Oncologists can't afford to stay independent

While the healthcare-consolidation trend has accelerated across specialties since the implementation of the Affordable Care Act, oncologists in private practice face particularly intense pressure to sell or become otherwise affiliated with hospitals, according to an article from the New York Times.

In fact, data from the Community Oncology Alliance shows that since 2008, 544 of the nation's 1,447 independent oncology practices were purchased by or entered contractual relationships with hospitals, another 313 closed and 395 reported financial difficulty.

Many oncologists, such as Jeffery Ward, M.D., told the newspaper that after years of fighting for their independence, they eventually surrendered to "a series of cuts in oncology reimbursement under the guise of reform to which private practice is most vulnerable."

In particular, the burden of stocking their drugs is heavier for oncologists. While they have always risked absorbing losses if patients died or discontinued using the medication supply a doctor had purchased, they are now reimbursed far less. Insurers used to pay doctors at least twice the wholesale price of the drugs, but that has dropped to the average cost of the drug plus 4.3 percent, according to the Times. Most hospitals, on the other hand, participate in a federal program that lets them purchase these drugs for about half what private practice doctors pay, and often charge up to 200 percent more.

Thus, according to Ward, the only way he and his partners could have prevented selling the private practice to Swedish Medical Center in Seattle would have been to work for free. But while the hospital has offered many once-independent physicians a refuge from severe reimbursement cuts and sky-high overhead, patients and insurers may pay up to double for hospital-based care compared to what they would have paid private practice, in part due to dramatic markups on chemotherapy.

But this consequence of hospital acquisitions is not limited to oncology. Expenses for hospital-owned physician practices in general were 10.3 percent higher than physician-owned practices, and those for multihospital system-owned practices were 19.8 percent higher between 2009 and 2012, according to a study published in JAMA.

To learn more:
- read the article 
- see the abstract