February 2013 Edition Vol.7, Issue 2

Transitioning to Value Based Oncology: Strategies to Survive and Thrive

Transitioning to Value Based Oncology:
Strategies to Survive and Thrive

By Michael L. Blau, Esq.

On October 11-12, 2012, oncology leaders gathered at the 2012 Cancer Center Business Summit at the Worthington Renaissance Hotel in Fort Worth, Texas. The Summit is a unique event focused on business innovations in community oncology. It is a forum that considers business, legal, reimbursement and market developments; and spotlights some of the most advanced thinking of industry leaders about emerging best models and practices for succeeding in the rapidly evolving marketplace for community-based cancer care. The theme of the 2012 Summit was Transitioning to Value Based Oncology: Strategies to Survive and Thrive. Following are Mr. Blau’s opening remarks, and a summary of options he outlined for community oncologists to remain independent in the evolving world of ACOs, medical homes, and risk-based payment arrangements.

Changes are transforming the healthcare landscape. These changes are being driven by the economy; and some would say, the social and moral imperative to reduce the unsustainable rate of growth of healthcare spending in this country. These costs make the United States the most expensive healthcare system in the world, and make healthcare unaffordable or inaccessible for far too many Americans. Oncology is responsible for its fair share of these rising costs accounting for up to 10% of all healthcare expenditures by some estimates. In addition, oncology costs are growing faster than many other healthcare components due to expensive new drugs, expensive new molecular diagnostics, and expensive new robotic technologies and therapeutic technologies, like proton beam therapy.

The time has come to seriously re-examine our fragmented, expensive healthcare system and to innovate sustainable ways to cure its ills. Most healthcare executives are heeding this message. Their offices today are replete with talk of bold initiatives to re-imagine, re-design and re-build our system of “sick” care into the population health management system of the future. Community oncology also has the opportunity to make a significant contribution toward this goal by curbing variability and overutilization of cancer drugs and therapies; by changing physician incentives to select the most cost-effective treatments rather than the most profitable ones; by pro-actively monitoring patients to avoid ED visits and hospital admissions; and by eliminating futile end-of life services. If these things are done well, community oncology should have the opportunity to share in the resulting cost savings.

The pace for the change to population health management and value-based cancer care is unprecedented—and, there is a growing sense of urgency that the stakes are high, resources are constrained, and that the right investments need to be made now, before opportunities disappear or are claimed by others. The prospect of change of this magnitude can be exhilarating, innovative, and it can create new opportunities. But, it can also be unsettling. That is what many in community oncology report feeling today. They are concerned about reimbursement reductions for chemotherapy, radiation therapy and imaging; reduction in demand for elective services due to increased patient co-pays; being excluded from payer contracting networks because of the relatively high cost of oncology care; and losing referral sources as primary care physicians and other specialists align with specific networks. Other factors include the pressure to give up their practice autonomy and become employees of hospitals, strong multi-specialty groups or health systems; shift to use of mid-level providers practicing at the top of their license; whether payers will pay for the transformation to value-based care and personalized medicine or for new state-of-the-art drugs and technologies; and finally, the projected reduction in need for oncology care under stringent managed care systems that incent lower specialist utilization rates.

In the face of all these challenges, some community-based oncologists want to know what strategic options they have to remain independent, and to survive and thrive during the transition to the population health management system of tomorrow. At the Summit, we explored many options oncologists can consider, and their respective business, legal, and technological hurdles and challenges, as well their pros and cons, and costs. The following are some of the strategic options considered at the Summit:

