Ira M. Klein, MD, MBA
Winston Churchill once said, “Americans can be counted on to do the right thing, once they’ve exhausted all other alternatives.” In our healthcare delivery system, we’ve embraced this principle through many false starts and unfulfilled promises in the fields of clinical informatics and integration. A few shining stars were mentioned in the recent presidential debates, but not every system can be the Mayo Clinic or Cleveland Clinic. Healthcare delivery is like politics: it’s all local. The unifying principle for care delivery in every situation should ideally be centered on complete clinical information, coupled with evidence-based medicine, and filtered through clinical decision support tools for best healthcare outcomes tailored to individual patients. That is where we want to be overall as a healthcare delivery system. In clinical oncology, that era of informatics may be coming very shortly.
The background on why oncology practice would act as a leading edge for medical informatics includes three interdependent factors. These are (in no particular rank order): new and expensive drug therapies, Centers for Medicare & Medicaid Services (CMS) responses to cost rise trend pressures in oncology, and advances in health information technology (HIT) coupled with federal legislation (Affordable Care Act). This confluence of clinical, cost, HIT, and legislative factors is immensely powerful, squeezing the structure of oncology care delivery into something new. The resulting yield is a huge potential expansion of efficiency and quality through the application of informatics.
Figure 1. Cost of Cancer Care Versus US Gross Domestic Product
Source: Reprinted with permission from National Cancer Institute. Cancer costs projected to reach at least $158 billion in 2020: new NIH study projects survivorship and costs of cancer care based on changes in the US population and cancer trends. cancer.gov. Accessed October 25, 2012.
Rising Drug Costs
From 2000 until 2011, 40 new cancer drugs were approved by the US Food and Drug Administration (FDA) in the United States. As documented by a recent New York Times editorial,1
the typical new cancer drug coming on the market a decade ago cost about $4500 per month (in 2012 dollars); since 2010 the median price has been around $10,000. The majority of new drugs in the pipelines of every major pharmaceutical company in the world are targeted at either cancer or a rheumatologic/immunologic condition. The costs of new drugs approved by the FDA continue to rise, with an annual increase of 20%. No sign of abatement is seen, given the swollen phase II and phase III pipelines and associated companion diagnostic biomarker tests for many of them (Figure 1
Change in Drug Reimbursement
The CMS response to the rising cost of cancer care was to completely change drug reimbursement to oncologists in 2004. As of 2005, Medicare recipients constituted 70% of Part B drug reimbursement by most oncology practice volume,3
with an incidence of cancer in the 6 to 8 per 1000 range of Medicare population, versus a commercial population incidence of 1 to 1.5 per 1000. The shift in drug payment pricing over to an Average Sales Price (ASP) + 6% methodology has ratcheted down the profitability portion of drug “buy and bill” hugely, with a net effect being an average effective payment cut on drugs of 46.9% as of 2010.4
Healthcare System Reacts to Cost Pressures
Community oncology practices, which were the predominant site of service early in the previous decade, responded in two ways. One, they sought to increase the volume of patient flow through their offices. Two, those practices that could not wring out more efficiencies or carefully manage the millions of dollars of oncology drugs in their infusion services inventory elected to merge with other practices or sell their practices to local hospital systems.