Integrated Delivery Networks and Oncology Care Delivery: Changing the tide, or changing the sign outside?
By Meadow Green, Consultant, Kantar Health
I was sitting in the office of my primary care doctor on a Wednesday morning. I was really proud of myself going to the doctor for my first free (thanks, Obamacare!) well visit. I would’ve been a bit prouder if I’d gotten to it in January, when I’d intended to go, rather than November, when I actually went.
Either way, my visit was super interesting. Not because there was anything wrong with me or that my friendly DO is particularly amusing. My family doctor of decades had sold his practice to the local hospital, which, I noticed a month later, had rebranded itself and put up a billboard dropping the “Hospital” and adding the suffix “Health.”
“Nothing is going to change,” he told me.
The healthcare market has been consolidating in recent years with practice mergers, hospitals-hospital partnerships, and the acquisition or affiliation with primary care and specialist practices. These large health systems have ramped up activity to diversify services and revenues and manage risk as accountable care organizations (ACOs) and sometimes even offering their own health plans.
The formation of an integrated delivery network (IDN) can be vertical (usually involving hospitals acquiring or affiliating with a large physician group and/or the formation of a HMO) or horizontal (mergers, partnerships and affiliations between multiple providers). Although there is little in the published domain quantifying the extent or form that most of this type of consolidation and IDN formation is happening, the increasing corporatization of the U.S. market and the trend from community to hospital outpatient care delivery is on the radar of payers and pharmaceutical manufacturers alike.
These trends raise several concerns: Payers are concerned that acquisition of practices (especially oncology practices) by hospitals causes inflating costs of the same services since the hospital “outpatient setting” is associated with higher reimbursement rates and facility fees than in the community setting, without necessarily offering improvements on quality or resulting efficiencies. Manufacturers note that this dynamic – in combination with the expansion of the 340B pricing program in 2010 – results in an increasing number of entities and sites eligible to receive 340B discounted drugs, which in turn takes a toll on manufacturer revenues.
Another concern is the impact of IDNs on physician behavior and drug selection. These concerns are not without merit; a similar wave of consolidation in the 1980s and 1990s resulted in the formation of some particularly sophisticated systems like Geisinger and Kaiser Permanente, which are often associated with highly centralized decision making, lack of rep access and limitations on drug selection. And, with the availability of better healthcare information technology linking providers, computerized physician order entry and clinical pathways in oncology, implementation of draconian limitations on prescribing based on costs and contracting would be easier than ever. The affiliation or acquisition of many oncology practices raises the question of whether this current wave of consolidation will significantly change the way decisions are made about oncology care.
The infrastructure is there…
Kantar Health explored the dynamics of the impact of IDN care delivery on physician autonomy and drug decision making in a 2014 survey with 80 IDN oncologists. We found that many IDNs have the ability to influence drug selection through outpatient formularies and electronic medical records, and physician order sets that restrict the treatments that can be prescribed (Figure 1). Kantar Health data also point to the fact that some IDNs may incentivize physicians based on oncology performance, and treatment pathways are significantly more common in oncology practices/centers that are part of an IDN than in the community setting. In addition, since IDNs often participate in ACOs, this reimbursement structure may further prompt more cost-conscious physician behavior, even in oncology. About one-third of IDN oncologists participating in an ACO in Kantar Health’s 2014 survey stated this reimbursement arrangement had caused them to be more careful in selecting cost-effective treatments.
…but the will usually is not.
Despite the fact that the capabilities and infrastructure are available in many IDNs to heavily influence oncology decision making, it would be a mistake to conclude that oncology care delivery is universally more regimented and proscriptive in any IDN setting. IDNs often hesitate to take a heavy hand with oncology, and caveats help oncologists maintain autonomy over their drug choice (see Figure 2).
Although most IDNs may hesitate to take a heavy hand on oncology today, it is possible that the minority may become the majority in the future. For now, variation in cancer care delivery and decision making within IDNs makes it difficult to make generalizations about how to approach this increasingly important stakeholder. Still, Kantar Health has found that meaningful characterizations can be made based on analyses of the IDN delivery structure (e.g., payer ownership, degree of integration, site of care), which can help manufacturers support a meaningful, strategic approach to allocating resources and engaging with IDNs.
More time will be needed to see if the tone of the health system and cancer center relationship changes significantly as these organizations mature. After all, oncology practices are likely to have been acquired for profitability and/or to better manage patients across the care continuum, including their associated costs and risk. Therefore, it is likely that health system executives may opportunistically explore ways to nudge physicians to meet these goals, even in cancer. Until then, what my DO told me about his practice is likely to hold true in oncology: “Nothing is going to change,” except maybe the sign hanging on the door.
About the Contributor
Meadow Green is a Consultant at Kantar Health.
Kantar Health is a leading global healthcare advisory firm and trusted advisor to the world’s largest pharmaceutical, biotech, and medical device and diagnostic companies. It combines evidence-based research capabilities with deep scientific, therapeutic and clinical knowledge, commercial development know-how, and marketing expertise to help clients launch products and differentiate their brands in the marketplace.
One of Kantar Health’s oncology-related offers is Oncology Market Access US (OMA US), which provides strategic and tactical insights into the evolving oncology landscape. Combining Kantar Health’s commercial and clinical expertise in oncology, OMA US provides cutting-edge information and analysis on critical reimbursement, coverage and competitive issues in the U.S. oncology marketplace.
If you would like us to act as catalysts for you, contact us at www.kantarhealth.com/contactus.
 Community Oncology Alliance and Milliman. Comparing Episode of Cancer Care Costs in Different Settings: An Actuarial Analysis of Patients Receiving Chemotherapy. August 2013. Available at: http://www.communityoncology.org/UserFiles/Milliman_SiteCostofCancerStudy_2013.pdf
 The Biotechnology Industry Organization (BIO), the Community Oncology Alliance (COA), the National Community Pharmacists Association (NCPA), National Patient Advocate Foundation (NPAF), the Pharmaceutical Care Management Association (PCMA) and the Pharmaceutical Research and Manufacturers of America (PhRMA. The 340B Drug Discount Program: Review and Analysis. Winter 2013. Available at: https://www.bio.org/sites/default/files/340B%20White%20Paper%20FINAL.pdf
 Community Oncology Alliance. Community Oncology Practice Impact Report: The Changing Landscape of Cancer Care. 25 June 2013. Available at: http://www.communityoncology.org/pdfs/Community%20Oncology%20Practice%20Impact%20Report%206-24-13F.pdf
 Kantar Health. Oncology Market Access US: Integrated Delivery Networks Module. August 2014. Available at oncologymarketaccess.com