Choose the Right Organizational Model for Oncology Practice Success

Oncology Live®Vol. 19/No. 13
Volume 19
Issue 13

Many pressures on independent oncology practices have contributed to regionalization of services, in which practices merge or establish relationships with larger health systems. The forms that these larger systems have taken are diverse, but they do fall into several basic categories.



Many pressures on independent oncology practices have contributed to regionalization of services, in which practices merge or establish relationships with larger health systems. The forms that these larger systems have taken are diverse, but they do fall into several basic categories. However, the systems that succeed are the ones that best fit the geographical, cultural, and financial profiles of practices, according to experts on optimizing regional health systems interviewed by OncologyLive®.

“Reimbursement and margins for practices are going down,” said Matthew R. Sturm, MBA, associate principal at ECG Management Consultants based in Seattle, Washington. “Practices are trying to figure out how to do the same things or, in many cases, do more with [fewer] financial resources.” Ultimately, by combining resources and improving collaboration, practices can provide higher levels of comprehensive care, he said.

Over the past decade, 848 practices have merged with or been acquired by larger entities, according to the 2018 Community Oncology Alliance Practice Impact Report.1 Payment issues are a chief cause of this trend, Sturm said. More patients are using Medicare and Medicaid, he noted, and this includes patients who become eligible for coverage before they reach retirement age (Table).2 These plans tend to pay less than private health plans, and from a practice’s perspective, this results in less revenue, Sturm said. In addition, more patients are on plans with higher deductibles, which motivates them to find the most economical options for their care.

Picking the Right Model

Another factor putting pressure on margins at practices is that cancer drugs and technologies are developing at a rapid pace. Providing state-of-the-art radiation, immunotherapy, imaging, diagnostics, and even chemotherapy can require heavy financial investment. The challenge for organizations is finding a way to pay for this against a backdrop of declining revenues. A regionalized cancer care collaborative often is the answer to these problems.A regional cancer care collaborative can clinically integrate, align, and coordinate services. It can happen within a single healthcare system, across healthcare systems, or across healthcare systems and affiliated hospitals.

Although there are many ways to structure a regional cancer care delivery system, experts recommend choosing management personnel carefully and selecting a business model that fits the practice. Each group must consider their location, whom they want to lead their group, and which structural and financial models best suit their needs and their mission.

Table. Medicare and Medicare and Medicaid Enrollment Has Increased

Because greater efficiency is at the heart of any move to consolidate, it is important to avoid any unnecessary duplication of services, particularly in nonurban areas where the investment in resources could be costlier. A collaborative has multiple parties that combine assets across a spectrum of oncology services, and this can provide a more comprehensive array of oncology services to a defined geographic service area than what an independent could achieve.There are 3 basic organizational models that typically define regionalized care systems. The hub-and-spoke model, which features a system of geographically centralized care with satellite clinics, is most common and works best in many environments, including rural areas. The distributed model of regionalization allows for geographically dispersed facilities that specialize in different types of care. The third type, the coordinated model, features a high degree of specialization in which physicians work closely to address each element of care. The distributed and coordinated models are more appropriate for compact geographical footprints where patients don’t have to travel significant distances to reach each center.

“There’s not a single superior model; it’s not one-size-fits-all,” Sturm said. “I think that it has to be vicinity- and organization-specific in terms of what resources they have, what their culture will allow, and what geography they have.” Each organization must consider what the different stakeholders are trying to achieve and how committed they are to reaching those goals.

Location, Location, Location

“I always tell my clients [that] form follows function,” Michael L. Blau, Esq, a partner at the Boston, Massachusetts, office of the law firm Foley & Lardner, said. “‘Tell me what your goals and objectives are, what each party is bringing to the table, and what the business plan [is].’ Once we know that, we can have an engaged discussion on which model best fits the goals and objectives of the parties.”Not all locations can support a regional cancer delivery system, and different areas require different models. A well-organized regional cancer care delivery system improves patient adherence and access because patients find it more convenient to receive services there. This makes it important to ensure that patients don’t have to travel significant distances. It’s fine if a patient needs to drive only 30 minutes for treatment, but if the network is so spread out that it would require a trip of several hours, that’s not good clinical care, and the patient will not stay in the network.

