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Institutional Partnership and Affiliation in OncologyPresented to                                                        P...
Not Much Is Universal, So We Will Speak in Generalities                    Examples can Show Biases                Past Pe...
Why Cancer Matters to All, Despite Varying Points of View Cancer’s financial impact varies significantly, but its prevalen...
Section 1:Forces driving new partnerships and affiliations
Health care’s overall shift in site of care…                                                  … More so in cancer         ...
Physicians Losing Ground …                                                                                                ...
Physician Employment has become the norm…                                      … and Cancer is Catching Up                ...
Everyone is trying to move from being Place-    Centric…         …in which patients and their families must coordinate ser...
…To Being Patient-Centric                            …where functions/services,                            providers, and ...
Oncology Prediction:            We Approaching Peak Per Patient Utilization                   • For decades, per patient u...
As if set by thermostat…More is more… as more appropriate care is provided, more inappropriate care is provided.     • If ...
Oncology Forces: Overall trends         Institutions                       Groups                                Payers   ...
Oncology Forces: Emerging Physician ShortagesOncologist supply has increased slightly, but new cancer cases peroncologist,...
In the meantime, we all are older…              Percentage of All Physicians by Age                  18.8%                ...
Oncology Forces: Comparative Effectiveness Research is    lacking in some very common areas of care    Cancer diagnosis an...
Oncology Forces: Patients are relatively unchangedPatient remain predominately over 65, often co-morbid, under existential...
Partnering Activity is Cyclical                          Scrutiny is Increasing                  Partnering may become mor...
Section 2:Models of partnership and affiliation
Prevalence of Illness (not just cancer) in the Community andthe Roles of Various Sources of Health CareLike most of health...
Breast and Prostate: Macro microcosms of cancerIn terms of primary sites, Breast and                                      ...
Recent Oncology-related Partnerships                         on the Affiliation Continuum                                 ...
Range of Affiliation StructuresThere is a broad range of potential affiliation structures available to hospitals / health ...
If you can afford to “build your own”…Memorial Sloan-Kettering has pursued aggressive expansion of outlying sites of care....
Partnering for New Payments?  Oncology is particularly resistant to new payment models  Based on findings from almost two ...
Alternate Payment Approaches for Oncology Care…                                       … very early stages                 ...
Models: Will continue to vary by party                                  “Designated” Centers          Broadening geography...
Section 3:Expectations regarding the challenges and benefits ofpartnerships and affiliations
Partnering: Some Challenges & Benefits             CHALLENGES                                       BENEFITS   •   Accepti...
Preparing to Partner: Next StepsExperience suggests that those seeking partnerships often are ill-prepared for:     • Maki...
QUESTIONS AND DISCUSSION
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Forces Driving Institutional Oncology Partnerships and Affiliations

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Navigant Healthcare’s Charlie Cosovich explores the dynamics that are influencing partnership strategy among healthcare providers in the field of oncology care. Cancer’s prevalence makes it critical to all providers because of the impressions made on patients and their families during the course of cancer care. The best impression is made by a well-coordinated, patient-centered experience, and partnering across provider types can help deliver this promise. At the same time, substantial and persistent changes to standards of cancer care are driven by accelerating scientific understanding. Partnering can offer overview needed to stay abreast of changing standards. After decades on the increase, pressures are mounting that will reduce the number of distinct treatments per patient – fewer infusions, surgical procedures, radiation oncology treatments and office visits for any given patient during the acute phase of their care. Evidence suggests much care is unnecessary with rates of use that vary dramatically in different parts of the US and little Comparative Effectiveness Research to define the best care. Provider partnerships can help cover wider geographies and populations and thereby support major capital equipment investments needed to meet modern standards of care. Still, partnering among providers is fraught with challenges and under increasing scrutiny from regulators and efforts at payment reform will come slowly to the complex environment of oncology care. Charlie identifies issues and considerations involved in oncology-related partnerships, and shares how to prepare for and manage expectations around partnering discussions.

