Cochlear implant programs: Balancing clinical and financial sustainability

Abstract

In 2006, a tertiary academic medical center's adult and pediatric cochlear implant program was closed due to financial losses. Using business practices known as supply chain and revenue management, the objective was to establish a new cochlear implant program that was financially viable. Retrospective cohort study using a nonequivalent historical comparison group design. Using available financial data from the period of 1999 to 2006, cost and revenue figures were estimated, and a business plan developed using supply chain and revenue management principles to re-establish the cochlear implant program in 2007. Actual cost and revenue data from 2007 to 2011, the current program, were assessed for current financial performance and compared to the historical data. In comparing the period of 1999 to 2006 to the period of 2007 to 2011, the net loss per implanted patient went from $22,365 to $976. Profitable gross and net margins were achieved for all payers except Medicaid, for which the loss per case remained unchanged. This per case loss may change with receipt of pending Medicaid Upper Payment Limit supplemental payments. Use of supply chain and revenue management principles markedly improved the financial performance of the re-established cochlear implant program. With improved cost and revenue outcomes, the overall negative net margin was reduced. Physicians who learn and use supply chain and revenue management methods can work to ensure that their patients will have continued access to cochlear implant surgery, and are applicable to any clinical services or procedures that must meet the challenge of achieving financial sustainability.