CMS' 340B Reform Effort Shakes Up Hospital-Clinic Partnerships

Deborah Abrams Kaplan
Published: Friday, Mar 29, 2019
Teri U. Guidi, MBA

Teri U. Guidi, MBA

Following a multiyear trend in which oncology practices merged with hospitals to achieve savings and improved care, it appeared as though the pendulum was going to swing the other way. The Centers for Medicare & Medicaid Services (CMS) in early 2018 changed the 340B Drug Pricing Program and reduced the outpatient drug purchasing advantage many hospitals had enjoyed over independents.

During that tumultuous period, some oncologists reevaluated their hospital professional services agreements (PSAs) and ended or decided not to renew them. And although the 340B discount adjustments were a huge factor, there were other reasons why oncologists began to rethink their hospital partnerships. They may not have been happy with the status quo or wanted more decision-making authority, Guidi said. Culture and relationships between the hospital and the group may not have been aligned.

Figure. Evolution of the Troubled 340B Drug Pricing Program

Figure. Evolution of the Troubled 340B Drug Pricing Program

Alternatives to Hospital Partnerships

Regardless of 340B and the drug purchasing discounts it provides to hospitals, conditions have become much more difficult for independent practices in recent years. Oncology practice has grown more sophisticated, complicated, and costly, requiring more staff, technology, investment, and patients to stabilize cash flows.
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