Many cancer programs partnering to ensure financial sustainability
Across the past two years, two-thirds of organizations have made some type of organizational change to ensure financial sustainability. Of those changes, acquiring private practice physicians was most common.
On the one hand, this was surprising. Recent policy and reimbursement changes, such as cuts to 340B drug reimbursement and reduced reimbursement to non-excepted hospital outpatient departments (HOPDs), make it less financially attractive for hospitals to convert physician practices to hospital outpatient billing. On the other hand, this isn't too surprising. Both private practices and hospitals continue to seek shelter in size given reduced reimbursement under fee-for-service (FFS) payment models and a continued push toward value-based care. After acquiring private practice physicians, creating partnerships to drive research and aligning with private practice physicians, such as through a professional service or co-management agreement, were the most common actions respondents took to ensure financial sustainability.
It's also worth noting that 32% of respondents haven't made any organizational changes to ensure financial sustainability in the last two years. This may speak to these programs not yet having landed on the best response for their financial situation, or to the fact that they are feeling fewer cost pressures in their specific market.
Top threats to cancer growth are all related to costs and reimbursement
Respondents ranked reimbursement requirements from payers as the top threat to cancer program growth, followed by shifting reimbursement away from FFS to value-based care. This aligns with the fact that 62% of respondents reported participating in value-based contracts in a separate question on the survey.
Uncertainties in drug pricing reform policies, cost of new treatment processes and equipment, and cost of drugs rounded out the top five threats to growth. This is best reflected by the story of CAR T-cell therapy. The therapy's clinical results have been promising, but health systems struggle to get adequate reimbursement for this expensive therapy, causing financial issues for most patients and community cancer centers.
Underscoring the financial challenges cancer programs are facing is the fact that all of the top five threats to growth are reimbursement and cost-related (and this was before the Covid-19 crisis, which will only further disrupt and threaten providers' future finances.)
Notably, the percentage of respondents reporting site-of-care policies issued by private payers as a top threat increased from 12% in 2018 to 25% in 2019. Respondents are aware that private payers' focus on controlling oncology costs is likely going to encourage more chemotherapy to be delivered in less-expensive freestanding settings.
Cancer programs' cost saving and investment priorities align with cancer patient preferences
Improving care coordination and symptom management are the top two opportunities for cost savings, closely followed by using lower-cost drugs (speaking again to drug costs being a top threat for respondents).
It's no surprise that care coordination and symptom management are highly ranked, considering that they are two of the most valuable services to cancer patients, according to our 2019 Cancer Patient Experience Survey. The hope is that investing in these services may help organizations attract and retain increasingly self-directed cancer patients, as well as improve the cancer program's bottom line and succeed under value-based care.
The top investment respondents believe will yield a return on investment is increasing the number of subspecialists, which also closely aligns with findings from our 2019 Cancer Patient Experience Survey where cancer patients rank a "doctor who specializes in my cancer" as the most important feature when deciding where to go for care. Additionally, the second investment—marketing to referring physicians—reflects the importance cancer patients place on their physicians' recommendation.
Cancer programs report high participation in value-based contracts
Oncology is no longer on the sidelines of health care payment reform. Respondents report participating in a wide range of value-based contracts, with shared savings/ACO models, bundles, and the Oncology Care Model (OCM) taking the top three spots on the list. Interestingly, pay-for-performance contracts have dropped significantly on the list, moving from #1 in 2018 to #4 in 2019 with 10% decrease in associated responses.
Only 9% of respondents said they participated in an Oncology Medical Home, which may be a bit of a missed opportunity. Many cancer programs are uniquely suited to succeed in this model because they already offer many of the required services, such as patient navigation and palliative care services.