New Survey Reveals Community Oncology Practices Face Serious Challenges Affecting Nation's Cancer Care

Mergers and Acquisitions by Hospital Systems on the Rise

Community oncology practices, in which close to 70% of the nation’s cancer care is delivered, face serious challenges according to a recent survey by Berkeley Research Group (BRG) researchers Aaron Vandervelde and JoAnna Younts. In the survey, commissioned by the Community Oncology Alliance (COA), 33% of community oncology practices reported being in serious acquisition discussions with hospital systems or in merger talks with other practices. This continues a trend that COA has reported in its Community Oncology Practice Impact Report, which has indicated that 544 practices have been acquired by hospital systems and 149 have merged with other practices, in addition to 313 community oncology treatment clinics that have closed since 2008.

The survey reveals that community oncology practices cited reimbursement rates for drugs (98%), reimbursement rates for chemotherapy administration (90%), and the cost of regulatory compliance (87%) as being “very important” or “extremely important” challenges threatening the ongoing viability of their practices. For those practices in merger or acquisition discussions, 56% cited declining reimbursement, 48% cited a need to decrease costs, and 44% cited increased competition as the primary reasons for considering a merger or acquisition.

“The survey results seem to indicate that mergers between community oncology practices are evaluated from a position of strength, such as improving negotiating power, while acquisitions by hospitals typically occur from a position of greater financial stress,” according to lead BRG researcher Aaron Vandervelde.

Hospital acquisitions of community oncology practices are a primary factor in the shift in the site of care from physician offices to hospital outpatient departments. Over 65% of survey respondents believe that 340B drug pricing available to certain hospitals is a primary contributor to the shift in site of care to hospital outpatient departments. Recent analysis by Vandervelde and others revealed that the percentage of chemotherapy administration in the hospital outpatient department increased from 18% in 2008 to 34% in 2013. Several studies by IMS Health, The Moran Company, Avalere Health, and Milliman have documented the increased cost to patients and payers when chemotherapy treatment is provided in a hospital outpatient department compared to a physician office.

“Community oncology is making incredible strides in innovating novel payment reform that is increasing the quality and efficiency of cancer care,” says Ted Okon, COA executive director. “It’s incomprehensible that misguided public policy is forcing consolidation of cancer care in this country and driving up the costs of care for patients, when it should be doing the exact opposite.”

COA commissioned BRG researchers Aaron Vandervelde and JoAnna Younts to produce a comprehensive white paper on the model of integrated community oncology. The early survey results reported here are parts of that white paper, which will be released at the Community Oncology Conference in Orlando on April 23–24, 2015.

About Community Oncology Alliance (COA) 

The Community Oncology Alliance (COA) is a non-profit organization dedicated solely to preserving and protecting access to community cancer care, where almost 70% of Americans with cancer are treated. COA has led community cancer clinics in navigating an increasingly challenging environment to provide efficiencies, patient advocacy, and proactive solutions to Congress and policy makers. COA members have testified before both chambers of Congress, authored cancer care demonstration projects, and been instrumental in the passage of oral cancer drug parity legislation, among many other initiatives. More information can be found at www.CommunityOncology.org.