The Business of Cancer Care

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Commentary - September 2010

Tex Med . 2010;106(9):23-26.

By Steve Paulson, MD

No diagnosis in medicine is more transcending diagnosis than cancer. Alzheimer's disease, multiple sclerosis, amyotrophic lateral sclerosis, and a variety of other illnesses bring fear and anxiety, but the association of cancer with pain and loss of hope can be devastating. This association can promote desperate and even irrational reactions to the diagnosis, which result in ill-advised therapeutic choices by family and patients.

Given these dynamics, should business and cancer care go in the same sentence? Cancer care evokes images of hope and encouragement, anxiety reduction, and victory over disease through well-reasoned, state-of-the-art therapies. Conversely, the mention of the business aspects of cancer care generally frames a situation in cold, financial terms.

Make no mistake: Cancer care has become big business. Nearly 1.5 million Americans are diagnosed with cancer each year. More than 560,000 Americans are expected to die of cancer this year. In the past year, cancer has exceeded heart disease as the No. 1 killer in the United States of patients younger than 85, yet paradoxically the cancer death rates have actually been declining in recent years. Progress particularly has been made in lung, breast, prostate, colorectal, stomach, and uterine cancer.


The cost of health care is rising almost exponentially. In 1965, health care was 5 percent of the Gross Domestic Product. Today it is estimated at 16 percent, and by 2014, it is expected to approach 20 percent.

But, medical care in 1965 was not what we enjoy today in 2010. In 1965, a typical patient entering the hospital with a heart attack received care similar to the care given to then-President Eisenhower when he had his heart attack in 1954. Six weeks of bed rest, oxygen, and intravenous narcotics, with cardiac monitoring to manage arrhythmias, were followed by another six weeks of limited activity. All this resulted in significant debility.

Today, that same patient is often in the cardiac catheterization lab within an hour of arriving in the emergency room and receiving very effective treatment to markedly reduce the amount of cardiac muscle damage. The hospital stay is reduced to as little as three days, and exercise is initiated with rehabilitation services at discharge. The overall result is a lower death rate and morbidity after the heart attack.

The same is true in cancer care. In 1965, few effective antineoplastic drugs were available, and, save the occasional childhood leukemia patient, care was largely supportive. Now, there are diagnoses for which cure is the expectation, not the exception.

Hodgkin and non-Hodgkin lymphomas, testicular cancers, and anal carcinoma all have high cure rates, and breast, myeloma, lung, colorectal, and esophageal tumors all have improved outlooks. The number of drugs available has ballooned from four or five to more than 50, and therapies are being "targeted" for specific abnormalities in the genetic makeup of the malignant cells.

These great improvements are not free. The National Institute of Health (NIH) in 2009 estimated that the 2008 cost of cancer care was $228.1 billion. Of this, only $93.2 billion was due to direct medical costs; $18.8 billion was due to lost productivity of the patient because of illness; and $116.1 billion was due to lost productivity secondary to  premature death.

Much focus has been placed on the cost of cancer agents and their delivery. In 1963, the overall spending on direct patient care for cancer was $1.3 billion. By 1995, it had increased to $41.2 billion, a 32-fold increase. From 1995 to 2008, these costs ballooned to $93.2 billion, a 225-percent increase in direct costs of cancer care.

The recent comprehensive health care reform legislation promises to inject an additional trillion dollars into the overall health care system. The addition of 32 million patients to the ranks of the insured promises to increase greatly the demand and volume for all services. The insurance revisions preventing exclusion of preexisting conditions and eliminating lifetime caps on care will likely result in a greater volume and cost of cancer care delivery.

With Texas having the nation's highest percentage of uninsured patients, this may reduce some of the burdens of providing care, but it promises to prolong the time to access oncologists and likely will aggravate care delivery, especially in areas that already have a shortage of cancer care providers. The new dynamics may mean less cost-shifting (insured patients underwriting the care of uninsured patients) going forward, but it will unlikely result in any windfall for the cancer delivery system because most of the new, additional care will be reimbursed at Medicaid rates. These rates generally return significantly less than the actual cost of caring for these patients.

Evolution of Cancer Care

In the early 1970s, the majority of cancer care was provided in academic centers. The migration of cancer care into the regional hospital and outpatient cancer centers has largely been supported by the evolution of comprehensive outpatient facilities that make care accessible and convenient.

This migration of care is also possible because of the development of supportive-care drugs that make outpatient care easier and more practical. The use of growth factors, improved drugs to control nausea, effective pain medicines, outpatient laboratories, easy intravenous access catheters, and more effective antibiotics make the transition to outpatient care safe and feasible. As a result, outpatient cancer centers with convenient access have become a reality.

