Houston, TX—In the past 2 decades, community oncologists have experienced an era of stability (1991-2003) and a time of adaptation (2004-2006), and are now practicing in an era that may best be described as feeling the “squeeze” (2007-present), said Thomas A. Marsland, MD, President of Cancer Specialists of North Florida, Jacksonville, who discussed the current crisis in the community oncology setting at the Association for Value-Based Cancer Care second annual conference.
The current buy-and-bill outpatient practice infusion model is providing quality care, he said, “although maybe not always the best value,” because it “comes at a significant price.”
A 2007 analysis of 14 million claims indicated that the average annual pharmacy cost for a patient with cancer was $110,000. Already quite high, these costs are now increasing by 20% annually, Dr Marsland emphasized.
Drug margins once subsidized oncology practices, but with the Medicare Modernization Act of 2004 came the average sales price approach; this coincided with reduced use of erythropoiesis-stimulating agents, and revenues took a hit. Over time, drug revenues increased, although the cost of cancer drugs rose faster.
Oncology practices were forced to become more efficient, inventory became better managed, standardization was promoted for both billing and clinical care, clinical pathways were envisioned, and production increased. “As a result we saw a net increase in revenue,” he said. “Then the squeeze came.”
Efficiencies in the practice were “maxed out,” labor costs increased, and total costs surpassed revenues, but the number of patient visits per full-time equivalent decreased, because more staff were hired to handle the additional clinical and regulatory requirements on providers. “Having a nurse call to see if the patient is taking his medication correctly is not a reimbursable service, but became expected as part of good quality of care delivery,” Dr Marsland said.
Today, direct interaction with payers takes time from administrative and nursing staff; physicians themselves spend 3 hours weekly on this, and the total national cost of this interaction is estimated at $23 billion to $31 billion annually, he said.
In addition, revenue as a percentage of total revenue in oncology has decreased from 85% in 2005 to 65% in 2012.
In part because of these trends, Dr Marsland and fellow medical oncologists have seen their income diminish by 30% over the past 6 years. “We are still making a comfortable living, but the point is that the income stream is on a downward trend, and practices are feeling the pinch,” he commented. “What is happening?”
A recent survey of 1000 practices from the Community Oncology Alliance found that 200 practices were closing their doors, 30 were merging, 325 reported financial distress, and 50 were sending patients to the hospital for infusion services. Another survey from the Association of Northern California Oncologists showed substantial economic stress resulting from payment delays, rejections of appeals, and so forth.
This shift away from community oncology is reducing patient access and increasing costs to the healthcare system, Dr Marsland said.
The reasons behind the rising cost curve are numerous—not just “drugs per se,” but duplication of services and fragmentation of care, Dr Marsland told attendees.
“We are daily bombarded by payers who want to reduce our payments and decrease utilization. Our collaborative efforts are still based on a fee-for-service mentality that is not sustainable in the long run, although we are beginning to talk about completely new payment models,” he added. Problems with the current system include:
To control these trends and growing costs, a variety of strategies are being imposed on providers by payers. Cost control efforts include:
It is expected that emerging models will be better, in that they will:
“These assumptions are intrinsic in all the new payment models,” Dr Marsland said.
In closing, Dr Marsland said his definition of “value” is giving the right care to the right patient at the right time and at the right cost. With the emerging models of cancer care, “you see commonality and a vague image of what the ideal healthcare delivery system might look like,” he acknowledged.
Embedded in these new models are some tough demands, including a total integration of economics, cost, clinical care, and standardization to rid the system of variance. “This will take some deep pockets,” Dr Marsland predicted.
