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“The only thing necessary for these diseases to the triumph is for good people and governments to do nothing.”



Waiting for a liver - Hidden costs of the organ shortage

Liver Transplantation
Volume 10, Issue 8, August 2004

Donald A. Brand 1 2 *, Deborah Viola 3, Pretam Rampersaud 4, Patricia A.
Patrick 1 2, William S. Rosenthal 5, David C. Wolf 51Primary Care Research Unit,
School of Public Health, New York Medical College, Valhalla, NY
2Division of General Internal Medicine, Department of Medicine, School of
Public Health, New York Medical College, Valhalla, NY
3Department of Health Policy and Management, School of Public Health, New
York Medical College, Valhalla, NY
4Digestive Disease Associates, Staten Island, NY
5Sarah C. Upham Division of Gastroenterology and Hepatobiliary Diseases,
Department of Medicine, New York Medical College and Westchester Medical Center, Valhalla, NY


Abstract Procedures Results Discussion Acknowledgements References
Discussion about the economics of end-stage liver disease has typically
focused on the high cost of liver transplantation, but the management of
complications in patients waiting for an organ can also be very expensive.

Our research considered the hypothesis that an increase in the number of
organ grafts would decrease health care costs in patients with liver disease by
eliminating the cost of waiting for an organ.

We examined treatment costs for a consecutive series of liver transplant
candidates listed at our institution between November 1, 1996 and December 31,
1997. Costs were estimated for inpatient stays, outpatient visits, and
posttransplant medications for 2 1/2 years from the date of listing.

Of the 58 study patients, 26 (45%) received transplants, 7 of whom died
within 2 1/2 years. A total of 11 patients (19%) died while waiting for an organ,
and another 21 patients (36%) were still waiting after 2 1/2 years.

Pretransplantation costs accounted for 41% of the total cost. Transplanting
all 58 candidates without delay through a hypothetical increase in the supply
of organs to meet demand would have more than doubled the number of
transplantations while increasing costs in this cohort by only 37% (from $123,000 to $169,000 per patient).

In conclusion, although an adequate supply of donor organs would not decrease
total health care spending for patients with end-stage liver disease, so much
money is currently spent on medical management during the waiting period that
the savings achieved by transplanting all candidates without delay would
offset a large portion of the cost of the additional transplants.


Discussion about the economics of end-stage liver disease has typically
focused on the high cost of liver transplantation, but the management of
complications in patients waiting for an organ can also be very expensive. Previous cost studies that have examined the perioperative and posttransplantation periods have not fully accounted for costs during the waiting period. Because they have gained less attention, these pretransplantation costs - which apply to patients who eventually receive organs as well as those who die on the waiting list - might be referred to as hidden costs of the organ shortage.

By examining health care expenses during the waiting period, perioperative
period, and posttransplantation period, the present study estimated the
contribution of hidden costs to the total cost of treating end-stage cirrhosis. Our
research considered the hypothesis that an increase in the number of organs
transplanted would, paradoxically, decrease health care costs in patients with
liver disease by eliminating the cost of waiting for an organ.

This retrospective cohort study examined a consecutive series of patients
listed as candidates for liver transplantation at Westchester Medical Center
between November 1, 1996 (when the transplant program began) and December 31, 1997 and who received ongoing medical care from our Liver Transplant Service. The medical center currently performs approximately 60 liver transplants per year. All inpatient stays and outpatient visits were examined for a period of 2 1/2 years from the date of listing.


While liver transplantation is expensive, not performing transplants is also
expensive. In our series, the average cost of treating a patient who died on
the waiting list was $74,000. Most of that money was spent treating
complications of liver disease while the patient waited for an organ that, it was hoped, would save the patient's life.

Resources used to treat patients who died on the waiting list accounted for a
portion of the hidden costs of the organ shortage. The remaining portion was
spent on candidates who were still waiting at the end of the follow-up period
and on recipients during the interval between registration and transplantation. When the various sources of hidden costs were combined, they accounted for a remarkable 41% of total health care expenses for transplant candidates in our series. Policy discussions about liver transplantation that ignore such expenses are bound to overstate the cost of transplant surgery relative to the medical management of patients with end-stage liver disease.



