The changing economics of cancer medicine are causing independent oncology practices to close and patient costs to rise significantly, according to The New York Times.
Since 2008, 544 independent oncology practices out of 1,447 were purchased or contracted by hospitals, 313 closed and 395 reported bad finances, according to data in the report from Community Oncology Alliance, an advocacy group for independent oncology practices.
Independent practices are finding they cannot shoulder the enormous overhead costs for stocking chemotherapy drugs, according to the report. Insurers used to reimburse physicians for twice the wholesale price of drugs, but now they only reimburse the average cost of the drugs plus 4.3 percent, according to the report. Changing reimbursements may influence physicians to stock a smaller variety of the drugs because drug companies offer physicians rebates when they buy certain drugs in bulk. Patients may not realize there are more therapeutic options, according to the report.
Hospitals, on the other hand, receive completely different rates. Insurers pay hospitals more for administering chemotherapy drugs, hospitals receive discounts for buying drugs in bulk and 30 percent of hospitals qualify to buy chemotherapy drugs at a 50 percent discount under the 340B Drug Discount Program, according to the report. This is because many hospitals serve a disproportionate share of low-income and uninsured patients or provide essential services to rural communities. Private practice physicians often must refer uninsured and underinsured patients to hospitals for chemotherapy because they cannot afford to treat them.
Hospitals also offer cancer patients conveniences private practices cannot, including imaging, radiation therapy, lab testing and surgery all in one location, physicians noted in the report. However, patients pay an average $134 more per dose of the most common cancer drugs when they see a physician affiliated with a hospital, according to data in the report from IMS Health.
Barry Brooks, MD, a Dallas oncologist in private practice, used an analogy to describe what he sees happening in oncology. "Say there was a Costco that had very good things at reasonable prices," he told the New York Times. "Then a Neiman Marcus comes in and changes the sign on the door and starts billing twice as much for the same things."
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