CV technologies, access the Cardiovascular Clinical Technology Compendium.
Source: Advisory Board Research and Analysis.

39. TAVR1 Market Expanding Despite Barriers to Entry
Infrastructure Needs, Financial Challenges Not Limiting Investment
Number of TAVR Sites in the U.S. MEDPAR data,
Estimated TAVR Device and Procedure Costs
Program Components Supporting Approval of Commercial TAVR Site
Clinical Quality, Coordination
Operations
Staffing
Exceptional outcomes for valve surgery; infrastructure for multidisciplinary decision making (e.g., valve case conferences)
Branded valve/structural heart center; formal valve clinic screening model
At least one physician with TAVR exposure; dedicated valve/TAVR nurse coordinator
Transcatheter aortic valve replacement.
Source: Babaliaros et al. "Comparison of Transfemoral Transcatheter Aortic Valve Replacement Performed In the Catheterization Laboratory (Minimalist Approach) Versus Hybrid Operating Room (Standard Approach)." JACC: Cardiovascular Interventions 7.8 (2014): Advisory Board Research and Analysis.

40. Market Size, Poor Financials Limit MitraClip Adoption
Service May Round Out Comprehensive Valve Clinic Offerings
National Market Estimates for Major Structural Heart Procedures 2014
$35K
Estimated Cost of MitraClip Device
2-3 Days
Estimated MitraClip Patient LOS
$14-$21K
Baseline Medicare Payment Range1
$15K
Maximum Technology Add-On Payment1
Key Drivers of MitraClip Adoption
Program differentiator
Utilizes TAVR program infrastructure
Integrates HF, EP, and structural heart specialists
Potential downstream revenue
FY2016 rates.
Source: Advisory Board Inpatient Market Estimator Tool. Advisory Board Research and Analysis.

41. Watchman Device Targets Significant AF1 Population
Device Offers Percutaneous Option to Seal Off Heart’s LAA2
Stroke Risk and Anticoagulant Use Among AF Patients in Commercial and Medicare Managed Care
, n = 30,757
Treatment gap for stroke risk reduction therapies
Low or Moderate Stroke Risk
High Stroke Risk with Anticoagulant Use
High Stroke Risk without Anticoagulant Use
Portion of thrombi in non- valvular AF patients originating in the left atrial appendage (LAA)
Considerations for Watchman Adoption
Societal guidelines recommend substantial interventional experience prior to adoption
Procedure reimbursed under MS- DRGs ; early adopters report challenging financial margins
Atrial fibrillation.
Left atrial appendage.
Source: Lang, Kathleen, et al. “Anticoagulant use for the prevention of stroke in patients with atrial fibrillation: findings from a multi-payer analysis.” BMC Health Services Research. 14:329. Advisory Board Research and Analysis.

42. CardioMEMS Offers HF Remote Monitoring Platform
Device Sends Pulmonary Artery Data to Central Electronic System
CardioMEMS in Brief
CardioMEMS HF System designed for patients with New York Heart Association (NYHA) Class III HF who have been hospitalized within the past 12 months
Device utilizes a permanent implantable PA sensor that does not require a battery, leads, or replaceable parts
Sensor is implanted through a right heart catheterization procedure and measures a patient’s pulmonary artery (PA) pressure, which studies have shown can indicate worsening HF
Data sent to electronic system that can be accessed daily
System received FDA approval in May 2014
Heart Failure Hospitalization Rates per Patient-Year, CHAMPION Trial
n = 550,
$32B
Annual cost to the U.S. health care system for heart failure patients
Source: "Heart Failure Fact Sheet." Division for Heart Disease and Stroke Prevention. Centers for Disease Control and Prevention, 03 Dec Web. 05 Oct Abraham, William T. et al. “Sustained efficacy of pulmonary artery pressure to guide adjustment of chronic heart failure therapy: complete follow-up results from the CHAMPION randomised trial.” Lancet. 387: Advisory Board Research and Analysis.

43. Fenestrated Stents Extend Endovascular Options
Niche Technology an Option for Advanced Aortic Centers
Zenith Fenestrated AAA1 Endovascular Graft 24-Month Outcomes n= 23, 2009
Fenestrated Stents in Brief
Fenestrated and branched AAA endografts are stents that have reinforced openings (fenestrations) or branches that allow physicians to attach arteries that lead to other organs
Procedure is a viable option for patients who may have once been considered inoperable, such as those with complex aneurysms that are located throughout the entire length of the aorta
Each fenestrated graft is customized to fit the precise anatomy of each aneurysm.
Research suggests devices are both safe and effective in treating carefully selected patients, with low incidence of complications
Aneurysm Shrinkage > 5 mm
70%
40%
Percentage of patients ineligible for endovascular aneurysm repair with unfavorable anatomy of the proximal aortic neck
1) Abdominal aortic aneurysm.
Source: Greenberg RK, et al., “Intermediate results of a United States multicenter trial of fenestrated endograft repair for juxtarenal abdominal aortic aneurysms,” J Vasc Surg, 2009, 50:730-7 Advisory Board Research and Analysis.

44. Physician and Infrastructure Needs for Key CV Growth Opportunities
Before Adoption Consider Infrastructure Needs
Physician and Infrastructure Needs for Key CV Growth Opportunities
Facilities
Key Support Staff
Physician Skill Set
Key Specialist(s)
TAVR
Ideal: Hybrid OR or modified, sterile cath lab
Ideal: Cross-trained or dedicated hybrid room RNs, techs, and valve coordinator (NP)
Advanced interventional skills, including TAVR training requirements
2-5 proctored cases
CV surgeon
Interventional cardiologist (IC)
Radial PCI
Ideal: Cath lab
Ideal: Cath lab RNs, techs with radial case training and experience
Radial access experience, >50 cases preferable
Interventional cardiologist
EP Ablation
Ideal: Dedicated EP lab, potentially hybrid OR for hybrid ablation
Ideal: Dedicated EP RNs, techs, and AF coordinator
RF ablation experience
Additional cryoballoon training
Cox-Maze experience EP
CV surgeon (hybrid ablation)
AAA and TAA Endografts
Ideal: Hybrid OR
Ideal: Cross-trained OR, cath staff or dedicated vascular team
Endovascular training with open aneurysm repair experience
Vascular surgery IC
CV surgeons
LEPAD Interventions
Ideal: Dedicated vascular lab
Ideal: Cath lab RN, techs
Training in variety of access points
Experience with numerous devices
Vascular and CV surgeon IR
Advanced HF Care, VADs
Ideal: OR suite and dedicated HF clinic
Ideal: Dedicated HF mid-levels, VAD coordinator
HF training, experience with high acuity patients
10 VAD implants for DT certification
HF specialist
Source: Advisory Board Research and Analysis.

45. Additional Resources Growth Outlook Payment Updates
Reform & Payment Transformation
Service Line Strategy
Clinical Innovation
Additional Resources

46. Enhancing CV Service Line Strategy
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Comprehensive market and financial analysis to determine investment decisions
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