Our study was motivated by published data and anecdotal evidence from our own institution that patients awaiting liver transplants often require expensive
inpatient care to manage complications of liver disease. We wondered whether
eliminating the waiting period and associated costs through a hypothetical
increase in the supply of organs to meet demand might, paradoxically, decrease the overall cost of caring for this group of patients while increasing the number
of transplantations. While our findings do not support the hypothesis that
transplanting all candidates would decrease overall treatment costs, our
findings do indicate that an adequate supply of organs would have more than doubled the number of recipients in our series (from 26 to 58) while increasing the average cost per patient in this cohort by only 37% (from $123,000 to $169,000). In other words, a moderate incremental investment of dollars - $46,000 per patient - would have resulted in the timely transplantation of all candidates and have prevented deaths on the waiting list. Given the evidence that liver transplantation improves quality of life,[15][16] such an investment could also be expected to have provided benefits beyond improved survival.

Comparison With Other Cost Studies

While we have not found another study that has followed all outcome groups
for a constant time interval after listing, previous investigations have
provided cost estimates for some of these groups. For example, 3 U.S. studies that have assessed transplantation costs and included at least a year of follow-up
have reported mean costs of $149,000, $163,000, and $200,000 (after adjusting
for inflation to yield 1999 dollars), as compared with a mean of $161,000 for
our recipients. For nonrecipients who die on the waiting list, mean costs have
been estimated at $74,000 and $121,000 (again after adjusting for inflation),
as compared with our mean cost of $74,000. Although the categories of expenses included and the time horizons used in these studies are not strictly
comparable to ours, they are similar enough to attest to the reasonableness of our
cost estimation methods.

Limitations of Study

Obtaining data from a single institution necessarily constrains the sample
size. Our patients were somewhat younger and had a lower overall disease
severity than a recent sample of all U.S. transplant candidates, although these
differences were not statistically significant (Table 1). Younger patients with
lower disease severity may have resulted in a lower average treatment cost than
what would be expected in a nationally representative sample. At the same time,
the higher posttransplant death rate in our sample may have had the opposite
effect of producing a higher-than-expected average treatment cost. Future
studies using nationally representative samples would help assess the
generalization of our findings. In addition, larger studies would permit stratified
analyses that estimate and compare costs in different subgroups, such as those
defined by etiology or disease severity.

Since nearly all study patients lived within an hour's drive of Westchester
Medical Center (most within a half-hour), they received virtually all inpatient
care at this hospital before transplantation. In addition, about half the
patients - predominately those with more severe liver disease - also received
their outpatient care at the medical center's Liver Transplant Service during the
pretransplant period. The other half did receive ongoing medical care and
routine laboratory tests from their local physicians, and the cost of these
pretransplant services was not captured in our study. Since study patients received virtually 100% of their posttransplant care at the Medical Center during the study's follow-up period, the missing costs would have caused the study to
underestimate the ratio of pretransplant to total costs. In other words, the
missing data would tend to have biased the study against our hypothesis. It is,
therefore, reasonable to conclude that the study has produced a lower limit on
the true ratio.

The present investigation could not include costs incurred beyond 2 1/2
years. (At the time of data collection, that would have been the future for
patients listed toward the end of the enrollment period.) It is possible that a
longer follow-up period might have altered the ratio of pretransplantation to total
costs. Unfortunately, it is not possible to forecast whether that ratio would
increase or decrease with additional follow-up, since patients still waiting
at the end of the 2 1/2 years and patients who had already been transplanted
would both incur additional costs. Short of following all patients in the
cohort until death - which could require decades - use of a fixed time horizon
relative to registration on the waiting list probably offers the fairest basis for
estimating the ratio of interest.

Finally, our study ignores indirect costs, such as loss of wages due to
illness and caregiver expenses. Since previous investigations have demonstrated
marked improvement in patients' ability to care for themselves and return to work
within a year of transplantation, incorporating indirect costs would probably
increase the economic advantage of the no-wait scenario.

Increasing the Supply of Organs

Unless we can increase organ Alternative Treatments rates, our society will continue to pay for the treatment of complications during the waiting period with money that would be better spent paying for more transplants. Is there evidence to suggest the possibility of increasing organ donations enough to meet demand, or must we continue to accept the organ shortage as an unfortunate fact of life?

