Lucio N. Gordan, MD
As CMS moves ahead with payment reforms designed to reduce the total cost of hospital care, the results from a new study show that cancer treatment remains much less expensive at community oncology clinics than at hospitals and that the spending gap between the 2 types of sites may be growing wider.
The total cost of care for patients receiving chemotherapy in hospital outpatient facilities is nearly 60% higher than the same treatment at independent practices, according to the study by Lucio Gordan, MD, medical director in the Division of Quality and Informatics at Florida Cancer Specialists, and Xcenda, a health economics consultancy. The average difference for patients with breast, lung, or colon cancer was $7512 per month, or $20,060 in the hospital setting versus $12,548 at community practices. Annually, the average difference amounted to $90,144 per patient.
The findings are consistent with 10 previous studies between 2011 and 2016 that found hospital outpatient costs were 38% higher on average, according to the Community Oncology Alliance (COA), which released the report. Gordan said the bigger difference in his study may reflect the increased costs of new biologic drugs, more expensive radiology, and higher hospital fees.
A major driver for the cost difference was chemotherapy, which ran 71%, or $3510, higher per month in hospital outpatient departments; the average spending was $8443, compared with $4933 at community practices. Physician visits cost 3 times as much per month—$3316 versus $765, a difference of $2551. The widest gap was seen in breast cancer, which cost 66% more in outpatient settings, followed by lung cancer at 54% higher and colorectal cancer at 46% higher.
Gordan’s analysis differs from some previous studies in that he adjusted for type of cancer, age, geographic region, presence of metastatic disease, comorbidities, and other factors, to ensure that he was comparing similar hospital-based and community patient populations, he said. He also made an effort to consider how patients fared and found that those in hospital settings had more emergency department (ED) visits and hospitalizations after receiving chemotherapy. For hospital patients, 9.8% had ED visits within 10 days, compared with 7.9% for community practice patients.
The study’s main goal is to strengthen COA’s ongoing campaign to fix payment systems that favor hospitals and have contributed to hundreds of acquisitions and closures of independent oncology practices in recent years, Gordan said. He presented the findings at the organization’s annual Payer Exchange Summit on Oncology Payment Reform in October. “This is going to be an evolving battle to get payers to understand,” he said. “This is how we plan to light the fire again. The purpose was to keep people reengaged in the subject because even though we have had 10 studies showing kind of the same idea, nothing really happened.”
Hospitals sometimes argue that their higher costs are justified because they offer services not available in other settings, such as 24-hour EDs, uncompensated care, disaster preparedness, and various specialized services. “These roles are not explicitly funded; instead they are built into a hospital’s overall cost structure and supported by revenues received from providing direct patient care,” the American Hospital Association (AHA) said in response to a set of CMS payment reform proposals. Meanwhile, COA argues that community practices have their own expensive obligations and provide equally good care at a much lower cost.
Nancy Keating, MD, MPH, a professor of healthcare policy and medicine at Harvard Medical School, said Gordan’s study would be better if it had more clarity about who the included patients and payers are and more detail on the patients’ conditions and their office visits. But she said the findings on the whole are consistent with other research supporting the benefits of community medicine. “We don’t have evidence that hospital outpatient department care is better, and certainly for patients who want to get care locally, which makes it more convenient, there doesn’t seem to be any problem with that,” she said. “It might actually have the advantage of saving our healthcare system money and maybe even leading to fewer emergency visits.”
COA Executive Director Ted Okon acknowledged that in specialized cases, patients with cancer do need to be treated at hospitals, but he rejected arguments that large institutions provide better outcomes generally. “The hospitals always throw around those remarks, but they never prove it with data. As we’ve accumulated more data here, the data actually say the contrary,” he said.
The AHA did not respond to requests for comment on the COA study. Numerous individual hospital centers also did not respond or provide comments.