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Transcript of "Forces Driving Institutional Oncology Partnerships and Affiliations"

  1. 1. Institutional Partnership and Affiliation in OncologyPresented to Presenter: Charlie Cosovich DirectorJune 21, 2012 415.356.7107 Office charlie.cosovich@navigant.com
  2. 2. Not Much Is Universal, So We Will Speak in Generalities Examples can Show Biases Past Performance is No Predictor … Party the First + Party the Second For Every Consummated Partnership, There are Many, Many Non-Public Discussions
  3. 3. Why Cancer Matters to All, Despite Varying Points of View Cancer’s financial impact varies significantly, but its prevalence makes it critical to all providersAbout Cancer Med Rad Surgeon Nurse / Hospital System Payer Medicare Onc Onc Mid-Level - Com% of dollars 25% - 10% -associated with 100% 100% 30+% 35% 12% ? 100% 100%cancer care% patients that 25% - 10% - < 1%experience you as 100% 100% 50+% 50+% ? 100% 100% annuallya cancer provider All figures are estimates to illustrate relative attention to cancer; actual figures may vary by provider
  4. 4. Section 1:Forces driving new partnerships and affiliations
  5. 5. Health care’s overall shift in site of care… … More so in cancer National Inpatient Days and Outpatient Visits, 1989-2009 Inpatient Days Outpatient Visits 230 OP Visits % Change (’89-’09) +125% 700 220 600 500 Millions 210 Millions 400 200 300 190 IP Days % Change (’89-’09) −15% 200 180 100 170 - 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Source: AHA Trendwatch Chartbook, 2011.Page 5
  6. 6. Physicians Losing Ground … … More so in cancer Medical Practice Cost Inflation versus Medicare Physician Payments Decrease in Medicare reimbursement (cumulative change) for infusion services since 2004 (percent change over time) ©2011 by American Society of Clinical OncologySource: AMA, Division of Economic and Statistical Research, June 2011; Eagle D JOP 2011;7:293-295
  7. 7. Physician Employment has become the norm… … and Cancer is Catching Up 100% Medical Practice Ownership TrendsMedical Practice Ownership Typeas a % of Total Medical Practices 75% 50% • In 2009, MGMA found that the share of hospital-owned practices 25% reached 55% vs. 30% in 2004 • Hospitals have been increasingly employing physicians, in part to 0% 2002 2003 2004 2005 2006 2007 2008 2009 position themselves to become a accountable care organizations Hospital-owned Physician-owned • Physicians are increasingly seeking employment in order to “lock-in incomes” in a declining reimbursement environment, shifting this risk from their practices to the hospital Source: MGMA Physician Compensation and Production Survey Report; Wall Street Journal, “Shingle Fades as More Doctors Go To Work for Hospitals,” November 8, 2010Page 7
  8. 8. Everyone is trying to move from being Place- Centric… …in which patients and their families must coordinate services and navigate between programs and sites of care on their own… Ambulatory Center Rehab Skilled Nursing Physician Office Home Health Facility AgencyPage 8
  9. 9. …To Being Patient-Centric …where functions/services, providers, and sites of care are organized around the patient; care is coordinated across the continuum; and navigation between services and sites of care is proactively facilitated and managed by providers for the patients and their families. Page 9
  10. 10. Oncology Prediction: We Approaching Peak Per Patient Utilization • For decades, per patient utilization of clinical services has been driven ever higher by a constellation of factors Units of Service Delivered per Cancer Patient 1970 2012 2020 • In the coming decade, per patient utilization will settle at lower rates. Will upward pressure of age cohorts more than off set reduced per patient volume?
