340B program entices hospitals to snap up oncology practices

Hospitals have been accused of using the discounts available as part of the 340B drug discount program to line their pockets with profits. But facilities are also apparently using the money for another purpose: to acquire community oncology practices, OncLive reported.

The number of oncology practices the hospitals acquired increased considerably between 2009 and 2012, with preliminary data suggesting the trend continued unabated last year, according to OncLive, citing a recent report from Berkeley Research Group. 

Physician practices are currently in demand by hospitals, which see such deals as a good way to control costs while guaranteeing stability for its medical staff.

However, the 340B program, which provides discounts on drugs for low-income patients, adds another reason for hospitals to focus on oncology practices--it provides a huge edge in a facet of healthcare delivery where drugs are often the largest expense.

"That disparity in the cost structure creates an incentive for 340B hospitals to acquire oncologists, whether practices or individual physicians, and as 340B hospitals' relative market share grows, it puts additional pressure on those community oncologists who have remained independent," Aaron Vandervelde, author of the report, told OncLive.

Hospitals are already under scrutiny for their use of the 340B program. In some instances, hospitals have resold their discounted 340B drugs to insured patients, sometimes pocketing tens of millions of dollars in profits.

Vandervelde noted that after hospitals acquire such practices, their 340B program chargebacks double on average.

Moreover, hospitals tend to target oncology practices in higher-income neighborhoods within their service areas in order to obtain better payers. "If you purchased a practice that was located in a very low income area where a lot of the residents were on Medicaid, the Medicaid reimbursement amount would be much lower than [that for] a commercially insured reimbursement amount. That's because the 340B program doesn't affect reimbursement, it just affects costs," Vandervelde said.

To learn more:
- read the OncLive article
- here's the report