Transplantation.

In Part 1 of this disoussion Long, H. "Medicare's ESRD Program, Part 1: Dialysis." Physician Executive 15(2):24-26, March-April 1989), the focus was on the various forms of dialysis for patients with end stage renal disease (ESRD). In this article, we turn our attention to the alternative therapy-transplantation.

Renal transplantation was included in the original implementing legislation of 1971 as a Medicare benefit. Slightly more than 3,000 transplants were performed in the first fun year of the ESRD program. This number has increased modestly since; 8,967 kidneys were transplanted in 1987 (see table below). An understanding of the reasons for this growth in and potential demand for kidney transplant services is important to the health care executive evaluating new or ongoing participation in the transplant arena.

The development of cadaver kidney harvesting techniques expanded the availability of kidneys for transplantation and increased the percentage of successful kidney transplants utilizing a cadaver donor from 56 percent in 1967 to 79 percent in 1987.1 Part of the success was due to the FDA approval in 1983 of cyclosporin as an immunosuppressive and antirejection drug. The cadaver donor program had been declared the nonevent of the ESRD program" as early as 1980 because of the poor success rate in preventing or rejection.2 The ability to suppress organ rejection with cyclosporin effectively provided a new supply of input resources (kidneys) into the system, a supply heretofore constrained by the need for, but the scarcity of, closely matched related donors. Indeed, during the first three years after FDA approval of cyclosporin, the average annual increase in cadaver kidney use tripled over the prior three years. Much of this increase, however, was absorbed in substitution for living donor matches.

Medicare's inclusion of cyclosporin drug therapy as a benefit began in 1986 and marked a major shift in the ESRD program toward transplantation,. The inclusion of immunosuppression after-care made all ESRD beneficiaries potential recipients of kidney transplants. As a result, recipients of kidney transplants are the fastest growing component of the ESRD program, more than doubling between 1979 and 1987 (see table below).

Medicare policy has consistently supported organ procurement and transplantation as an option in the care of ESRD patients. The ESRD program amendments of 1978 increased benefit eligibility from one to three years after tranplant and increased payments for acquiring kidneys. In 1987, new federal regulations required hospitals funded by Medicare and Medicaid to develop organ transplant policies and to affiliate with organ procurement agencies. The rules were aimed at decreasing national competition for organs. In March 1989, Medicare extended its effort to increase organ availability to Medicare patients by prohibiting the payment of kidney procurement costs when kidney recipients are not Medicare beneficiaries.

The preference for transplants by Medicare is probably based on past difficulties in controlling dialysis center costs and on the improved medical outcomes at lower costs in the tranplantation program. As noted in Part 1 of this article, the renal dialysis program has become more efficient with respect to the annual cost of caring for dialysis patients (in terms of 1972 dollars, a reduction from $13,672/ year in 1974 to $5,700/year in 1987). The medical success of the program has, however, placed increasing political pressure on the Medicare system because (1) increased longevity of ESRD patients (all patients died before dialysis availability; now about 20 percent of those on dialysis die annually) has increased lifetime costs per enrollee, and (2) poorer than expected return-to-work rates of dialysis cost issues. Costs have also increased because Medicare extends all its benefits to ESRD program participants, so that all NON-ESRD care received by these patients also becomes the responsibility of the Medicare system.

Studies of the financial effects of transplantation have demonstrated the cost of maintaining a patient with a functioning graft to be only one-third that of the dialysis patient.3 Even with a 50,000 transplant cost (including organ procurement, hospitalization, and physicians'fees), the present value of the costs to all payers for a patient receiving a transplant now is anticipated to be less than two-thirds that of maintaining the patient on dialysis, assuming the patient would live 10 more years under either approach (see figure 1 above).

Medicare terminates its responsibility to ESRD program enrollees 36 months following their receipt of a transplant. Consequently, Medicare would expect to save almost 60 percent of the present value of its costs for dialysis over a 10-year survival horizon by using transplantation (see figure 2 above).

Doubt concerning the medical success of dialysis was raised as early as 1981. The work of Gutman and others revealed that only 25 percent of dialysis patients worked outside the home, and 60 percent of the patients not having diabetes could do little more than care for their own basic needs.4 Evans et al reviewed a dialysis population in 1985 and showed a drop in labor force participation from 67.1 percent before chronic renal failure to 33.5 percent after the onset of chronic renal failure.5 A similar study in Australia supports the premise that quality of life measures tend to decline through time for patients on chronic dialysis.6 These figures are in stark contrast to the successful transplantation patient, who usually returns to a normal life.5

Thus, medical as well as financial considerations tend to favor transplantation over chronic dialysis as a long- term treatment plan for ESRD patients. These facts, coupled with the existing apparent price to the patient for renal transplantation (20 percent of cost) have resulted in demand far in excess of supply, with the gap expected to increase. In March 1988, one year after congressionally mandated participation in national organ "clearing houses," there were 12,500 people on waiting lists for kidney transplantations, 150 percent of the number of patients transplanted in the previous year. By January 1989, the waiting list had grown to 13,943.1-1 No one is quite sure how many dialysis patients could undergo a transplant, but some experts estimate that as many as 50 percent might benefit from the procedure.9 With more than 110,000 patients currently receiving chronic dialysis therapy, the January 1989 waiting list may be only one-fourth of the ultimate demand for renal transplantation at current subsidized price levels.

