November 2017 Edition Vol.11, Issue 10

Cost Disparities in Site of Cancer Care Persist

By Megan Garlapow, PhD

Cancer care costs are estimated to reach $170 billion by the year 2020.1 Increasing costs have been associated with a site-of-care delivery shift from the community-based practice setting to the outpatient hospital setting. The Community Oncology Alliance (COA) has been tracking oncology practice closures and acquisitions since 2008. A report from COA notes that since that time there has been an increase in closings of community cancer centers of 121%; and an increase in acquisitions, merges, or purchases by hospitals of 172%, to a total of over 1000 independent practices.2

In terms of total numbers of facilities, 380 community cancer practices closed and another 609 were acquired by or affiliated with hospitals. An additional 290 community cancer centers reported financial struggles that made remaining open a challenge.2

A consequence associated with hospitals’ acquisitions of community cancer centers is the significant rise in total amount of chemotherapy claims in hospital-owned practices. This pattern is especially problematic when considering the escalating costs of cancer care.3, 4

Assessing the significances of the rising cost of cancer care in the United States, a study by researchers at Xcenda, a global consultancy group, examined the financial ramifications related to site-of-care in patients diagnosed with 1 of 3 common tumor types: breast, lung, or colorectal cancer. Since previous studies indicated that patients treated in the hospital setting may be inherently different than patients treated in the community practice setting, Xcenda conducted a matched analysis of patients undergoing chemotherapy and evaluated differences in total cost, emergency department (ED), and inpatient care.5

Patients were matched (2-to-1, those treated in a community setting to those treated in a hospital-owned outpatient clinic) based on:

  • Cancer type (breast vs. lung vs. colorectal)
  • Specific chemotherapy regimen received
  • Gender
  • Prior surgery
  • Receipt of radiotherapy during treatment
  • Presence of metastatic disease
  • Geographical region (East/Midwest vs. South/West).5


Study Design

Researchers obtained a 10% random sample of medical and pharmacy claims from the IMS LifeLink database of over 80 million patients, selecting data from patients with breast, lung, and colorectal cancer across 70 healthcare plans between July 2010 and June 2015. Patients were followed for up to one year after the index date or until discontinuation of frontline chemotherapy.5

Lucio Gordan, MD, Medical Director in the Division of Quality and Informatics at Florida Cancer Specialists and Research, explained that this study is unique from the multitude of other research showing the cost disparities between the hospital-based and community oncology settings because of its larger number of patients, its examination of specific cancers (breast, lung, colorectal), and its matched analysis to ensure the patient population was well balanced between the two care settings.

Additionally, he said, “we assessed Charleston comorbidity scores to show that the patients were well equalized between the hospital and community settings, and we examined not only costs — with a breakdown of very specific procedures such as radiology, pharmacy, and chemotherapy — but also some quality metrics that other studies did not.”


Study Results

In this matched analysis of patients treated in community cancer centers vs outpatient hospital departments, chemotherapy was 71% more expensive, visits with clinicians were a whopping 333% more expensive, and visits to emergency departments were higher in those treated in the hospital outpatient setting vs patients treated in the community cancer center setting.5

The results were consistent across all three tumor types, suggesting overarching, generalized drivers of increased costs.

An alarming increase in cost of care in the hospital outpatient setting (n=2,225) over the independent, community cancer center setting (n=4,450) was observed. Over the course of one year, the cost of care for patients undergoing chemotherapy across all three tumor types was 59.9% higher in the outpatient hospital setting than in community cancer practices. This totals an astounding $90,144 more per year per patient for identical treatment. Per patient per month, this comes out to $20,060 in the hospital outpatient setting vs $12,548 in the community cancer center setting (P<.0001).5

When considering the increased cost of new immunotherapies, targeted therapies, and other specialty medications in oncology care, the need to effectively control costs of therapies that form the backbone of treatment becomes more apparent. Though biosimilars are poised to deliver savings and potentially enable financial headroom in cancer care6, the double-edged sword of decreased access to community cancer centers and increased cost of care in the outpatient hospital setting is an issue that has yet to be resolved.

Additionally, “hospitals are financially motivated to use the more expensive drug and not the biosimilar. As a result of that, the motivation to use biosimilars is probably not there,” said Ted Okon, Executive Director of COA.


