Making the Business Case for CEPs

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Making the Business Case for CEPs

Matthew Thomas, MS, MBA, ACSM-CEP |  June 29, 2022
Making the Business Case for CEPs

The influence of cardiopulmonary rehabilitation (CR) participation on desirable patient outcomes is well established. Moreover, the role clinical exercise physiologists (CEP) and exercise physiologists serve in such programs is becoming better understood and desirable in many health care settings. Less understood, and perhaps more vital for substantiating the CEP’s role in health care, are the unseen benefits these professionals guarantee through high-quality CR services.

The purpose of CR can at times be oversimplified in an attempt to educate administrators and stakeholders. The goal of improving an individual’s fitness and quality of life often takes center stage. While this is a crucial component of optimal patient outcomes, it represents only a small window of the patient’s overall well-being and prognosis. For this reason, event-free survival should be the hallmark of CR and the driving design of the CEP’s services. Decreasing length of stay (LOS) and the elimination of 30-day readmissions should be front of mind to support patients in achieving event-free survival, improved physical conditioning and overall quality of life.

The operational impacts of decreased LOS and reduction of 30-day readmissions are often overlooked because these can be difficult to quantify. Despite the challenges, positive impacts in these categories can provide substantial cost-savings opportunities for health care systems. It should be said that the difficulty in such cost analyses are often only a matter of expertise and access to information. Generally, operational finance teams take the lead when determining the costs associated with prolonged LOS and 30-day readmission events.

For many organizations, LOS and 30-day readmissions are measures that drive reimbursement contracts. Poor performance in these areas can lead to penalties or reduced reimbursement. Therefore, the quantification of these variables is instrumental in preserving operational stability. Diagnosis related groups (DRGs) are the key component in determining the cost burden of both prolonged LOS and readmissions. DRGs represent the average expected bundled cost of a particular medical event. Insurance companies use DRGs to benchmark reimbursement and contract negotiations. If individual treatment codes are like groceries, DRGs would represent the final cost once the groceries have been bagged and given to the customer.

There are two LOS types that are important in deriving costs for a particular DRG. The first is facilities’ average length of stay (ALOS), and the second is a nationalized LOS average known as the geometric mean length of stay (GMLOS). The GMLOS is an important benchmark as it is the performance measure by which reimbursement is distributed to organizations.

Consider the six-month cost analysis of LOS and readmission events for a coronary artery bypass graft (CABG) performed at Generic General Hospital under DRG 233: Generic General performed 35 cases of DRG 233 with a reported ALOS of 12.1 days for a gross total of ~420 patient days (12.1 x 35). Finance declares direct costs for this DRG case load as $1,230,480 — or $2,930/day. 


The national GMLOS for DRG 233 is 11.4 days, 0.7 days lower than Generic General’s current performance. If Generic General were to decrease their ALOS to the GMLOS standard, the organization would save $82,040 = (0.7 x $2,930 x 35) for the six-month period. The annualized amount of $164,080 is a meaningful savings for any organization. This figure is even more substantial when combined with other applicable CABG DRGs.

Readmission cost analysis is calculated in a similar way. In this case, common readmission DRGs must be identified rather than treatment event DRGs. In this way, direct costs can be calculated and applied in the same manner of LOS where the associated readmission DRG cost multiplied by the average LOS for a particular readmission event yields direct and annualized costs for an organization.

The CEPs professional efforts will accelerate when health care administrators, legislators and insurance representatives grasp the financial implications of preventing the downstream cost burden associated with prolonged LOS and readmissions. Until the associated cost burdens are demonstrated, CEPs will continue to be professionally misunderstood and their scope of practice overlooked. The business case of the CEP’s worth may just be the prospect we have been awaiting.