Cancer Care at a Crossroads
Scientific developments in oncology generate excitement about breakthrough cancer treatments and hold the promise of better clinical outcomes. The science is advancing at a great clip, but can health systems keep pace? Hospitals looking to expand their oncology offerings will need to take a number of factors into consideration as new trends challenge all stakeholders in the delivery of cancer care.
Across the national healthcare market, and without exception in oncology, there is immense pressure to deliver high quality care at a lower cost. When the individualized nature of cancer and the instances of specific tumor types are coupled with the emergence of personalized medicine and genetic testing, the potential for improved outcomes becomes exponential, but at a much higher upfront cost. The reality of reimbursement cutbacks needs to then be balanced with treatment plans that incorporate innovative oncology care.
Further, the oncology market is expanding. What is driving the market growth? The 15.5 million cancer survivors today—and the 20 million survivors projected in 20261 —point to the success of current treatments, but also represent the forthcoming need for ongoing care as patients live longer.
Down the line, cancer survivors will need maintenance plans to treat comorbidities associated with cancer, and hospitals must focus on locking up those referrals. On top of that, patients now contributing a larger share of the cost are demanding greater transparency of care. They want access to the price and quality of healthcare services so they can make better decisions about their care.
The current state challenges health systems to maintain their competitive edge and stay one step ahead of the trends. More than ever, these organizations need to take calculated steps and ensure that any and all changes to their approach to oncology care align with both their short- and long-term goals.
A few years ago, the U.S. saw a shift in the delivery of cancer care with hospital ownership becoming more and more commonplace as community-based oncologists were looking for additional security. While the instances of hospitals acquiring community practices has slowed, the ongoing goal of alleviating administrative burdens so doctors can devote more of their resources to the actual delivery of patient care remains a constant.
Where opportunities for consolidation exist, the healthiest way for a hospital or health system to approach expansion is to determine in advance what they intend to accomplish and what type of model makes sense. Will the community oncology practice become an outpatient clinic, close completely or continue as is?
The arrival of the Bipartisan Budget Act of 2015 leveled the playing field by requiring Medicare payments to hospital departments to align with payments to physician offices. This was followed by The Helping Hospitals Improve Patient Care Act of 2016 (H.R. 5273) proposing, among other recommendations, modifications to Medicare payments for certain hospital outpatient departments.2 The matter remains unsettled, as legislators, policymakers and hospital trade associations continue their debate and discussion over how payment rates will impact care delivery.3 The volatile political climate has left many health systems more cautious about expansion decisions, waiting to see what will happen before making any determinations about the way they approach growth in oncology care.
Meanwhile, community practices aren’t as quick as they once were to sign away their practices to health systems. As private practices are bringing more to the discussion, all stakeholders need to be more diligent. Health systems need to eliminate risks associated with an acquisition; such as ensuring each target is financially sound. Unlike hospitals, physician-run clinics can often track expenses down to the penny, so balance sheets should be reviewed in detail to reveal the true financial picture. Buying a failing business with the aim of turning it around post-acquisition is a disaster in the making.
Another critical consideration is the transition of multiple electronic medication record (EMR) systems. The potential for leveraging the combined data from the hospital and practice setting offers great promise for supporting, sustaining and advancing cancer care. But the task of combining numerous disparate systems could actually make it more difficult to track care and paint a complete picture; critical pieces to ensuring patients are following their treatment plans.
Reining in Costs and Maintaining Relevance
Understanding the issues that affect the optimization of oncology drug purchases in a health system is crucial. Recent trends indicate shifting models that present complex questions around class of trade, product access, particularly access to limited distribution drugs, group purchasing organization contracts, physician contracts, and varying Medicare Part B reimbursement rates under the Hospital Outpatient Prospective Payment System and the Medicare Physician Fee Schedule. When it comes to cases of consolidation, decisions need to be made about how the acquired community practice’s drug costs fit into the overall financial picture. Adding a new location is a big change requiring careful consideration of the business impact.
A hospital may decide to add an acquired practice to its outpatient offerings and therefore, carry expenses on its own cost report. Or, perhaps the more financially sound route is to allow the practice to continue to function independently.
These factors and more should be taken into consideration as health systems negotiate contracts, stock inventory and determine eligibility for rebates and other incentives. Another pressure for health systems is the rising cost of oncology drugs, particularly new treatments that hit the market. Lower reimbursements mean the margin of error is narrower than ever so hospitals must keep close tabs on their budgets.
Ultimately, when considering consolidation, an understanding of the physical and human environments for oncology care alongside a well-structured plan that appropriately addresses the impact on purchasing, reimbursement and technology can advise both parties along the decision-making process.
Cancer care remains a top priority for all stakeholders. Greater stability of the community oncology setting and the availability of robust oncology care in the hospital setting will ultimately lead to the best patient care. It will give patients choices: options closer to home and access to additional resources for managing more complex cases. There is no one size fits all to cancer care, but the bottom line, better outcomes for every cancer patient, is never different.
1. Press releases. (2012, June 02). Retrieved November 9, 2016, from American Cancer Society, http://pressroom.cancer.org/SurvivorshipStats2016
2. H.R. 5273, helping hospitals improve patient care act of 2016. (2016, June 3). Retrieved November 9, 2016, from Congressional Budget Office, https://www.cbo.gov/publication/51651
3. Dickson, V. (2016, July 6). CMS angers hospitals with plans for site-neutral rates in outpatient payment rule. Retrieved November 9, 2016, from Modern Healthcare, http://www.modernhealthcare.com/article/20160706/NEWS/160709964