How Health Economics Drives Medtech Growth with Betty Tsai, President of Cardiology Services International

[00:00:03] Hello, everyone. Welcome back to the Outcomes Rocket podcast. I'm here at the Medtech Innovator event with the outstanding Betty Tsai. She is the President of Cardiology Services International. Betty, welcome to the podcast. Hi, Saul. Thank you for inviting me. Really excited to help contribute to this podcast content. Yeah, for sure. You split your time between Austria and Houston.

[00:00:28] Yes. Yeah. So I run my own health economics consultancy, which is co-registered in both Europe and Austria and also in Houston, Texas. Tell us a little bit more about Cardiology Services International. What are you guys focused on? What do you do? Yeah. So Cardiology Services International was founded about seven years ago as a general consulting, business consulting, strategic consulting. And we actually, in the last three years, have expanded significantly beyond strategic marketing.

[00:00:56] So we're now mainly focused on health economics associates. Super cool. And we do a lot more than cardiology. That's why I've expanded our discipline significantly into other specialties such as neurovascular, infectious disease, spy, chronic management, pediatrics. So you name it. We're basically a health economics consultancy that is offering services to anyone class one, two, three. Okay. And then when you say health economics, like unpack that for me, what does that mean?

[00:01:26] Are you helping with the commercialization side? Are you helping with med affairs? Talk to us about that. I think there's a lot of misconception around health economics. So health economics is not exactly equal to reimbursement. Okay. Although it's a prefix to reimbursement. So I think a lot of people think health economics is equal to getting a new CPC code. And it's entirely not about that.

[00:01:48] Health economics is really about understanding the cost of care, the cost of total care, either in that episodes or entire patient journey. So what we do as an agency is that we actually look at the real live payers claims data, including Medicare data and also all payers data and see what is the cost of care for that particular patient.

[00:02:09] So if we just take example of heart failure, which is cardiology, for example, what is the cost of care for that heart failure patient in that first primary admission? And what happens to that patient later on within 30 days or six months afterwards, if they get readmitted, we look at the entire cost of care for that patient journey. And I think a lot of people, when they think about reimbursement is that which code do they fit into?

[00:02:35] I think a lot of the companies that come to MTI and if they're raising money, the investor is saying, okay, so do you fit into an existing CPT code or the MSDRG code? Whatever those codes are, that's actually not the most important thing because most of those billing codes that exist today are underpaid by CMS. If we were talking about chronic diseases, they're usually underpaid by at least 20%.

[00:03:00] So for heart failure patients, for example, they're probably losing between $10,000 to $15,000 a year. So if you're introducing a new technology, it doesn't matter if it's a breakthrough status or a incrementally better technology, unless you can prove that you are reducing that cost of care by incident to the provider. They're not interested in talking to you because they're like, we have thousands of technology that try to get into our system unless we can actually improve our bottom line by reducing cost.

[00:03:30] We really, we're not about to just sign another major contract. Another major thing, and that is the trend that you would like to find out about is value-based care. So we actually have CMS officer here that's talking to everybody specifically about value-based care.

[00:03:45] And what that actually means is that unless you're improving that care of the patient from either improving their safety, improving their clinical outcome, improving their cost efficiency and the OR time, you basically, right now CMS is paying by performance. So CMS actually takes 2% of revenue out of each hospital, acute hospital, 2% in the beginning of the year, measuring four different domains, safety, clinical outcomes, foster efficiency and patient engagement.

[00:04:14] And at the end of the year, they'll return that 2% if you're meeting those metrics. If you don't meet those metrics, they actually don't pay you back that 2%. You'll get less than 2% or you get more than 2% back because if you're improving all of those quality metrics more than your peers. So each, there's about 20 major healthcare system in the U.S. right now. And each one of this healthcare system, including HCA, they make way more than $20 billion in years.

[00:04:41] So if you're getting, let's say, 1% taking out of the revenue, that's $200 million right there. That's meaningful. So that is huge, right? So this is the reason why if you actually understand the cost of care for that patient and you can actually demonstrate that cost savings to your provider, then you have a really chance to drive adoption at a high scale. Value-based care. Yeah, fantastic. And I love the context that you shared here. It's really about cost of care.

