Medicare O.K. Could Mean Growth For Angioplasty Alternative

Twelve years of persistence -- timed with the changing demands of managed health care -- soon could pay off handsomely for Cardiomedics Inc. Medicare reimbursement has been recommended for use of products such as the Irvine, Calif.-based growing company's CardiAssist external counterpulsation system, used to treat severe angina that hasn't responded to medical therapy. The recommendation came from the Healthcare Finance Administration, which administers the Medicare program. Reimbursement should begin July 1. While some insurance firms have been covering use of CardiAssist on a case-by-case basis -- and other patients have been paying on their own for treatments -- the coming Medicare reimbursement means huge growth potential for Cardiomedics, a company with fewer than 20 employees. About 30 of the company's machines are presently in use. "Probably we'll place three times the machines this year as in 1998," says John Hutchins, vice president of sales and marketing. "And we would anticipate roughly doubling each year thereafter for three or four more years." The CardiAssist system increases the flow of blood through the coronary arteries into the heart muscle while reducing strain on the heart. The therapy is noninvasive and does not require anesthesia. In 1987 Cardiomedics' external counterpulsation system was the first such device cleared for sale by the U.S. Food and Drug Administration (FDA) for the treatment of angina, heart attacks, and cardiogenic shock. The company spent the next 10 years doing research and development. "Two years ago we became the company we are today, formally commercialized the device, and started trying to sell it," says Hutchins. The timing was right, it appears. "Until the last two to three years, the medical community really wasn't ready for a noninvasive, less-expensive procedure, because the cardiologists -- our primary customers -- were making too much money doing invasive procedures like angioplasty," Hutchins says. "It has only been in the last two or three years when cost pressures on the whole medical system have become so severe" that physicians have reconsidered procedures. Cardiomedics expects to double its production staff to meet the increased demand spurred by Medicare reimbursement -- and anticipates hiring added specialized executives. The firm manufactures the CardiAssist systems on-site, outsourcing the needed components and then doing subassembly and assembly in-house. It also is working on future CPR and ambulance-based applications for its product. Hutchins predicts that CardiAssist will begin replacing angioplasty, just as angioplasty in many cases replaced open heart surgery: "Once the reimbursement is put into place, and the physicians see they can do a noninvasive procedure and save the patient and system a considerable amount of money, the use of the procedure will increase exponentially."