TAVR program raises margin 350% by befriending rivals

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ATLANTA—Why swim with the sharks if you can float above them in uncontested waters? One medical center is taking a “Blue Ocean” approach to its transcatheter aortic valve replacement (TAVR) program after its success with a liver initiative netted $1.1 million and saved the healthcare system $54 million.  

The Blue Ocean strategy provides a foil to the standard competitive approach for gaining market share in an industry. Rather than expend money and energy battling over an existing product or service in the marketplace, the Blue Ocean approach advocates for identifying uncontested markets to differentiate a brand and grow free of competition.

Aurora Saint Luke’s Medical Center in Milwaukee is embracing the concept with dividends, said Bradley B. Kruger, MA ED, MBA, the medical center's vice president. He shared details of their success June 11 at the MedAxiom Cardiovascular Service Line Symposium in Atlanta.

“What if your cardiac service could be in a league of its own?” he asked. “Instead of competing with others in the industry, what if you were setting the pace, creating unique programs and profiting in lucrative markets?”

Aurora Saint Luke’s tested that concept initially with a liver transplant initiative that was built on the recognition of a potentially untapped market. The program focused on hepatitis C, which is largely undiagnosed in the U.S. with the highest rates among adults between 45 and 65 years old. Hepatitis C can progress into a chronic liver disease and, if left untreated, lead to cirrhosis.

His team estimated that 37,000 adults in Wisconsin have undiagnosed hepatitis C, with about 8,000 in the Aurora system. They built an alert in their EMR that would flag if a patient fell into the target age group and had not had a hepatitis C test. Within the last three months, 200 patients tested positive for hepatitis C. As a result, they have added three patients to their liver transplant waiting list, referred four patients with liver cancer to the oncology unit and contributed $1.1 million to the pharmacy’s margin.

While the cost of pharmaceutical treatment may exceed $80,000, savings from downstream costs averted from life-threatening liver diseases are much higher, at $280,000. “Over time, that is a savings for just those 200 patients of approximately $54 million,” he said. “You can start to see we are generating revenue now in a fee-for-service environment and we are curing hepatitis C in the patients so they won’t progress to stage four.”

Their Blue Ocean approach for TAVR required a change in mindset. With the sole TAVR program in eastern Wisconsin, they didn’t fret about market share. But they resisted the historic strategy of pilfering patients.

“With TAVR, we had to deconstruct that and build [a pathway] to ensure the patient got back to their [primary care physician] or their specialist in a competing system, follow up with that doctor and then to put surveillance in place in such a way that we support that relationship of patient and the competing doctor rather than undermine it. That is a culture change and a way to strengthen a partnership.”   

Using this noncompetitive model, they have been able to double their TAVR volume, lower costs and improve the contribution margin by 350 percent. “Everyone must work together to focus efforts and resources on our patients,” he said. “This will only occur with an increase in trust and finding ways to create win-win scenarios.”