I have shared this information previously, but it has been a long time. Since more people are starting to get interested in this company, I am sharing this again because I thought some of you might be interested.
NOTE - most of this was compiled about 2 years ago. I considered trying to research and update all of the costs, but I just don’t have time right now to do that. So, the actual numbers are probably outdated based on inflation, but I think they are still directionally correct. However, I do not guarantee the accuracy - so do your own research and confirmation.
Also - I am not a medical professional, and I don’t work in this field. So, while I believe all of my information and conclusions below are accurate (or were accurate at the time I originally wrote this), I don’t guarantee any of them.
Cost / Benefit Analysis – Insurance Company Perspective
- Most transplant patients spend a lot of time in the hospital ICU when they are waiting for a transplant. Lung avg wait time for a transplant is 3-6 months; Heart is often more than 6 months; Liver median wait time is 321 days (17,000 people on waiting list). During that period of waiting, these extremely sick patients often need to spend significant time in hospital ICUs - especially as their health starts to deteriorate. The way the organ assignment system works, you have to be among the most sick people before you moved to the top of the list to receive a donated organ.
- The number of days patients spend in the hospital while waiting for transplants varies, but my dad was in the ICU for a couple months straight when he was waiting for his lung transplant. He had a lot of extra procedures during that time that I’m sure boosted the cost per day higher than what I estimate below – so I think my estimates are conservative.
- The cost per day of ICU is around $6,000 base price + extra for tests / medicines / procedures / specialists. So, a total daily cost is probably a minimum of $8,000. (NOTE – this estimate is my best guess based on info I was able to find online a couple years ago. I do not have high confidence in these estimates, but I tried to be conservative.)
- The reason people must wait so long is lack of organs because so many of the organs that are currently donated are not used (literally thrown away) due to the limitations of the current storage/transport process.
- The TMDX OCS system greatly increases the number of organs that can be used for transplant and will therefore make it possible for more people to get transplants quicker. If sick people can get their transplants faster, the OCS system will actually save money for the insurance companies.
- The below slide from TMDX shows the % increase in organs that were able to be used from different studies.
- The cost of the OCS disposables are $65,000 - $70,000 (depending on type).
- If the time in ICU while waiting for a transplant can be reduced by 10 days, that alone will pay back the insurance company for the cost of the OCS disposable.
- I can not find info on what the average time in hospital ICU is for people waiting for transplants, but if I estimate it is 20 days @ $8k per day, then the insurance company will save net of $95,000 for each patient. My dad was in the hospital ICU at least 60 days, so for someone like him the savings are much greater.
- If there are a total of 6,200 heart and lung transplants each year in the US, this savings works out to $590M savings per year for insurance companies. (this is very conservative – I think the savings is much more than this)
- In addition, the post surgery complications are reduced from 30% to 10% with the OCS system. I believe this is primarily due to the fact that with OCS the organs are not damaged by cold storage – so they are in better condition when they are transplanted. This is another huge economic benefit for the insurance companies because they currently have to pay for extra time in hospital and pay for expensive procedures for these post-surgery complications.
- I don’t know how to estimate the cost / benefit for this because I do not have info on what the typical length of stay is post-surgery vs. what it is when there are complications.
- If I take a guess and say that the difference is 10 days on average, then this could be another $500M savings per year for insurance companies.
- Conclusion – Insurance companies want to expand use of OCS because it will save them money overall – around $1B yearly savings based on my estimates above. As mentioned above, I think my estimates are conservative and I think the insurance companies will actually save more than I estimated.
Cost / Benefit Analysis – Hospital Perspective
- The transplant hospital charges between $600k and $700k per transplant with a 30% profit margin. (This was from info gathered in 2019, so I assume it’s higher now) Transplants are among the more profitable procedures that hospitals perform.
- There is huge unmet demand for transplants, so hospitals could perform more if additional organs were available.
- These numbers were all from 2019.
- There are about 100,000 NEW patients every year diagnosed with stage 4 heart failure – so the possible demand will far exceed whatever additional hearts are made available. This is in addition to an existing base of 250,000 people already diagnosed with stage 4 heart failure.
- There are 1,000,000 people with COPD – which is a major source of people needing lung transplants.
- There are 650,000 people with (NASH / Hep C / Cirrhosis) who would benefit from a liver transplant.
- So, there is a lot of potential $ to be made by hospitals if they had more viable organs available for transplant. The opportunity is there for hospitals to make a lot more $.
- Example - In 2019 one major heart transplant center increased the number of heart transplants from 70 per year to 93 per year by utilizing the OCS Heart system. (This was during trials). If the profit per transplant is ~ $200,000, then increasing the # of heart transplants at one hospital from 70 to 93 results in a profit increase of 23 x $200,000 = $4.6M.
- There is no extra cost to the hospital (in the US) for this because the insurance company pays the extra for the OCS consumables.
- Increasing the % of organs utilized also eliminates a lot of wasted work that the hospital currently does. The hospital currently has to send a team of people out to retrieve each available organ. Right now, only 23% of lungs and 32% of hearts are actually used after collection. So, the hospital is wasting around 70% of their trips. This puts extra strain and cost in the system for all those wasted trips. The OCS device increases the utilization rate to 81% - 87%. So the hospital will be much more efficient with their resources.
- The TMDX National OCS Program eliminates all this waste from the hospital. TMDX resources are retrieving the donated organs, so the hospital staff does not need to go out on all of these “wasted” organ collection trips. And, the OCS system enables usage of a much higher percentage of organs - so there is a lot less waste in the overall system.