  11. 11. As if set by thermostat…More is more… as more appropriate care is provided, more inappropriate care is provided. • If “best practices” were matched nationwide, some markets may experience dramatic use rate declines. Unadjusted Regional Use of Appropriate and Inappropriate Imagining as a Function of Overall Imaging Among Medicare Patients with Prostate Cancer 80% % of Prostate Patients Undergoing Imaging NJ by Risk Group Volume that may vanish UT 20% 40% % of All Prostate Patients Undergoing Imaging 80% Source: Health Affairs, April 2012
  12. 12. Oncology Forces: Overall trends Institutions Groups Payers “Financial Pressure” Science Practice Standards Economies of Skill Specialization Capital / Debt Exposure (Costs = 12% ; Under treatment = 0.4%) Generational Transition • Financial strain on health care in the US is ubiquitous and mounting … and will be for the foreseeable future • Science offers new solutions to known problems, but also to unknown problems … increasingly we can “see” more than we know what to do with; no CER support • Practice standards are highly variable in their rate of propagation and application … still, “sudden science” can have a profound influence on volume • Experienced, skilled, high-performing physicians and staff are rare … and may be getting more so, though Clinical Integration relies on these people
  13. 13. Oncology Forces: Emerging Physician ShortagesOncologist supply has increased slightly, but new cancer cases peroncologist, especially Medical Oncologist, has grown significantly Oncologist Supply vs. Demand % Change % Change 2010 2006 1999 (06-10) (99-10)New cases of cancer Medical Oncologist Radiation Oncologist 5,079 4,698 5,386 4,424 5,330 3,787 -6% 6% -5% 24%per Medical Oncologist Gynecology Oncologist 482 460 424 5% 14%are 140% of what they Surgical Oncologist 402 303 123 33% 227%were in 1999. Total Oncologists 10,661 10,573 9,664 1% 10%Surgical specialization US Population (millions) 309 299 279 3% 11% US Pop. per Oncologist (Total) 28,956 28,280 28,870 2% 0%has more than doubled. US New Cancer Cases 1,530,000 1,400,000 1,150,000 9% 33% US New Cases Per Med Onc 301 260 215 16% 40% US New Cases per Onc (Total) 144 132 119 8% 21% Source: AMA Physician Characteristics and Distribution in the US, US Census Bureau and National Cancer Institute websites
  14. 14. In the meantime, we all are older… Percentage of All Physicians by Age 18.8% 15.5% <35 35-44 23.5% 17.5% 45-54 55-64 65+Source: AMA 24.7%
  15. 15. Oncology Forces: Comparative Effectiveness Research is lacking in some very common areas of care Cancer diagnosis and treatment is ripe for comparative effectiveness research. Four of the IOM’s top 25 recommended studies (and 7 of 100) focus on oncology • Management strategies for localized prostate cancer (e.g., active surveillance, radical prostatectomy [conventional, robotic, and laparoscopic], and radiotherapy [conformal, brachytherapy, proton-beam, and intensity-modulated radiotherapy]) on survival, recurrence, side effects, quality of life, and costs. • Management strategies for ductal carcinoma in situ (DCIS). • Imaging technologies – PET, MRI, CT – in diagnosing, staging, and monitoring patients with cancer. • Genetic and biomarker testing and usual care in preventing and treating breast, colorectal, prostate, lung, and ovarian cancer, and possibly other clinical conditions for which promising biomarkers exist. • Mammography alone versus mammography-plus-MRI screening • New screening technologies versus usual care in preventing colorectal cancer. • Surgical resection, observation, or ablative techniques on patients with liver metastases. These topics say much about what no one knows about cancer care. Answers could (will?) suddenly and dramatically shift standards of care (again?).Source: Initial National Priorities for Comparative Effectiveness Research, Committee on Comparative Effectiveness Research Prioritization, Institute of Medicine, 2009
  16. 16. Oncology Forces: Patients are relatively unchangedPatient remain predominately over 65, often co-morbid, under existentialduress… even after they transition to being SurvivorsThey expect: • Certainty – the probabilities that apply to every scenario – Complicated by poorly differentiated coverage of scientific findings • Comparability – treatments, providers, others – Complicated by metrics that lack nuance and customization • Counsel – on far more expansive questions in the internet age – Complicated by the apparent complexity
  17. 17. Partnering Activity is Cyclical Scrutiny is Increasing Partnering may become more difficultScrutinyPartnering X We are here Are we here?
