Nicole Hartung, MD
Over the past five years, rapid consolidation has occurred among healthcare providers, driven in part by the Affordable Care Act. The pace of consolidation shows no sign of slowing down, “transforming the healthcare marketplace into a land of giants,1
” as The Wall Street Journal
aptly describes it.
This trend also applies to oncology, as more and more community-based oncology practices are joining large health systems. Remaining independent has become much harder for many reasons, including competition from large healthcare organizations and payer consolidations that make negotiating difficult and managing a practice more complex. However, many studies have verified that treating patients in community-based clinics as opposed to outpatient hospital settings results in significantly lower costs to both patients and Medicare. One study found that Medicare spending for patients receiving chemotherapy in a community clinic is 14.2% lower than the hospital outpatient department (HOPD), providing $623 million in annual Medicare savings.2
Another study found that drug costs were between 25% to 47% higher in the HOPD than in the physician’s office.3
As these studies show, independent practices play a crucial role in slowing the rise of healthcare costs, but keeping practices strong and vibrant in today’s challenging environment is no easy task. It requires close attention to detail, planning, and execution, as well as dramatic changes in leadership style.
Sound Business Strategies Support Independence
From a business standpoint, creating a viable business model is essential, as it provides the foundation for clinical and operational success. Staffing needs must be accurately projected, payer contracts negotiated, revenue cycle activities scrutinized from check-in through billing, and a reliable, cost-effective source identified for drug purchasing and that is just the tip of the iceberg. Management should also ensure staff is utilized at the top of their licensure, so that nurses and advanced practice providers (APPs) do what they are trained to do. This maximizes provider resources and creates full functioning offices where patients with mild complications can be seen the same day in the office rather than in the emergency department, therby improving the patient experience and reducing costs. These are fundamentals that must be attended to by a management with strong business skills and a thorough understanding of clinical operations.
To succeed in the value-based world, practices must also embrace alternative payment models. At Minnesota Oncology, where I practice, we emphasize our ability to rapidly alter payment models when interacting with payers. We are the only oncology group in our region embracing alternative payment models because we have the infrastructure and flexibility to rapidly improve our care delivery more quickly than large health systems can.
Consultants are of Value in OCM Transition
Community practices are opportune sites to implement The Center for Medicare & Medicaid Innovation’s (CMMI) Oncology Care Model and other quality-oriented initiatives. While these programs require extensive reporting, which is challenging for independents, outside consultants can help if needed. In our case, these requirements are made much more manageable through our affiliation with The US Oncology Network, which provided guidance and resources to help us meet the reporting requirements in our new payment models and also helped with payer negotiations.
Leadership also plays a key role in succeeding in this new environment. Oncology is radically changing, creating the need for a different type of physician and clinical leadership to drive change management. Today’s leaders must build relationships, provide feedback, and coach provider partners, requiring a great deal of emotional intelligence. We need to make sure we are training a leadership group that can effectively handle these tasks.
Quality, Cost-Effective Care Is Critical for Success
Making certain every patient receives the best care possible with an optimal outcome has the potential to strengthen referring physician relationships and builds a strong image within the community, helping to ensure success. Practices should strive to achieve high-quality Triple Aim focused care care designed to improve the patient experience, reduce per capita cost of care, and improve the overall quality of care on a population basis. The better we do this in a community setting, the more viable the practice becomes.4