- Conclusion – There is a huge financial benefit for the hospitals and it does not cost them anything (for the US market). This is a no-brainer for the hospital.
- One additional benefit that is hard to put a price on is the ability to better schedule the transplant procedure because there is more time that the organ can be stored in a healthy state in the OCS system. TMDX stated that in some cases this enables transplant centers to wait and do the procedure the following day instead of having to do it as an emergency during the night = better quality of life for hospital staff. This may seem like a small issue, but the life of a transplant surgeon is very stressful and there is a growing shortage of transplant surgeons. Possibly eliminating the need for emergency surgeries in the middle of the night is a big deal and may help more surgeons keep working longer – or make it more likely for young surgeons to pursue transplant fellowships.
- Another benefit for the hospital is the fact that clinical outcomes are better post-surgery when the OCS is used. So it will be easier for hospitals to meet the insurance company requirements for good outcomes in order to keep getting reimbursed. Also, a reduction in post-transplant complications frees up the surgeons to do more transplant surgeries – because they are not having to spend as much time doing follow-up care/surgeries on people with complications.
- Here is a quote from an article with a third benefit for hospital staff – “In addition, (in the current legacy system) the urgency and risk associated with ischemic time (time in cold storage) often results in the need of a dangerous high-speed trip for the transplant team, which increases the risk of serious injury and death on the road. In the United States, 122 accidents and 68 injuries were reported by transplant teams from the period of 1990-2007 in which only 16% of respondents felt safe during the transportation of a donor heart to the recipient hospital [20]. Increasing safety and comfort during the transportation of a donor organ could also be indirectly attributed with the use of OCS.”
- Basically, using the OCS device provides a larger window for transit time and makes it safer for the team that is retrieving and transporting the organ because they don’t need to rush as much when using the OCS system.
Cost / Benefit Analysis – Organ Procurement Organizations
- These organizations help track people on waiting lists and match available organs to the patients.
- In the United States, an organ procurement organization (OPO) is a non-profit organization that is responsible for the evaluation and procurement of deceased-donor organs for organ transplantation. There are 58 such organizations in the United States,[1] each responsible for organ procurement in a specific region, and each a member of the Organ Procurement and Transplantation Network (OPTN), a federally mandated network created by and overseen by the United Network for Organ Sharing (UNOS). The individual OPOs represent the front-line of organ procurement, having direct contact with the hospital and the family of the recently deceased donor.[2] Once the OPO receives the consent of the decedent’s family, it works with UNOS to identify the best candidates for the available organs, and coordinates with the surgical team for each organ recipient.[2]
- OPOs are paid ~ $30k per successfully used organ.
- So, if the OCS device can increase the # of utilized organs, it will increase the profitability of these Organ Procurement Organizations proportionally.
- NOTE – Wikipedia says they are non-profit, so I’m not sure if the economic benefit really matters for them. However, even non-profits want to keep getting paid.
- There is a shortage of organs for transplant because a high % of donated organs currently go unused. In order to address this, CMS (Medicaid) has told the OPOs that they need to improve the rate of organ utilization or else CMS is going to stop reimbursing them. The Transmedics OCS system enables the OPO to meet this need.
- On average, 20 people die every day because not enough organs are available for transplant.
- As mentioned in earlier sections, there is a high cost for hospital treatment of patients in critical condition waiting for transplants.
- This is the article referencing the mandate from Medicaid for improved organ utilization rates: https://www.cms.gov/newsroom/fact-sheets/organ-procurement-organization-opo-conditions-coverage-proposed-rule-revisions-outcome-measures-opos
- Quote from TMDX CEO regarding CMS (Medicaid) changes / mandate:
- “What we’re seeing in the public media and coming from the White House and coming from Congress is really a confirmation of how important organ transplantation is, how cost-effective organ transplantation is to manage this very complicated chronic end-stage organ failure condition, how underutilized the donor availability and donor organ availability is. And by having these (Medicaid) initiatives, it only improves our ability coming with the Organ Care System technology to really address the fundamental problem in the field of organ preservation. It’s water to our mills. We help them. They help us. And the bottom line is the patients and the health care system are the ones that actually reap all that benefit.”
- “the regulation has provided some tailwind for TMDX. Over the past year, UNOS has changed the way that lungs and livers are distributed to patients on a geographic basis. The new policy largely jettisons the 11 donor service areas (DSA) that for decades have dictated how organs are allocated, instead creating zones around the donor hospital to determine the pool of candidates eligible for the organ. This policy will be extended with slight modifications to guide the geographic distribution of donor hearts. Although priority will be given to patients within the DSA of the donor hospital, if no local patients match, the heart will be considered by hospitals within 500 nautical miles of the donor hospital, and then 1,000 nautical miles, and so on. These changes are expected to cut down on geographic disparities in organ matching, while keeping organ preservation time as short as possible. This is only possible with organ perfusion equipment.”
- There is no cost to the Organ Procurement Organization – it is all benefit.
- Conclusion – the OPOs are going to be very supportive of the OCS system because it is an enabling technology that will help the OPO meet the new goals from the CMS.
Competition - there is competition among transplant centers for people who want to receive an organ transplant. Patients have a choice on where they can go, and they naturally want to go to a location where they can get the transplant as soon as possible. Many of them are at significant risk of dying, and they want to go to a transplant center that will help them receive the transplant urgently. There is going to be competition among transplant centers to partner with TMDX because once one of them in a region starts getting more organs offered and shortening the wait times, transplant patients are going to learn about it and gravitate to that transplant center. Other centers are going to be forced into following suit if they want to keep up with competition.