  18. 18. Section 2:Models of partnership and affiliation
  19. 19. Prevalence of Illness (not just cancer) in the Community andthe Roles of Various Sources of Health CareLike most of health care, in cancer a very wide cast net is required to find a single hospitalization How wide depends on the characteristics of your community and institution Source: Green L et al. N Engl J Med 2001;344:2021-2025
  20. 20. Breast and Prostate: Macro microcosms of cancerIn terms of primary sites, Breast and Males Females All invasive cancer sites 11,958,000 5,506,000 6,452,000 Prostate cancer are overwhelmingly Brain and other nervous system 129,000 68,000 61,000 prevalent. Breast Cervix 2,646,000 244,000 14,000 0 2,632,000 244,000 • Together: Colon & rectum Endometrial cancer and Uterine sarcoma 1,110,000 573,000 542,000 0 568,000 573,000 ‒ 42% of all prevalence Esophagus 30,000 23,000 7,000 Hodgkin disease 167,000 86,000 81,000 • Separately: Kidney and renal pelvis 296,000 174,000 122,000 Larynx 89,000 71,000 18,000 ‒ 41% female cancers Leukemias 254,000 143,000 111,000 Liver and bile duct 32,000 22,000 10,000 ‒ 43% of male cancers Lung and bronchus 373,000 173,000 200,000 Melanoma of skin 823,000 401,000 422,000Every hospital-medical staff community, Multiple myeloma 64,000 35,000 29,000 regardless of size and other Non-Hodgkin lymphoma Oral cavity and pharynx 454,000 253,000 235,000 164,000 219,000 89,000 characteristics, needs to serve these Ovary 178,000 0 178,000 Pancreas 35,000 17,000 18,000 patients. Prostate 2,355,000 2,355,000 0 Stomach 66,000 38,000 28,000Both Breast and Prostate care necessarily Testis 201,000 201,000 0 involve a wide array of providers and Thyroid 458,000 101,000 357,000 Urinary bladder 537,000 398,000 139,000 diagnostic and therapeutic modalities. Childhood cancer (age 0 -19 years) 353,000 177,000 176,000More partnership is needed just to optimize Estimated cancer prevalence in the United States as of January 1, 2008 care of these patients .
  21. 21. Recent Oncology-related Partnerships on the Affiliation Continuum Contract Networks, Management/ Merger/ Alliances Lease JOA Consolidation Less More Integration Integration Clinical Joint Sale / Affiliations Ventures Acquisition
  22. 22. Range of Affiliation StructuresThere is a broad range of potential affiliation structures available to hospitals / health systems.Independent “Looser” Affiliation “Tighter” AffiliationIndependent, Contracted Joint Management Joint Asset Sale or Full AssetFree-Standing Relationship Venture Contract Operating Long-Term Merger Agreement Lease Specific Clinical Back Corporate Physician Risk Purpose Office Services Alignment Sharing Alliance JV JOA Merger• Insufficient to • Fewer governance implications • Assets and credit • Hard to buy in make an than a JOA remain separate, current economic impact • Scalable / ready to grow but significant conditions • However, single economic entity is shared economics • Hard to be sold in at best limited to what is in JV • Immediately almost all supports joint conditions contracting and planning Page 22
  23. 23. If you can afford to “build your own”…Memorial Sloan-Kettering has pursued aggressive expansion of outlying sites of care.Gross Revenue per hospital bed in 2009: • Memorial Sloan-Kettering = $4.1 million • NY-Presbyterian = $1.4 million • Mt Sinai Medical Center = $1.1 millionThese financial results, though also supported by PPS-exemption status, are a product of a broad geographic strategy.Source: http://www.crainsnewyork.com/article/20120122/HEALTH_CARE/301229983
  24. 24. Partnering for New Payments? Oncology is particularly resistant to new payment models Based on findings from almost two years of effort to develop a new pilot program, United Healthcare’s SVP for Oncology Services, Lee Newcomer, argues that new payment models must address the following problems: 1. Separating an oncologist’s income from drug selection 2. Basing the price of new cancer drugs on value 3. Creating payment incentives that support constant comparative effectiveness analysis based on real patient data 4. Rewarding physicians for outcomes that include quality of life and cost metrics in addition to clinical effectivenessSource: Lee N. Newcomer. “Changing Physician Incentives for Cancer Care to Reward Better Patient Outcomes Instead of Use of More Costly Drugs”. Health Affairs, 31, no. 4 (2012): 780-785