The Right Leadership

This is crucial for a rural network. “I think it’s important in a rural healthcare setting to be able to provide high-quality services regionally,” said Kathleen LaRaia, MS, executive director of cancer services at Munson Healthcare in Traverse City, Michigan.All regionalized cancer care operations should have a dedicated and well-chosen council. This is a group of stakeholder representatives. If multiple hospitals are part of the collaborative, then each should have a key oncology decision maker participating on council.

The council is charged with coordinating services among the separate and disparate parts of the regional cancer care collaborative. It is also tasked with persuading the hospitals throughout the regionalized structure to organize their oncology resources in a way that benefits the organization and the community.

“Generally, in these ventures, you have the executive leadership of the stakeholders directly involved. Having the key decision makers of the oncology service line and executive leadership level is key to making it work,” Blau said. “The right people have to be at the table who understand and coordinate the service line.”

The council must be able to mobilize and access the resources of the integrated health system, including finances, operating resources, people, and technology, and this takes buy-in from all stakeholders as well as hospital executive teams. It is critically important, Blau said, to have the right leadership and a commitment to remaining engaged with regular meetings, which facilitates good communication between the health systems and the oncology service line.

Further, it is essential to have the members of the council, the physicians, and others in agreement about the organization’s mission. “I think what is most important is that you have a shared vision, and to achieve that, everyone needs to have an equal seat at the table in decision making for key areas of the oncology service line via strategic planning, budgeting, and policy making,” LaRaia said.

Another key component of a successful regionalized care network is allowing input from the entire oncology specialty staff. Whether the staff member is a medical oncologist, a radiation oncologist, a recent graduate, or somebody who has been in practice for decades, it’s important for everyone to have a voice.

Naturally, there will be communication challenges. It can be complicated to ensure that all staff members get equal attention—particularly in larger, more geographically spread-out collaboratives—and to keep schedules aligned so personnel can meet regularly.

At Dayton Physicians Network in Ohio, physicians and managers spend a lot of time working around these challenges to maintain strong communication, according to Chief Executive Officer Robert Baird, MFA, RN.

Model Specifics

“We are constantly looking for ways to improve communication through email, video chats, or [visits to] each location. We also monitor our clinical, operational, and financial metrics to make sure that all locations are being consistent.” Hub-and-Spoke Model

The hub-and-spoke model features a centralized, full oncology service office and smaller locations offering limited services. Typically, this model creates strong physician alignment at the central hub but less consistency at the “spoke” locations. The spokes may have limited technology, requiring patients to go to the central location or a different spoke for treatment.

Each spoke may be managed as part of an oncology service line or directly by the hub. The geographical distances involved will influence this management style. The hub-and-spoke model is particularly beneficial for collaboratives that cover a wide geographic area.

Munson Healthcare follows the hub-and-spoke format. The group deviated from the traditional hub model led by a medical director and adopted a comanagement system. “That’s a big leap for a lot of programs—to set the foundation where administrators and physicians are defining the future of the service line together. It takes support from the whole organization to allow that kind of collaborative management of the service line. That’s an important foundation,” LaRaia said.

In Munson’s hub-and-spoke model, the cancer center is the home base for the physicians, and they either rotate and travel among the other locations or are assigned to a specific regional location to help maintain continuity of care.

However, this system is not perfect, and some patients must travel a great distance when starting their treatment. “The challenge is the patients sometimes have to travel to the main cancer center for their initial visit,” LaRaia said, “but to allow for convenience and better access, we offer infusion services and a traveling medical oncologist so they can have follow-up visits closer to their home.”

Distributed Model

In the distributed model, the logic is to take the physical locations and assets of a network, health system, or cancer care organization and create points of specialization or distinction. For example, a large facility might specialize in lung cancer and draw patients from affiliated smaller clinics, and another might specialize in breast cancer, also drawing from smaller clinics. There can be as many centers as their resources and the region can support, and patients would go to the specialized treatment center that corresponds to their disease and needs. These centers have centralized governance for the service line that spans the sites and programs.

