Many oncologists have doubtless thought, just as they were about to board the plane and fly back to their snowy homes after a Hawaiian vacation, “This place is paradise. I wish I could move my practice here someday.”
Jonathan K. Cho, MD, understands the temptation, but he urges such people to be careful what they wish for.
“Hawaii is a very difficult place to be a doctor,” explained Cho, who practices with Oncare Hawaii. “Blue Cross Blue Shield dominates the private insurance market so completely that it can virtually set its own reimbursement rates, and the reimbursements paid by Medicare are also low because the government lumps Hawaii in with all Pacific Islands and claims it’s a low-cost market. As a result, doctors make considerably less here than they do on the mainland, and that disparity is increased by what is actually a very high cost of living.”
The practice that’s currently known as Oncare Hawaii opened its doors in the 1980s. It operated from a single office in Honolulu until, in 1997, it was bought out by a Georgia-based firm called Oncare that essentially cornered the market for both medical and radiation oncology in Hawaii. The parent company went out of business, but the business it left behind is still the largest player in Oahu’s community-based medical oncology market. It is also the only one with the economies of scale to provide infusion chemotherapy treatments.
The main competition comes from hospitals, such as Queen’s Medical Center, Kuakini Medical Center, and the Straub Clinic & Hospital. Kaiser Permanente also controls about 20% of the market, but it doesn’t really compete with other providers because its members must use its facilities. The same could be said of the US Department of Veterans Affairs facilities that care for the state’s many active and retired military families.
Oahu measures only 597 square miles, less than twice the size of New York City, but Oncare Hawaii operates seven separate offices to minimize the time patients spend traversing the island’s mountains and crawling through its often congested streets.
The practice has made a point of locating its satellite offices in medical office buildings attached to different hospitals. Oncare physicians maintain privileges at those hospitals — some of them even have a contract to provide services for Queen’s — and they all maintain relationships with the doctors who work in and around each facility.
Relationship Building Is Critical to Survival
“Hawaii is a small market. Everyone knows everyone here, at least through a friend of a friend. Long-term business success hinges upon the ability to build relationships and, for us, the key relationships are those we build with referring doctors,” said Leslie Chinen, Oncare’s chief financial officer since 2011, who noted that all of the group’s doctors had been born and raised on the island. “The insularity here virtually eliminates our need to market ourselves. We don’t advertise. All of our patient referrals are from other physicians.”
The size of the market also places some limits on the services that Oncare Hawaii can provide. Less than a million people live on Oahu, and the total population of Hawaii is just over 1.4 million. Those figures are far too small to allow oncologists to specialize in anything but the most common tumor types. They’re also too small to give surgeons much practice with rare procedures or to let the hospitals justify the purchase of specialty equipment stocked by mainland cancer centers. As a result, some Hawaiian cancer patients need to seek treatment on the mainland.
In addition to being relatively small, Hawaii’s population differs dramatically from that of any other state in the union. Nearly 40% of the people there are Asian (mostly Japanese). Europeans are the next most common group (24.7%), followed by people of two or more races (23.6%, more than triple the percentage in any other American state) and Pacific Islanders (10.0%, including people of Native Hawaiian ancestry).
This mix has little effect on the incidence of major cancers, such as breast cancer and lung cancer, which all reflect national norms, but Hawaii’s large Asian population suffers from significantly elevated rates of liver cancer, thyroid cancer and biliary cancers — mostly because it also suffers from unusually high rates of hepatitis B and C. (Hawaii’s climate is also unique among American states, but it does not boost the number of patients at Oncare Hawaii: melanoma incidence rates are actually below the national average.)