Cochlear implant programs: balancing clinical and financial sustainability.

Area of Science:

• Healthcare Management
• Surgical Program Sustainability
• Medical Economics

Background:

• A tertiary academic medical center closed its cochlear implant program in 2006 due to financial losses.
• Re-establishing the program required a focus on financial viability using business principles.

Purpose of the Study:

• To apply supply chain and revenue management principles to create a financially viable cochlear implant program.
• To assess the financial impact of these business practices on the program's performance.

Main Methods:

• A retrospective cohort study with a nonequivalent historical comparison group design was employed.
• Financial data from 1999-2006 were used to estimate costs and revenues for business plan development.
• Actual program data from 2007-2011 were analyzed and compared to historical financial performance.

Main Results:

• The net loss per implanted patient decreased from $22,365 (1999-2006) to $976 (2007-2011).
• Profitable gross and net margins were achieved for most payers, with Medicaid showing unchanged per-case losses.
• Potential changes in Medicaid reimbursement may impact future per-case loss figures.

Conclusions:

• Supply chain and revenue management principles markedly improved the financial performance of the cochlear implant program.
• Improved cost and revenue outcomes led to a significant reduction in the overall negative net margin.
• These management principles are applicable to ensuring patient access to cochlear implant surgery and other clinical services facing financial sustainability challenges.