Running Head: ELECTROCONVULSIVE THERAPY (ECT) PROGRAM

Business Decision of Uncertainty Analysis of Electroconvulsive Therapy (ECT) Program QNT /HC 561

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Business Decision of Uncertainty: ECT The Kennedy University Healthcare System is looking to establish an outpatient electroconvulsive Therapy (ECT) program. Currently ECT services are offered throughout the state with the largest concentration being from Trenton northward. At this time, only Hampton House in West Hampton, NJ and Virtua-Mount Holly offer ECT services in Southern New Jersey. The use of electroconvulsive therapy (ECT) began in 1938 as a treatment modality for patients with severe depression and gained widespread use in the middle to late part of the 20th century. The refinement of anesthesia processes has led to a safer, more readily accepted use of the procedure. ECT is currently used worldwide to treat patients who have reactions to, or are resistant to traditional psychiatric medications. Additionally, newer research suggests that ECT may have a beneficial effect on other therapy resistant conditions such as agitated dementia. To determine the expected rate of return (ERR) on developing a Electroconvlusvie therapy program an analusis of key attritubes using a weighted aveage model will be performed. The key attributes were assigned levels of importance or weights based on level of influence on the program. . The key attributes used in the analysis are:

Primary Insurance carriers AETNA, Blue Cross & Blue Shield (BCBS) and Medicare Payer mix of medicare and private insurance Case volume projections Cost per treatment Revenue per treatment

From the above important factors in determine the viableiu of the program a rank was assigned to each that factored in their level of importance. Coming up with the right categories or factors and

BUSINESS DECISION OF UNCERTAINTY: ELECTROCONVULSIVE THERAPY 3 then giving each of those factors just the right ranking is an iterative process. The only caveat was that all of the rankings must add up to 1.0. To see ther ranking of atttriuvte relatd to ECT therpay plase refer to appendix A. Facilty Cost per treatment Using the DRG code value the primary insurance carriers and Medicare were assigned a score from a scale of one to ten with 10 considered the highest rate. Appendix A presents the Key attributes with their weight of importance and scores. Using The Weight of importance and assigned scores for the insurance carriers the total weight points were calculated and compared agasint the siz attributes. The two primary insurance carriers that have the best outcomes would be Medicare and BCBS. The least like carrier would be Aenta. In addition to determining case outcomes a probbilty distritbuion was called for each scenario. Probabliy distribution help in providing a risk analysis. Appendix B presents the calculated probailty outcomes for each case scenario. Using the probability outcomes the insurance carriers and Medicare were ranked. The data for the probability ranking of the insurance carriers and Medicare are located in Appendix C. The insurancde carrier were ranked as follows: (1) Medicare, (2) BCBS, and (3) Aenta. Patients selected for ECT will begin a series of treatments, which is considered the acute phase of treatment and typically numbers 10 treatments. Approximately 50% of patients will require "maintenance" treatments monthly for an indefinite period. Once the program is fully established, the mix of patients will be 60% acute treatments and 40% maintenance. Using the payer-mix ratio, DRG calculations and case volume projection the return of investiment was calculated. Information is presented in Appeendix D. Financial analysis also indicate the insurance carrier ranked as Best and most like outcomes also yield rate of return. Medicare payment averaged 700 to 800 more per treatment course that Horizon Blue Cross-Blue

BUSINESS DECISION OF UNCERTAINTY: ELECTROCONVULSIVE THERAPY 4 Shield and Aetna. Combing all carriers and Medicare has the pontential to yield a revenue stream of about $610,500 in the first year based on the current analysis. The probability and financial analysis above demonstrates that there is a good return on investment for ECT thereay program. The expected increase in volume and revenue generate would provide a positive outcome for the Kennedy Health system. By utilizing existing systems in place at Cherry Hill we will be able to deliver this new service through Same Day Surgery with a small capital expense and very minimal ongoing operating expense requirements. The safety and efficacy of this treatment is well documented, making this new service highly important to the success of our difficult to treat, adult behavioral health clients. Electroconvulsive therapy has been used for more than 70 years and has been determined to be a safe and effective treatment for mood disorders that are resistant to traditional treatments. This is a valuable and potentially profitable program that would allow Kennedy to gain and even stronger market share in the South Jersey behavioral health market.