  • Oncology SuperGroups—Oncologists can combine and consolidate their practices under a single tax id number, so that they can be relevant (if not indispensible) to any health system, ACO, medical home, or payer whose members need access to high quality, affordable oncology care. Examples of supergroups include: Texas Oncology and Regional Cancer Care Associates (NJ). The Summit also considered the antitrust limits on the size and activities of supergroups in particular markets.     
  • Building the Oncology Medical Home—The oncology medical home would focus on, inter alia, “right siting” oncology care; curbing overutilization of chemotherapy, radiation therapy, imaging and surgical services; standardizing use of cost-effective protocols, treatment regimens, and supplies; and pro-actively monitoring medication side-effects and patient status to avoid ED visits and hospital admissions. Early results from medical home pilots were presented at the Summit by John Sprandio, M.D., Oncology Hematology Consultants (Dix Hills, PA), and Linda Bosserman, M.D., Wilshire Hematology Oncology (La Verne, CA).
  • Forming an Oncology Network (financially integrated)—Create a single specialty risk bearing organization or network comprised of independent oncologists/groups that are sufficiently financially integrated to permit collective bargaining with health systems, ACOs, medical homes, and payers. Such a network could be a carve-in (or carve-out) for any payer/ACO that enters into a managed care or risk contract. One hurdle to forming such a network is whether existing IPA/PHO or other participating provider agreements permit interested oncologists to contract through any other network.                                                    
  • Forming a Clinically Integrated Oncology Network–Oncologists can create a clinically integrated organization and network comprised of independent oncologists/groups that are sufficiently clinically integrated to permit collective bargaining with health systems, ACOs, medical homes, and payers. Examples include Cancer Clinics of Excellence and Oncology Resource Networks of America (FL). A critical question is whether such networks will attract a sufficient critical mass of quality oncologists (within antitrust constraints), and become sufficiently clinically integrated (to meet antitrust CE standards), so that they are relevant, if not indispensible, to ACOs, payers and health systems in their markets.                                                                                                                        
  • Hybrid Arrangements—Hybrid arrangements can be developed, such as a core oncology (super)group, with a wrap-around financially and/or clinically integrated network. Some of these are in the process of being planned.           
  • Oncology ACO—Oncologists may be able to form an oncology-only ACO with a major commercial insurer and hospital or health system. An oncology only ACO would not qualify to be an ACO for purposes of participating in the Medicare Shared Savings Program (MSSP). The payer would pay for the value produced by the oncology ACO in reducing costs and improving quality (such as described in the Oncology Medical Home model), while the hospital/health system partner would work with the oncologists on transitions of care and in redesigning inpatient and outpatient cancer care processes. The Oncology ACO in Miami, Florida, is the first commercial ACO of this type. It is a collaborative venture of Advanced Medical Specialties, Florida Blue, and Baptist Health System. The Oncology ACO was the recipient of the 2012 Foley & Lardner LLP Cancer Care Innovator of the Year Award that was presented at the Summit.
  • Join multiple ACOs that participate in the MSSP and/or with commercial payers, and bargain for governance rights and for fair rates, together with a fair allocation of cost savings, performance based bonus payments, and risk pool surpluses.  
  • Form, join or consolidate with a dominant multi-specialty group that qualifies to be an ACO, that can sponsor development of an oncology medical home as an adjunct to its primary care medical homes (if any), and that has an adequate base of referring providers to support and grow a group of oncologists. Examples of such groups abound, and include Atrius Health (Massachusetts) and Palo Alto Medical Group (Palo Alto, CA).  
  • Apply for Innovation Grants to develop and pilot new business models for providing value-based oncology care. For example, a $19 million innovation grant from the Center for Medicare and Medicaid Innovation was awarded to Innovative Oncology Business Solutions (IOBS), an affiliate of New Mexico Oncology Hematology Consultants, as the lead organization, to form and study the impact of oncology medical homes in 6 states over a three-year period. The study seeks to prove that patient-centered, private practice cancer centers provide better oncology care at lower cost than alternative sites of care.
  • Hospital Alignment models that preserve independent private practice, such as Professional Services Agreements (PSA), Co-Managements, Leased Employee, Foundation Model, and Physician Enterprise arrangements. Examples include the PSA/Co-Management arrangements between The West Clinic and Methodist Health in Memphis, TN, and between University of Pittsburgh Medical Center and Oncology Hematology Associates in Pittsburgh, PA.
  • Practice management, MSO and support arrangements with health information technology, clinical decision support, and management service companies, such as McKesson/US Oncology, Alliance Oncology, 21st Century Oncology, Altos Solutions, Varian and athenahealth. Oncology groups can also consolidate or collaborate to create their own joint venture management service organization to attract venture or private equity capital for infrastructure development and growth.

At this important moment in healthcare, when so much is in flux, and new business models and solutions abound, the oncology sector has a solemn responsibility to really try hard to get it right—to forge the business models and relationships that will help define a new cancer care value proposition, and a sustainable healthcare system for the benefit of the patients it serves.

About the Contributor

Michael L. Blau, Esq. is the Chair of the Industry Teams, including the Health Care Industry Team, at Foley & Lardner LLP, and is a Co-Founder and Co-Host of the Cancer Center Business Summit. He can be contacted at mblau@foley.com. Further information about the Cancer Center Business Summit is available at www.cancerbusinesssummit.com.

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