Cost and contribution margin of transcatheter versus surgical aortic valve replacement

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ObjectiveTo compare the cost of and payments for transcatheter aortic valve replacement (TAVR), a novel and expensive technology, and surgical aortic valve replacement (SAVR). MethodsMedicare claims provided hospital charges, payments, and outcomes between January and December 2012. Hospital costs and charges were estimated using hospital-specific cost-to-charge ratios. Costs and payments were examined in propensity score– matched TAVR and SAVR patients. ResultsMedicare spent $215,770,200 nationally on 4083 patients who underwent TAVR in 2012. Hospital costs were higher for TAVR patients (median, $50,200; interquartile range [IQR], $39,800-$64,300) than for propensity-matched SAVR patients ($45,500; IQR, $34,500-$63,300; P < .01), owing largely to higher estimated medical supply costs, including the implanted valve prosthesis. Postprocedure hospital length of stay (LOS) length was shorter for TAVR patients (median, 5 days [IQR, 4-8 days] vs 7 days [IQR, 5-9 days]; P < .01), as was total intensive care unit (ICU) LOS (median, 2 days [IQR, 0-5 days] vs 3 days [IQR, 1-6 days]; P < .01). Medicare payments were lower for TAVR hospitalizations (median, $49,500; IQR, $36,900-$64,600) than for SAVR (median, $50,400; IQR, $37,400-$65,800; P < .01). The median of the differences between payments and costs (contribution margin) was −$3380 for TAVR hospitalizations and $2390 for SAVR hospitalizations (P < .01). ConclusionsTAVR accounted for $215 million in Medicare payments in its first year of clinical use. Among SAVR Medicare patients at a similar risk level, TAVR was associated with higher hospital costs despite shorter ICU LOS and hospital LOS. Overall and/or medical device cost reductions are needed for TAVR to have a net neutral financial impact on hospitals.