References Cooper, D.R. & Schindler, P.S. (2006). Business research methods (9th ed.). Boston: McGraw-

BUSINESS DECISION OF UNCERTAINTY: ELECTROCONVULSIVE THERAPY 5 Hill/Irwin. Retrieved from University of Phoenix, QNT561 Applied Business Research & Statistics Website. Center for Disease Control. (2009). CDC Seasonal Influenza Q & A. Retrieved from http://www.cdc.gov/flu/about/qa/disease.htm Center for Disease Control. (2010). CDC Seasonal Influenza. Retrieved from http://www.cdc.gov/flu/about/qa/vaccineeffect.htm Center for Infectious Disease Research & Policy. (2009). Study Finds Flu Vaccine Benefits for Older Workers. Retrieved from http://www.cidrap.umn.edu/cidrap/content/influenza/general/news/jan1409adults-jw.html

APPENDIX A Development of ECT program Aetn Likely Case Outcome BCB Medicar Aetn BCB

Medicar

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a Attributes insurance carrier payermix treatment volume treatment cost treatment revenue treatment cost Weight of importance 5 8 8 10 10 10 5 4 5 8 6 4 5 4 8 7 4 10 8 10 2 10 25 32 40 80 60 40 277 25 32 64 70 40 70 301 50 64 80 20 100 80 394 S e a S e

7 8 Likely Case Outcome

Development of ECT program Aetn a Attributes insurance carrier payermix treatment volume treatment cost treatment revenue treatment cost Weight of importance 5 8 8 10 10 10 10 6 10 2 10 8

Worse Case Outcome BCB Medicar Aetn BCB S e a S

Medicar e

4 6 5 9 10

6 7 7 6 5

50 48 80 20 100

20 48 40 90 100

30 56 56 60 50

Development of ECT program Aetn a Attributes insurance carrier payermix treatment volume treatment Weight of importance 5 8 8 10 6 7 6 4

4 3 80 40 30 Worse Case Outcome 378 338 282 Best Case Outcome BCB Medicar Aetn BCB Medicar S e a S e

6 7 9 7

6 10 8 9

30 56 48 40

30 56 72 70

30 80 64 90

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cost treatment revenue treatment cost

10 10

7 8

10

70 80 324

100 40 368

80 50 394

4 5 Best Case Outcome

APPENDIX B

OUTCOMES Likely Case Outcome Worse Case Outcome Best Case Outcome

Aetna 277 378 324

BCBS 301 338 368

Medica re 394 282 394

OUTCOME Likely Case Outcome Worse Case Outcome Best Case Outcome

Aetna 277 378 324

BCBS 301 338 368

Medica Probabi re lity 394 282 394 60% 15% 25% 100%

Aetna 166.2 56.7 81 303.9

BCBS 180.6 50.7 92 323.3

Medica re 236.4 42.3 98.5 377.2

Aetna Likely Case Outcome Worse Case Outcome Best Case Outcome Probable Ranking 3 1 3 3

BCBS 2 2 2 2

Medica re 1 3 1 1

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13 month s Insurer rates per E.DeCesaris Medicare Horizion/BC Aetna Average payment per tx course % KUH 45% 30% 25% 100%

Reimb . PerDi em $4,657 $2,465 $3,875 $6,340

Weight ed Average $2,095.6 5 $739.50 $968.75 $3,803.9 0

1st year Horizio Medica n etc re 55% 45% 38 58 3.50 $2,559 $8,957 $0 $8,957 $6,35 9 $0 $6,35 3.50 $4,657 Avera ge 100% 96 3.50 TOTAL

Payor mix per case, May 2012 Number of cases 2012 MS DRG Geo Mean CS TX
Rate for DRG 432 ECT Therapy Code 423

Average payment per treatment Extended Course Rate Implant Cost Pass-thru Total Payment

$4,657

$610,4

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