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How the Headwinds Facing Community Oncologists Just Got Stronger

Community oncology’s value proposition makes economic sense – deliver high-quality cancer care close to where patients and families live at far lower costs with similar outcomes compared to hospitals or academic centers. That’s why community oncology’s patient satisfaction and experience data traditionally outpace what patients report about their hospital-based care.

But the healthcare economy is far from a typical market. The competitor that produces similar outcomes at reduced costs with a better patient experience doesn’t always win as evidenced by the fact that community oncology practices treat significant fewer patients than ten years ago despite significant investment to expand their scope of care from advanced diagnostics and genomic testing to clinical trials and targeted therapies to palliative care and survivorship programs.

This decade-long shift from providing a preponderance of cancer care in the community to the hospital makes care more expensive and is largely driven by perverse reimbursement incentives that advantage hospitals over physician practices.

Hospitals are reimbursed double and sometimes triple what community oncology providers are paid for the same treatment. To make matters more inequitable, as hospitals’ own data shows, under the 340B drug discount program, 40 percent of U.S.-based hospitals are profiting handsomely from a program intended to help low-income, uninsured and Medicaid patients by charging patients 3.8 times more than hospitals spend to buy the drugs.

Now, instead of tackling the high cost of healthcare by addressing the cost differential between hospital and community-based providers, the current draft of the Build Back Better Act would make cancer care more expensive by significantly reducing reimbursements for delivering chemotherapy, immunotherapy and supportive care drugs for oncologists but letting hospital drug discount programs go unchecked.

It may make appetizing political talking points to claim Congress is cutting drug prices at the pharmacy counter, but since hospitals already have unfairly higher Medicare reimbursements for oncology drugs, they’ll be able to attract physicians and thus steer more cancer patients to the most expensive, least convenient care setting possible. If hospitals want to see their oncology-practice competitors whither on the vine, they seem to have willing accomplices in Congress.

Community oncologists just cannot go it alone anymore. Their choice is increasingly binary: Sell the practice to a hospital and become an employee, or partner with a company like OneOncology that brings working capital, technology and expertise to stay independent, grow and compete.

The high cost of healthcare is unsustainable for patients and their families. But a blunt force instrument like the price controls Congress is considering doesn’t solve the problem: it accentuates it by making hospital oncology more profitable and steering patients to the most expensive cancer care possible. If Congress truly wants to bend the healthcare cost curve, it should:

  • Directly negotiate with pharmaceutical manufacturers for any price reductions;
  • Not put oncologists and other providers in the middle of those negotiations and maintain those providers’ current reimbursement system; and
  • Address the perverse system that significantly overcompensates hospitals for providing the exact same drugs.

It’s time Congress consider healthcare costs holistically and put patients first by addressing the payment inequities between the high-cost hospital and the lower-cost community oncologist.