Currently, 83 percent of all cancer care is delivered in decentralized, nonacademic centers. This is clearly more convenient and less expensive to the patient and less costly to the payer, as well. These centers have evolved into full-service entities that can manage all aspects of patient care, from diagnosis to disease resolution. Occasionally,   specialized surgery, radiation, or medical treatment (e.g., transplants or phase I research   programs) require travel to tertiary centers, but this is the exception rather than the norm.

Outpatient cancer centers now have infusion capacity and capability to handle all but the most complex treatments. Outpatient radiation oncology can now provide standard as well as more advanced stereotactic radiation treatments.

Clinical research also has expanded significantly, with patients able to access promising new molecules without the cost and inconvenience of long-distance travel for these trials. Laboratory and diagnostic imaging are part of the integrated system and allow much greater coordination of care with all the services available and linked within a single site.

Even specialty pharmacy services within community centers make expensive and scarce oral chemotherapeutic agents readily available to patients.

Despite these advancements, not all cancer treatment is delivered in integrated cancer treatment centers. Seventeen percent of cancer care is provided in academic centers. Generally, the quality of care in academic centers is high, but these centers are often less accessible and much more expensive for patients, especially when indirect costs of accessing care (e.g., travel, lodging, time off from work) are considered. Some community-based care is provided in separate medical oncology-only office practices that coordinate care with radiation-only facilities, but the complexities and costs of cancer care delivery are forcing smaller practices to consolidate into larger groups to be in a position to provide diversified services that patients need. Critical mass is necessary to provide other services such as positron emission tomography, computed tomography, radiation, and research.

Downward pressure on reimbursement is putting a greater emphasis on efficient, cost-effective care delivery, and health system reform is expected to increase this downward pressure. Electronic medical records, another underfunded government mandate, along with quality oversight programs, will all be challenging to implement for a small practice with limited resources. Complicating matters more, the ASCO Workforce Advisory Group study projects a major shortage of medical oncologists by the year 2020. This shortfall could reach between 2,500 to 4,000 physicians compared with expected needs. (There are currently about 6,000 practicing medical oncologists in the United States.) A similar shortage will be seen in other oncology subspecialists like radiation, gynecologic, and pediatric oncologists.

This all will likely lead to the expanded use of physician extenders and more "team" approaches to cancer management. Patients will have less direct contact with the oncologist and more contact with the nurse practitioner or physician assistant, especially for survivor follow-up visits.

Adding to this shortage will be the overall change in the mindset of physicians emerging from today's training programs. Younger physicians have a much greater focus on quality-of-life issues, along with a diminished willingness to put in the long hours and intense time commitments that are currently standard for the aging oncologist. Current criteria for choosing a work environment centers most on reasonable hours, with more time off, not on overall compensation.

The shortage will be magnified in rural areas and will create access-to-care problems for patients living in those areas. How this will impact quality, cost, and physician incomes remains to be seen.

One thing is certain - the pressure to reduce costs associated with cancer care will continue. Multiple government and payer initiatives are focused on this effort.

Comparative Effectiveness

The most commonly promoted idea is comparative effectiveness: determining the least expensive alternative to give the same result. If efficacy and toxicity are the same, a treatment decision can be based on cost. This will be evidence based and allows the payer to decide equivalence and reimbursement. Treatment pathways and access to clinical trials will be critical. Physicians must be proactive in creating these pathways, or the payers will decide for them.

Cost-Benefit Analysis

Will this be acceptable to patients? Much more information is now available to patients and their families. Whether this information will be correctly applied by the patient and family or whether they will be susceptible to the "newest and best" approaches promoted through the Internet and other advertising entities remains to be seen.

No one likes to ration care, but some degree of restraint will be needed. Are the benefits of a treatment costing $10,000 per month worth the potential for extending one's life a few weeks on average? No one wants to deny or be denied treatment that may extend or improve the quality of someone's life, but these hard choices are coming, and patients will likely share more of the financial responsibility.

Case Rates

Another concept is case rates or payment for "episodes of care." This avoids the issue of equivalence and puts the decision making in the doctor's hands, but it incentivizes the doctor to choose least costly alternatives and therefore income-maximizing treatment.

Both of these concepts will skirt the issue of whether one treatment is more effective than another (such as proton therapy vs. intensity-modulated radiation therapy in prostate cancer) and allow the insurer to say "Here's what I'm paying, you choose how to use it." This will put patients and doctors on collision courses over care choices.

Steve Paulson, MD, is the president and chief executive officer of Texas Oncology, PA.

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