In 2002, there were about 4,200 liver donations in the United States
(cadavers and living donors combined) vs. 6,900 additions to the waiting list. It
follows that a 64% increase in donations would produce enough organs to keep pace with the incident cases of end-stage liver disease. Since the liver transplant
waiting list currently contains about 17,000 individuals, additional
donations would be necessary to eliminate the backlog. Assuming a constant rate of additions to the waiting list (this rate has remained quite stable for the past
several years), doubling the Alternative Treatments rate would clear the backlog in 11.3 years while accommodating all newly added cases.

South Carolina's organ procurement organization recently demonstrated the
feasibility of increasing organ Alternative Treatments rates by improving emotional support, bereavement counseling, and education about organ Alternative Treatments to families of potential donors. After implementing a program to improve these services, statewide Alternative Treatments rates increased by 83% (from 18.2 to 33.6 donors per million population) between 1997 and 2001 (P < .01), while national rates remained virtually unchanged. Program expenses added 16% to the procurement cost per organ transplanted (after adjusting for inflation), which would translate to about $3,000 per recipient in 1999 dollars. This would add only 2% to the estimated $169,000 per patient under the hypothetical no-wait scenario.

If successfully implemented nationally, similar programs might eliminate the
gap between the supply and demand for livers. A recent study estimating the
number of potential organ donors in the U.S. placed the lower limit at 10,500
per year. If vigorous efforts led to the procurement of all these organs, then
3,600 donated livers would become available beyond the annual demand of 6,900. In that case, it would take 4.7 years to clear the backlog and eliminate the

Thus, the organ shortage would appear to be neither inevitable nor
irremediable. So much money is currently spent on the medical management of patients during the waiting period that the savings achieved by transplanting all
candidates without delay would offset a large portion of the cost of the additional
transplants. Although economic factors may not determine organ supply directly,
accurate economic data could influence policymakers' attitudes toward
transplantation by demonstrating that this mode of treatment may be only slightly more expensive than the alternative. Such knowledge could, in turn, influence
regulations governing organ procurement and public funding for liver transplants.
It is hoped that this information might help refocus public policy debate from
the topic of which patients to transplant to the topic of how best to attain
a maximum rate of organ Alternative Treatments - perhaps eventually making the former topic of debate irrelevant.



Overview of Patients and Services

A total of 75 patients were registered on the waiting list for a liver
transplant between November 1, 1996 and December 31, 1997. Of these, 17 patients were excluded from the study for a variety of reasons, leaving 58 patients in the study. Of the 17 patients, 4 had to be excluded because their medical records could not be located, 4 patients withdrew from the waiting list after having switched to a transplant program at another hospital, 3 patients withdrew for personal reasons, 3 patients became ineligible for transplantation for medical reasons, and 3 patients were lost to follow-up.

Neither gender, age, ethnicity, nor disease severity differed significantly
between study patients and excluded patients. Study patients were similar to
all persons added to the U.S. waiting list with respect to gender, age,
ethnicity, and disease severity, but the 2 groups differed with respect to etiology of liver disease (Table 1).

During the 2 1/2-year follow-up period, study patients averaged 9.7
outpatient visits and 3.1 hospital admissions that led to 52.8 inpatient days.

Transplantation and Survival Statistics

Of the 58 patients, 26 (45%) had received a liver transplant by the end of
the 2 1/2 years). Before the end of the follow-up period, 7 recipients died. Of
the 58 patients, 11 (19%) died while waiting for an organ, and another 21
patients were still waiting at the end of the follow-up period (or on the last day
when their status was known).

Based on center-specific survival statistics maintained by the Scientific
Registry of Transplant Recipients, our 1-year survival rate of 73.1% (19 / 26)
was significantly below the national average of 85.6% for the same time period
(P = .01) (personal communication, United Network for Organ Sharing, February
2, 2004). Our outcomes have improved since this initial year of our liver
transplant program. During the most recent years for which outcome data are
available, our survival statistics have been consistent with the overall national


We based our analysis on fees rather than provider costs (e.g., the amount a
hospital must spend to provide a service) because fees were directly
ascertainable. As long as the same measure of resource use (e.g., fees) is applied consistently to all subjects (recipients and nonrecipients) and periods
(pretransplantation, perioperative, and posttransplantation), the distinction between costs and fees would not be expected to have a marked effect on the main study results.[8] For the remainder of this report, costs refer to fee-based
estimates derived using the methods described below.

