A while back I posted some news about US Oncology's plans to develop an oncology-specific risk-based contracting model and it generated a lot of interest. As I suspected,this was but the first step in plans to test out the concept of an oncology-specific ACO, as detailed in this article. At first blush the impetus for their efforts appears to be a desire to participate in the Medicare Shared Saving's Demonstration. In our current national meeting research we detail what this might look like in a presentation entitled Transforming Cancer Care. Essentially, it would entail a group of providers (e.g., physicians, hospitals etc) - the ACO if you will -accountable for the care of at least 5,000 Medicare patients. Because medical oncologists typically become the main care provider once a patient is newly diagnosed with cancer, particularly if they receiving chemotherapy, they would serve as the "PCP" actively managing care and sharing in any of the savings they achieve. Several studies have already demonstrated that, with oncology patients, there is significant variation (and thus savings potential) in chemotherapy drug costs as well as IP admissions and ED utilization. While the typical oncology practice may not be large enough to cover 5,000, US Oncology certain has a large enough networking of physicians. Plus, they would have the IT infrastructure, pathways program (Innovent) and capital necessary. And US Oncology is thinking big - they plan to pursue this model both with Medicare and commercial payers.
There are still some unanswered questions such as: Is 5,000 patients large enough to hedge risk? Would the potential savings in oncology alone justify risk that might come from non-oncology medical issues from patients' co-morbidities (e.g., diabetes, CHF etc)? That said, this will definitely be an interesting story to keep an eye on. For hospitals, in terms of volumes, this could mean demand destruction through reduced IP admissions and ED Utilization per patient. In terms of larger ACO strategy, if this model comes to fruition, it could give US Oncology a lot of market power in specific markets, forcing hospitals to contract with them directly for medical oncology services.