The downside of this model is that physician coordination may vary by location, so there may be a lack of standardization across the centers. There is also potential for technological duplication because different centers may have the same equipment, which is often not cost effective.

Dayton Physicians Network roughly conforms to a distributed model in that its different locations do have specialties, although each center offers roughly the same kinds of care, according to Baird. Unlike others under the traditional distributed model, each of the 6 cancer centers in the network offers radiation oncology, medical oncology, and imaging. However, some of those cancer centers have subspecialties, such as an advanced prostate cancer clinic and a clinical research center, that the others don’t. They have additional specialty offices not just for cancer care: 2 for urology, 1 for radiation oncology, 1 for medical oncology, 1 for pathology, and 1 for administrative needs and billing.

Physicians at Dayton Physicians Network share ownership and have developed their own compensation models. Additionally, they share an electronic medical record system that helps to standardize processes across all locations, assuring the same care and management. Baird says this part of the organization is essential to practice success.

“The best way to optimize the model is to make sure you have the best possible information technology,” he said. “Set up standardized plans in that medical record, and make sure you have standard operating procedures in place, that you’re training the staff, and that you do the same process for everything, whether it’s checking in a patient at the front desk or getting them prepared and going through the history.”

Dayton has centralized most of its administrative functions, such as billing, human resources, accounting, and finance management. “We try to keep as much of the onsite services as clinical as possible, except that we offer financial counseling at some of our locations, since some patients need that,” Baird said.

The strength of handling the distributed model this way, according to Baird, is that patients have access to high-quality, cost-effective oncology care in their own community without having to travel to different centers. The challenge is that it takes more resources to cover the locations and the facilities, pay the rent for the multiple buildings, and keep everything up-to-date. However, if an office were to become unavailable because of a power outage or other cause, Dayton would be able to shift patients to another location and maintain the quality of care.

Coordinated Model In the coordinated model, each clinical center specializes based on the technology or treatment it offers. This is because much of the equipment can be very expensive, such as magnetic resonance imaging scanners, and the coordinated model reduces the need to have duplicate services among the locations. For example, 1 location would serve as the imaging center, another as an advanced therapeutics center, and yet another as a center for support services, such as nutrition education and counseling. Similar to centers under the distributed model, coordinated centers have a centralized management system for the oncology service line across all sites.

Choosing a Financial Model

In this model, there is a high degree of collaboration between the physicians and the sites, as the patients will likely visit more than 1 site in the network over the course of their care. Therefore, there is a greater need for consistent physician alignment. Otherwise, there could be risks to the quality of care.Once an organizational model has been chosen, it’s necessary to decide on the type of financial model. This could be an affiliation agreement, a joint operating agreement, an equity joint venture, a hospital within a hospital plan, a radiotherapy joint venture, or a hospital provider—based conversion.

Standardization and Growth

LaRaia said that for its financial model, Munson uses a professional services arrangement so that the physicians each receive a flat rate for attending their outreach sites. This allows the program to grow because the physicians are not on a relative value unit payment model, so if they see 12 or 22 patients in 1 day, they receive a flat rate. LaRaia says this makes the physicians more invested in the growth of the practice.In any overall organizational model a collaborative chooses, it is essential that the care being delivered is consistent among all locations. “In terms of standardization, I think a lot of it comes from [a collaborative’s] clinical management structure. Within cancer care services, the trend is moving more toward subservice lines within that structure, like breast, prostate, lung, liquid tumors, and so on,” Sturm said. The clinicians who come together across a network need to reach a consensus about the organization’s clinical standards, policies, and procedures. Additionally, to grow into a highperforming network, a collaborative needs monitoring tools to ensure that clinicians are following established policies. Sturm recommends that organizations have an electronic health record system that enables management to see that care decisions being made are consistent with defined policy.


  1. Community Oncology Alliance. 2018 Community Oncology Alliance Practice Impact Report. COA website. pir/COA-Practice-Impact-Report-2018-FINAL.pdf. Published April 2018. Accessed June 6, 2018.
  2. CMS Fast Facts. Centers for Medicare & Medicaid Services website. Trends-and-Reports/CMS-Fast-Facts/index.html. Updated February 1, 2018. Accessed June 5, 2018.
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