Economic pressures for a large hospital system to develop a transplantation program are heightened by the prestige factor involved with this service. The public views organ transplantation as the newest medical miracle, and a health care system may not be viewed as truly first-rate if it doesn't offer the service.

The ability of a medical center to provide transplantation services depends on much more than direct economics. High-quality transplantation surgeons are in limited supply. Many transplant recipients are also eligible for Medicaid benefits in their states. Thus, Medicaid funds can be used to augment a medical center's transplant program, but this also results in state political processes affecting the nature of that program. Oregon's decision in the summer of 1987 to discontinue funding of transplants under Medicaid is an extreme example of how a state's health care policy can effect the success of a transplantation program.

Regulatory involvement in a transplantation program can also result in a negative public image for the entire health care institution, especially when ethical issues surrounding transplantation become a media topic. The Oregon decision to fund prenatal care rather than transplants is only one aspect of this thorny ethical issue. Hospitals providing transplant services are finding it more difficult to turn away patients who have limited financial resources. In some states, disapproval of funding on an individual case can leave a hospital in the precarious position of having recommended a transplant that it cannot afford to perform.

Although the causes are not clearly delineated, renal transplants are not uniformly provided to all races. White males represent one-third of all patients on dialysis, but constitute one-half of those patients having working kidney transplants. Blacks suffer chronic kidney failure at three times the rate of whites, but are only half as likely to receive a kidney transplant.8 Such statistics have led to accusations of racial discrimination in transplant programs. Similar sexual differentials also exist, although they are not as numerically extreme as the racial differences.

Even if funding, regulatory compliance, surgeon recruitment and retention, and ethical considerations are balanced and well-managed by providers, the difficulty of procuring organs remains. Possible mechanisms for increasing the supply of organs being explored include animal kidneys, anencephalic infant organs, and estate tax credits for organ donations.' Opposition to free market stimuli to increase the supply of kidneys is widespread. Public outcry and claims of "scandal" met the recent news of a British physician purchasing kidneys for resale in the London market." The United States has prevented interstate commerce in human organs by statute since 1984. It is interesting to contrast this approach with our use of market mechansims for renewable organs (blood and skin) and renewable body parts (sperm and hair).

The ESRD program was developed on the basis of a goal of returning chronic renal failure patients to the workforce. Early failures to achieve this goal resulted in program changes and funding of research to identify alternative treatment methods that could better achieve the program's original directive. Current trends toward kidney transplantation are a manifestation of a convergence of medical and economic preference in treatment choice. These two strong forces will in all likelihood sustain current trends (limited only by the chronic shortage of kidneys), absent a free market or the development of an implantable artificial organ. In any event, provider involvement in the transplantation aspect of the ESRD program holds many medical, economic, and ethical challenges for which management must be prepared.

References

1. "The 12th Report of the Human Renal Transplant Registry." JAMA 233(7):787-796, Aug. 18, 1975.

2. Rettig, R. "The Politics of Health Cost Containment: End-stage Renal Disease." Bulletin of the New York Academy of Medicine 56(l):115-38, Jan. Feb. 1980

3. Krakauer, H. "Assessment of Alternative Technologies for the Treatment of End-stage Renal Disease." Israeli Journal of Medical Science 22(3-4):245-59, March-April 1986.

4. Gutman, R., and others. "Physical Activity and Employment Status of Patients on Maintenance Dialysis." New England Journal of Medicine 304(6):309-13, February 5,1981.

5. Evans, R., and others. "The Quality of Life of Patients with End-stage Renal Disease." New England Journal of Medicine 312(9):553-9, Feb 28,1985.

6. Oldenburg, B., and others. "Prediction of Quality of Life in a Cohort of End-stage Renal Disease Patients." Journal of Clinical Epidemiology 41 (6):555-64, 1988.

7. Otten, A. "Growing Demand for Organ Transplants Spurs Efforts to Expand Pool of Donors. Wall Street Journal, March 18, 1988.

8. Blakelee, S. "Race and Sex Are Found to Affect Access to Kidney Transplants." New York Times Science, Jan. 24,1989.

9. Lutz, S. "Organ Transplant Programs Multiply." Modem Healthcare 18(10):23-25, 28-31 March 4,1988.

10. Gray, M. "Kidney Scandal May Push Britain to Bar Organ Trading." American Medical News 32(il):9, March 17,1989.

T H E A U T H O R S

Hugh W. Long, Phd, is Associate Professor of Health Care Management, A.B. Freeman School of Business, Tulane University, New Orleans, La. Richard M. Lauve, MD, is an emergency medicine physician with the St. Landry Emergency Room Associates in Opelousas, La., and an MBA student at Tulane University's A.B. Freeman School of Business.