We expressed all costs in 1999 dollars and used Medicare fee schedules for
inpatient and outpatient services regardless of a patient's actual insurance
coverage (private, Medicare, Medicaid, or uninsured) or actual bills generated,
insurance claims submitted, or monies collected for professional and hospital
services. Our cost estimates, therefore, reflected services that were
delivered, ignoring how those services were actually reimbursed. We included 5
categories of costs in the analysis: inpatient professional services, organ
procurement, inpatient hospital services, outpatient services, and posttransplant

Inpatient Professional Services

Because professional and hospital services are accounted for and reimbursed
separately in the inpatient setting, we developed separate approaches for
estimating the associated costs. Professional services were converted to dollar
amounts using Part B of the 1999 Medicare fee schedule for New York Locality 02 (New York City suburbs and Long Island).[9] These included services provided by 29 different specialties (e.g., transplant surgery, anesthesiology,
gastroenterology, hematology, psychiatry).

Organ Procurement

In 1999, the New York Organ Donor Network charged $26,500 for obtaining and
preserving a liver for transplantation. This amount was used in our analysis.

Inpatient Hospital Services

The Medicare inpatient prospective payment system rates (Medicare Part A)[10]
were used as a starting point for estimating costs associated with inpatient
hospital services. The rates are supposed to cover hotel services (room,
board, and housekeeping); nursing services; administrative services (medical
records, billing, accounting, facilities maintenance, and so forth); and space,
equipment, materials, medications, and ancillary services required to perform
diagnostic and therapeutic procedures. In short, the Medicare payment to the
hospital is intended to cover all inpatient costs with the exception of the cost of
professional services that are normally billed separately by physicians and
surgeons. Since Medicare Part A specifies a lump sum for a given admission that
is based on a patient's discharge Diagnosis Related Group, the fee does not
vary with the patient's length of stay or the actual services delivered during
that stay. Instead, the fee represents an expected cost for an entire hospital
stay based on historical cost data from a representative group of clinically
similar patients, i.e., patients classified into the same Diagnosis Related
Group. Since the present study is concerned with health care spending over time, a meaningful analysis required distributing these lump sums in a reasonable manner that reflected the actual services delivered and the timing of those services.

To accomplish this goal, we developed the following method for apportioning
the Diagnosis Related Group inpatient fees to individual days in the hospital.
The method separates the cost of providing inpatient hospital services into 2
components: per diem and variable. The per diem component, which covered hotel services, administrative services, and routine nursing care, remained
constant from day to day. The variable component, which covered the space, equipment, materials (including the cost of organ procurement), medications, and
ancillary services needed to support specific diagnostic and therapeutic procedures, varied according to the services delivered on a given day.

Based on financial data reported by the American Hospital Association for the
year 1999, we used $1,101 as the per diem amount. To derive the variable
component, we first added together the Medicare Part A fees associated with each hospital admission, then subtracted the above per diem amount multiplied by the total number of bed-days represented by these admissions. The residual amount - the variable component of inpatient hospital costs - was then distributed
to individual patients on specific dates according to the services that were
delivered on those dates. For each patient who was transplanted, the organ
procurement fee was assigned on the date of transplantation and then subtracted
from the residual amount referred to above (since this fee is paid by the
hospital and is therefore, in effect, bundled with the Medicare Diagnosis Related
Group payment for an organ transplant). Finally, the remaining variable cost
amount was assigned to study patients - transplant recipients as well as
nonrecipients - in proportion to the fees for professional services that were delivered each day a patient spent in the hospital. The rationale for distributing this remaining amount in proportion to professional fees is that variable hospital
costs are highly dependent on the intensity of professional services.

Outpatient Services

We again used Part B of the Medicare fee schedule to convert each outpatient
service (clinic visit, consultation, diagnostic test, or therapeutic
procedure) to a dollar amount.[9][13] For services that may be provided in either an inpatient or outpatient setting (e.g., ultrasounds, biopsies), the Medicare fee
schedule lists a different (higher) dollar amount for the outpatient setting.
The outpatient fee is higher because it includes an amount to cover space,
equipment, and ancillary personnel needed to provide the service - resources that are accounted for separately in the inpatient setting, as explained earlier.

Posttransplant Medications

Based on a survey of local pharmacies conducted annually by the Liver
Transplant Service, the approximate retail cost of a typical regimen of
posttransplant drugs was $1,500 per month in 1999. This amount was used in our analysis.






















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