Cost of Cancer Care in the Outpatient vs Community Oncology Setting

Mr. Bessette:  Hello, everyone.  This is Zack Bessette, assistant web editor for Journal of Clinical Pathways joined by my colleague, Cameron Kelsall, associate editor of the journal.  Our guest today is Lucio N. Gordan, MD, medical director in the Division of Quality and Informatics at Florida Cancer Specialists and Research Institute.  Dr. Gordan recently served as the lead investigator of a report for the Community Oncology Alliance titled, “The Value of Community Oncology - Site of Care Cost Analysis.”  In said report, Dr. Gordan and colleagues found that cancer care is significantly more expensive when delivered in a hospital outpatient setting compared with a community oncology practice.  Dr. Gordan will be sharing some of the details of the report and the implications this cost difference have for patients.

Thank you for joining me today, Dr. Gordan.  Dr. Gordan, can you talk about the differences in cancer treatment based on site of care referenced in your report?

Dr. Gordan:  Yes, absolutely, Zachary.  So, in our study we analyzed about 6,000 patients with breast cancer, lung, and colorectal cancer in the community setting versus hospital setting.  And in our study, we did matched analysis to take out any confounding factors.  We also looked at several different specifics, either demographics of the community setting versus hospital setting, including comorbidity scores, just to make sure the patients in the community or the hospital were sicker or vice versa.  So, we showed our patient population of about 6,000 patients or more were very equalized in terms of the demographic features.

So in our study we were able to show that in general, we are able to save about $8,000 per member per month in patients treated with breast, colorectal, or lung cancer.  We also were able to show that patients in our study treated in the community setting saw the emergency department at 72 hours post-treatment at 28% less than the hospital setting.  At the 10-day mark, emergency room visits were about 20% less in the community setting.  So, I think these are very important findings.

Mr. Bessette:  What are some of the drivers of increased costs for patients treated in hospital outpatient settings?

Dr. Gordan:  Several things.  The most important element is the cost of chemotherapy in the hospital-based practice.  It’s usually at least 100-150% higher.  So, unfortunately the hospital setting, the mark-up of the cost of chemotherapy, either branded or genetic agents or combination regimens is at least 100% higher.  So, this is driver number one.

Number two, physician visit costs are quite higher, about fourfold to fivefold depending upon which cancer one is analyzing for the hospital-based practice versus the community, so community practice physician visits are less expensive, probably because of less, the lack of hospital fees and others make things much more expensive.

There are other elements that make the cost higher in the community-based practice.  If you compare radiation costs, the, inpatient visit, emergency room visits, comparing community versus hospital, hospital is much more expensive beyond any statistical doubt. 

Mr. Bessette:  Do you believe financial toxicity to be a growing concern for patients with cancer?  Who or what is responsible, and what are some ways of minimizing toxicity for this population?

Dr. Gordan:  So, excellent question.  So, as you know we have a growing older population.  The incidence and prevalence of cancer will continue to rise.  We have more people on treatment because our treatments are getting more effective and so patients stay longer on treatment.  And the cost of some of these treatments are quite expensive and so this adds to the problem.

However, I think a very important issue pertains to the existence of the 340B program, so 340B was an idea that was initiated several years ago and the idea was good initially.  It was to try to provide lower cost of chemotherapy and anti-cancer treatments for patients who are under-insured or not insured or uninsured.  But the problem is that about 50% of the hospitals in the United States are under 340B programs so they’re able to buy the chemotherapy at a substantial discount of 50% and unfortunately, most of these hospitals do not offer any charity care whatsoever.  So what happens is that hospitals on 340B will just enrich themselves and what happens, they’re able to build new buildings, to buy clinics, to control the market by buying internal medicine groups, family practice groups, other specialties.  So, they choke the referral source to other oncologists that are not yet hospital-based.  So what happens, there is almost an inevitable transfer of work force from the community setting to the hospital setting.  So this lack of equilibrium in the market caused by the unintentional result of 340B really is, in my opinion, one of the most important triggers of this rise in cost of care in the hospital-based setting.

The other thing, there’s a very interesting paper called the Moran paper that shows that the mark-up of drugs in oncology can be as high as 500%, which is absurd as compared to the price from the manufacturer.  So, it’s inconceivable that the hospital system can charge 250-500% higher than the actual company which created and produced this medication and got to the market after years and years of research.

So I think squeezing the market by having extra cash to corner the market is very important, and also the mark-up of, excessive mark-up of drug prices is, makes it a done deal in terms of killing access to care.

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Mr. Bessette:  In your report, you mentioned that hospitals are increasingly acquiring community oncology clinics.  What are some of the long-reaching ramifications of this?

Dr. Gordan:  Yes.  So, as we, as the hospital acquires community oncology practices by choking their existence, by controlling referral patterns, for instance, by creating bigger buildings, by investing very heavily in marketing causing a terrible asymmetry in the market, we diminish number one, diversity in the community, so communities that had one or two or three clinics that are non-hospital-based don’t exist anymore.  In the smaller community areas or rural areas, access to care has been very difficult to non-existent so patients are having to drive 50-100 miles to a hospital now because their oncologists do not exist any longer.  They got acquired and the clinic got shut down.  So we have an importance of decreased access to care, decreased diversity, lack of support of the community, and fourth is significant increase in cost.  And this is unsustainable, Zachary.  There’s no way to maintain cost of care in the hospital setting which is at least 100% higher as compared to the community, for no benefit in terms of quality that it can be proved.

Mr. Bessette:  What steps need to be taken for hospitals to lower their prices on cancer care?      

Dr. Gordan:  So, they will probably not do this voluntarily.  This is too good for the hospitals, to be honest, to lower the mark-up or to get away from 340B, or to use 340B appropriately.  So, the only way that I see this changing is number one, legislative changes, so Congress people being more aware of the situation and changing the laws.  So, this will be step number one.

Number two, educate the audience including patients, tax payers, the oncology work force, ourselves, to support what is more cost efficient and to support community settings over hospital-based settings.  But it will probably take the law to really change, to enforce such changes.  Otherwise, I don’t think this will happen spontaneously whatsoever. 

Mr. Bessette:  Are there any other important points you would like to make for our audience?

Dr. Gordan:  Yes.  So, I think our study again underscores the importance of community oncology staying strong and alive.  We do appreciate the hospitals.  They have absolutely a place in healthcare.  We are supportive of the hospitals for the right reason.  We need inpatient care and procedures that are necessary to be done in house.  But as far as patient care in the outpatient setting, this belongs to the community.  This belongs to practices that have existed forever and now they are getting out of the market pushed by unfair market asymmetries as I said before.

So if our population, ourselves, want to have diversity in care, want to have better access of care, and desire to have lower costs and improved efficiencies, they need to support community oncology.  As is, we have seen hundreds if not thousands of practices being closed over the last ten years, and the cost has just simply gone up and, for instance, Medicare is probably paying in excess of $2.5-3 billion a year in cancer care alone just because of the shift from community to hospital, and this is not counting other subspecialties that are also, like rheumatology that uses more expensive drugs to treat the patients.

So, I think as I said, the hospitals have a significant value in healthcare delivery, but something has to give in terms of the mark-up of the drugs, as well as what they can charge and receive from 340B. 

Mr. Bessette:  Alright.  Thank you, Dr. Gordan, for taking time out of your day to speak with us.