[00:05:08] It's not, hey, do you fit in to the current reimbursement model? No, it's not. So you're really turning the paradigm on this and forcing people to think about it the way that health systems are thinking about it. It's like, how are you helping me reduce costs? How are you helping me? What's in it for me beyond telling me that, oh, you really fit into this existing MSDRG code or an existing CPT code because everyone is saying the same thing.

[00:05:33] I think it's also important for investors to understand that as they're evaluating these thousands and thousands of companies per year that they really need to understand just because a company comes to them and say, I fall into the existing code, which I think a lot of them actually do. It doesn't mean that's going to drive adoption. Yeah. So it is important to understand the general concept of value-based care. Yeah, that's really interesting because if you're not within that code, it really decreases your chances.

[00:06:02] Now, that's just table stakes is what you're saying. Like you're in that code structure, whether it be MSDRG or if it's a CPT. But now the thing that you should be thinking about is not just are you within that code structure, but what are you doing with regard to total cost of care? Exactly. Exactly. And then also another important thing is that if you're introducing a new technology, let's say you actually already fit into the existing billing codes for the MSDRG or the CPT.

[00:06:29] If you're a new technology and you are demonstrating significant improvements in terms of clinical outcome as well as economic outcome, you can actually apply for alternative reimbursements. And that is called the new technology added payment, the NTAP. So that's another pathway. That's basically beyond just showing your value-based care and securing a value-based care contract, you can actually apply for additional reimbursement. So let's say just now I used an example of heart failure.

[00:06:58] And if you're introducing a technology that really significantly improves that heart failure outcome and you can demonstrate you're reducing that cost of care in that primary or re-emissions, you can also get an additional reimbursement from CMS. Yes. You have to put money where your mouth is. Like if you can demonstrate those, you have a very high chance of getting reimbursement as well in terms of the added payment. How common is this? Betty, like how often are you seeing this now, this additional reimbursement lane that's available?

[00:07:28] It happens a lot with the therapeutic companies and especially with those that have received breakthrough technologies status. The one that actually have received breakthrough technologies status actually gets expedited. Oh, do they? Yeah, they get expedited as far as getting a CMS review for that additional added payment.

[00:07:45] So I think a company, if they can really differentiate themselves, either it's through a breakthrough designation status or they actually are running a pivotal trial and they're showing that they're improving clinical outcome, they're improving the cost of care. They have a really great chance in getting that end half, the new technology added payment. That's fascinating.

[00:08:35] So basically demonstrate outcome and you will share that savings, right? Your share, you basically, most of the company will strike a 50, 50% share savings at the end of a quarter or end of six months evaluation. And that's where you, that's where you get your revenue. That's great. It's from the share savings. That's really great. I personally like coming to events like MedTech Innovator Radar Forum because I get to learn interesting things from leaders like Betty.

[00:09:00] Hey, for those that couldn't make it, like what's an insight you've learned from either one of the companies you were a judge for or a conversation you've had that you want to share with them? I think that if they're coming here, they do need to do a little bit of the homework. And I think for the companies that actually do get selected at the end are the ones who have done a fair amount of homework around not just the clinical side of thing, the engineering side of thing, but also the economic side of thing.

[00:09:27] That will really bring them to the very top as far as getting selected at the very end. And I think just about 100% of the companies who are here today are raising money. And investors, they see that you have actually systematically looked through the process of driving adoption, which is really what I would talk about. And otherwise, I wouldn't talk about Valley Days Care. The other thing that I would say is that if you really thought systematically through that process, you have a really great chance of getting invested. And MTI will help you.

[00:09:52] It actually provides some resources to help you shape that story to a point where you're highly invested made. Well, I love it, Betty. Thank you for that insight as well as all the other ones that you've been able to share here today. If people wanted to learn more about working with you or about the things that you do, how can they get in touch? Where can they find you? They can definitely find me on LinkedIn. So just look under Betty Tsai and under the company named Cardiology Services International, and you'll be able to find it. That's awesome. Betty, thank you so much for doing this.

[00:10:22] And for everybody with us, Betty Tsai, she is the president of Cardiology Services International. Check out the show notes. You'll find all the ways to get in touch with her there, as well as to learn more about her company and the work that she's doing here at MedTech Innovator Radar Forum. Thank you all for tuning in. And Betty, thanks for being with us. Thank you for inviting me, Saul. Okay, see you next time. See you next time. Bye-bye. Bye.