  25. 25. Alternate Payment Approaches for Oncology Care… … very early stages CLINICAL PATHWAYS BUNDLED / EPISODE PAYMENT • Overview • Overview ‒ Required to treat specific clinical conditions with well-vetted ‒ Providers are compensated with a single payment that covers an chemotherapy regimens entire treatment period » When two or more regimes are clinically equivalent, the » Example: providers are limited to evidence based treatment least costly is recommended protocols and costs must be less than the national average ‒ Financial reward for compliance with the pathway for each episode • Requirements • Requirements ‒ Flexibility to rapidly respond to changing technology and ‒ Strong understanding of cost structure on the physician side evidence / protocol changes ‒ Consensus around length of episode, covered services, etc. • Savings • Savings ‒ Usually up-front, one-time events ‒ Immediate savings for insurance company • Pros ‒ Savings / gains for physicians could increase over time as they ‒ Shown to lower drug costs, in one study by 37% became more practiced at a particular regimen ‒ Encourages pharmaceutical / biotech companies to demonstrate • Pros comparative effectiveness of their drugs ‒ Pharmaceutical manufacturers may adjust pricing to meet national • Cons episode cost caps ‒ Does not allow real-time comparison between pathways ‒ Physicians would be incented to choose less costly regimens to maximize savings ‒ If supporting reimbursement schedule does not favor (i.e., pay a higher margin for) generic / low cost drugs, physicians may be • Cons biased to select high cost drugs ‒ Potential to limit patient access to non-regimen drugs ‒ No well-tested models exist, United Healthcare is a pilotSource: Lee N. Newcomer. “Changing Physician Incentives for Cancer Care to Reward Better Patient Outcomes Instead of Use of More Costly Drugs”. Health Affairs, 31, no. 4 (2012): 780-785
  26. 26. Models: Will continue to vary by party “Designated” Centers Broadening geography / population without disturbing P / S relationships Community programs Building a portfolio of services without extending too far up the T / Q end of the spectrum Medical groups Finding sustainability as team members in larger systems Non-provider, industry collaborations Identifying common purpose with Life Science, advocacy and community groups
  27. 27. Section 3:Expectations regarding the challenges and benefits ofpartnerships and affiliations
  28. 28. Partnering: Some Challenges & Benefits CHALLENGES BENEFITS • Accepting changes in control; • Buffer against volatility no longer anyway to avoid change • Scale to respond to new conditions • Waiting too long; More partnering makes more partnering more difficult; if others in your market are • Ability to re-focus around role on a ahead of you… “team” • Finding sustained, not just one-time, benefits requires merging cultures • Avoiding increased costs of partnership related to an overlay of management and reporting
  29. 29. Preparing to Partner: Next StepsExperience suggests that those seeking partnerships often are ill-prepared for: • Making their case for their own attractiveness as a partner; instead focus often is placed on the other party’s attractiveness (or lack thereof) • Transparency; get ready for public reporting and data mining to demonstrated value • Comparing a proposed partnership to other options; the first idea is too often the only idea • Continual change beyond the partnership agreement; what is done by the partnership after agreement is most important and influential
  30. 30. QUESTIONS AND DISCUSSION
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