Drivers of the Cost Differential

In the study, chemotherapy and physicians’ visits were shown to be the largest drivers in cost differential. In the outpatient hospital setting, chemotherapy was 71% higher or $8,443 per month vs community cancer center of $4,933 per month (Table 1).5



Notably, the lower cost of chemotherapy in the community cancer setting persisted regardless of whether branded, generic, or a combination of branded and generic chemotherapy was used. Though the use of branded and generic chemotherapy differed across tumor types in a way that was consistent between both treatment settings, the distribution of use of branded and generic chemotherapy was similar between hospital and community settings.5

The cost of physician visits was a whopping 333% higher in the outpatient hospital setting at $3,316 per appointment vs the community cancer center at $765 per appointment (Table 1).5


Costs across Tumor Types

Patterns of cost differentials were consistent across breast, lung, and colorectal cancers (Table 2).5

  • For patients with breast cancer undergoing treatment in the outpatient hospital setting (n=1,498), the average cost of chemotherapy was $8,206 vs $4,671 in the community center setting (n=2,996); the average cost of physician visits was $3,499 in the hospital setting vs $820 in the community setting
  • For patients with lung cancer undergoing treatment in the outpatient hospital setting (n=476), the average cost of chemotherapy was $8,430 vs $5,095 in the community center setting, and the average cost of physician visits was $3,015 in the hospital setting vs $709 in the community setting
  • For patients with colorectal cancer undergoing treatment in the outpatient hospital setting (n=251), the average cost of chemotherapy was $9,881 vs $6,189 in the community center setting (n=502), and the average cost of physician visits was $2,791 in the hospital setting versus $538 in the community setting5



Visits to the Emergency Department

On top of these additional costs, 3.6% of patients who underwent chemotherapy at hospitals visited the ED within 72 hours vs 2.6% of patients who received care at community cancer centers (P=.0055). The higher rate of visits to the ED persisted to within 10 days of undergoing chemotherapy, when 9.8% of patients in the hospital setting visited the ED vs 7.9% of patients in the community setting (P=.0022).1

These results of increased use of the ED following hospital-based cancer care are particularly unique. As Okon explained, these results are especially important given the patient cohorts were matched and balanced.

“That’s a big deal and a big finding,” said Okon. “We should really care about this study because it’s one thing to talk about higher treatment costs in hospitals, but I’ve never seen any data until this showing the higher utilization of the emergency room in patients receiving cancer care in the hospital vs. the community setting.”

In trying to determine why post-chemotherapy ED visits might be higher in the hospital setting, Dr. Gordan described the possibility that protocols used by clinicians in the hospital setting to treat patients experiencing potential post-chemotherapy complications might be different than in the community setting.

“Let’s say we want to increase the value of care for these patients, meaning we want them to stay outside the ED or hospital as much as is possible and safe. Of course, patients calling into the clinic with nausea, vomiting, fever, diarrhea, or any other symptoms receive I.V. fluids, I.V. antibiotics, or whatever it takes to prevent a hospitalization. We know that hospitalization is associated with increased costs, and patients and families undergo the trauma and the initial toxicity of being hospitalized. Community practices might have better procedures to keep patients out of hospitals,” explained Dr. Gordan.

Okon added that the first route into a hospital is often via the emergency department. “Hospitals are going to be more inclined to admit a cancer patient, even if they need something as simple as hydration, because it’s part of the hospital,” explained Okon.

He continued by describing the effects of the Oncology Care Model (OCM) guidelines on the community cancer practice: “On the other hand, in community practices, even if they happen to be located on a hospital’s campus but are otherwise unaffiliated, there exists more and more of a tendency to follow the OCM guidelines. The OCM guidelines include 24/7 care. There’s more of a tendency in the community setting of not having a patient go into the emergency room unless it’s truly an emergency.”


Conclusions and Persistent Obstacles

Though this study minimized differences in patient profiles via matching, cost disparities between hospitals and community oncology centers persisted and were driven primarily by differences in the costs of chemotherapy and physician visits. Addressing the asymmetrical access to cancer care as hospitals grow unilaterally will likely necessitate legislative changes. The effects of this site-of-care shift is most pronounced in inner cities and in rural areas.

“This is obviously not good for patient care, for patient access to care, or for diversity. We need to take this to our representatives in congress so that changes can be made at a central level,” said Dr. Gordan. “Obviously, hospitals have a very important and excellent role in care of patients, but it is certainly severely complicated when we are increasing the cost of care severely in oncology and other specialties. Something has to change, and it will take a large, concerted effort that includes legislative changes.”

Okon iterated that data have consistently shown that hospitals are a tremendous driver of excessive spending on cancer care. “It’s a lot easier to buy a practice that has an existing, ongoing patient base than hire oncologists, who are in short supply to begin with, then build a program, which takes years,” he concluded.



  1. National Cancer Institute Cancer Prevalence and Cost of Care Projections.
  2. 2016 Community Oncology Practice Impact Report: Tracking The Changing Landscape of Cancer Care.
  3. Vandervelde A, Miller H, Younts J. Impact on Medicare Payments of Shift in Site of Care for Chemotherapy Administration.
  4. Winfield L, Muhlestein D. Cancer Treatment Costs Are Consistently Lower in the Community Setting versus the Hospital Outpatient Department: a Systematic Review of the Evidence. 2017.
  5. Gordan LN, Blazer M. The Value of Community Oncology: Site of Care Cost Analysis.
  6. Garlapow M. Biosimilars Poised to Save Billions in Cancer Treatment. 2017.

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