“Cancer treatment delivery is a dynamic area and we’re seeing some pretty vast changes,” says Christian Downs, executive director of the Association of Community Cancer Centers, the Rockville, Md., an organization representing more than 700 institutions treating 45 percent of all U.S. cancer patients. “A lot of the care now is becoming more sophisticated. Twenty to 30 years ago, most cancer care was delivered in hospitals. In the last five years much of that has left hospitals for outpatient settings.”
The introduction of orally-administered cancer drugs that can be taken at home is expanding delivery options even further. Mr. Downs says reimbursement for in-patient cancer care began to decline significantly in the mid-1980s. “We’re now seeing reductions in hospital outpatient settings, too, which could push more patients to physician office settings.”
However, Mr. Downs says hospitals will continue to play a vital role in cancer treatment.
“You have to remember the reason people are getting treated,” he says. “Cancer is a difficult disease and many patients aren’t going out of the hospital. A lot is still being done in hospitals. In most markets, the hospital is still the one to handle the surgeries and linear accelerators and the diagnostic equipment. It’s still a revenue source for many of them.
“We’re seeing hospitals grow their cancer services,” Mr. Downs says. “Cancer does provide a high-tech payload to hospitals. Many employers and insurance plans want to see a good cancer program in their network.”
He says not many cancer programs have empty waiting rooms.
“When programs don’t succeed, it’s usually because of weak management or lack of commitment by the institution and not just economics,” he says. “We are seeing joint-ventures between doctors and hospitals to leverage each other’s strengths. We’re not seeing an exodus from hospitals, they’re not closing down facilities. I’m seeing programs expanding and making a larger commitment to their cancer programs. They’re trying to do what best fits their community needs and adapt their strengths to that model. We’re seeing physician employee models, large, multi-disciplinary group contracts with hospital and community hospitals affiliating with large, academic medical centers.”
Developing successful programs requires multifaceted approach
Mr. Downs says he’s seeing more hospitals and physician offices using oncology pharmacists, taking advantage of their clinical and economic skills. And they’re doing much more clinical evaluation, make suggestions to providers and helping them to become smarter purchasers of drugs. The downside, he says, is it’s difficult to find board-certified oncology pharmacists.
He says hospitals need to make an institutional commitment to their oncology programs. “I’m amazed by the number of CEOs who don’t,” he says. “It’s not just resources, but the CEOs and leadership must be invested in giving time, resources and priority, a real commitment beyond the money to make sure it’s successful.”
He predicts that oncology programs will soon see greater benchmarking. “Right now more work needs to be done on that,” he acknowledges.
Ernest Anderson, director of pharmacy for the Burlington, Mass.-based Lahey Clinic and ACCC’s current president, says many hospitals are actually expanding their oncology programs.
“While reimbursement on the drug side is a problem, overall cancer treatment remains a profitable venture for hospitals, albeit not as lucrative as it used to be,” Mr. Anderson says.
Oncology opportunities aplenty
He sees plenty of competition for oncology care in his native New England, but less in rural, less-populated areas. “The Medicare side of reimbursement has deteriorated and some physicians would rather shuttle Medicare patients to hospitals and keep the commercial insurance patients in their offices,” he says. “And if they can do that, they will, but it won’t be a good thing for hospitals.”
Janet Nelson, an oncology nurse, practice consultant consultant and executive with several oncology firms, says there are opportunities for hospitals to create good oncology programs to meet market needs.
“But the model has shifted in reimbursement and they need to look at different ways to recapture oncology revenues,” says Ms. Nelson, now the chief operating officer of Dallas-based Nex- Gen Oncology. “With many physician-hospital owned ASCs facing unwinding, there are many opportunities for hospitals.”
She points out that in Oct. 2009, physicianhospital joint venture ASCs will no longer be allowed to bill under-arrangement under the higher reimbursement hospital provider number.
Ms. Nelson says there are other opportunities for hospitals to invest in technology and recruit disease specialist physicians to grow their business lines in breast treatment, radiation therapy and pharmacy to regain market share.
She says the majority of radiation oncology centers are still owned by hospitals because they typically have deeper pockets and the technology is prohibitively expensive. She says recent changes in Medicare reimbursement are costing physicians money.
“We’re seeing many hospitals buying oncology physician practices,” she says.
She says large academic medical centers known for cancer treatment, M.D. Anderson and Sloan Kettering, for example, are fully-integrated healthcare systems with faculty physicians who teach and perform research and attract public dollars and capital.
“If they have a good business sense, they can compete in the marketplace,” she says. She says most of the revenue in oncology comes from surgery and radiation, “two cash cows” remaining in the oncology space allowing community hospitals solid opportunities to compete for business. Ms. Nelson says physicians are scrambling like community hospitals to figure out a model for survival and are seeking partnering opportunities. Many cancer specialists are joining large, multi-disciplinary practices or selling their own practices to hospitals.
“It’s hard to predict, given the current reimbursement climate, which model is likely to succeed,” she says.
Contact Mark Taylor at mark@beckersasc.com.
