Sep 21, 2018
Welcome to the ASCO Daily News podcast. I'm Lauren Davis, and joining me today is Harvey Bichkoff, CEO of Marin Cancer Care in California. Mr. Bichkoff has been an administrator at both public and private hospitals for many years before joining this integrated center that provides cancer care with compassion. In this podcast we will discuss the challenges for oncology practices to remain independent in the era of consolidation. Mr. Bichkoff, welcome to the podcast.
Thanks very much, Lauren. It's an honor to be here and talk about this important topic.
The 2016 Community Oncology Practice Impact Report shows that since 2008 nearly 1,600 community practices and/or clinics nationally have been affected by closings, hospital acquisitions, and corporate mergers. This is a rate of 15.1 community practices affected per month. What are some of the reasons for this increase?
It's been a real challenge for independent practices to maintain their operations over the last few years. There is tremendous pressure from hospitals that are trying to acquire oncology practices. They're doing this to subsidize other acquisitions that they've made and losses from their operations. Some hospitals give significant drug discounts from something called 340B pricing, they often have better commercial contracts, and sometimes have medical foundations that are made up of most of the referring specialists and primary care doctors.
Also, some oncology groups have seen declines in their reimbursement, maybe due to changes in peer mix, or more Medicare patients, as well as increases in their overhead costs. These factors may lead to selling to a hospital, and lock in or maybe increase the physician's income for a few years.
There are risks to giving up autonomy to the hospitals. Physicians may not be able to spend as much time with their patients, they lose control over staffing decisions, and their income guarantees are often short-term, and have to be renegotiated after they've lost leverage.
They may also lose some key employees. The new hospital employer may reduce employee salaries and benefits which could result in turnover. Finally, new acquired oncology practices may feel lost in a larger system where the emphasis may be on growth of market share and profits rather than patient, employee, and doctor satisfaction.
Consolidation seems to be a trend in cancer care, but what are some of the benefits for private practices to remain independent?
The primary advantages of remaining independent is that doctors have more control over their time spent with patients, employee hiring and firing decisions, and control over their budget. Some commercial peers are starting to realize that it is beneficial to pay independent doctors more so that they can remain independent, versus paying the hospitals who charge a great deal more for the same services.
I've also heard from colleagues around the country that it can be extremely difficult to renegotiate their salaries after the initial term. If the hospital is not doing as well financially it could impact the group. They can also experience reductions in benefits and retirement contributions. Once the practice is sold it is competing with other hospital departments for their budget.
Other significant advantages are the ability to make quick policy and process decisions. Hospitals are much more bureaucratic and often have several layers of management, which can stall decision-making.
Despite the increasing wave of acquisitions by larger practices or by hospitals, many established private practices wish to remain so. What are some of the challenges to do that?
As you said, the consolidation of medical groups, as driven by hospitals, health care systems and academic centers, has made it very tough on independent practices. Also the aging of the population and increases in Medicare patients where we are lucky to break even is much more difficult.
Our market is also somewhat unique. We have a good peer mix, but extremely high housing costs. This makes it difficult to recruit locally, as unemployment is very low and people can't afford to live here. There are also projected shortages of oncologists and oncology nurses. Lately we've had a hard time finding experienced oncology nurses, and we've had to train our new nurses with less experience.
Another significant challenge, which is particularly worse in cancer, is burnout. We've worked with an expert in the field who's talked with both our staff and doctors about techniques to increase resiliency.
Are there specific ways to be cost effective and keep practice costs down?
Our biggest costs are drugs, staff, and rent. We monitor costs
and cash flow carefully. The doctors and the management team
regularly meet, and everyone is engaged. We also watch our drug
costs carefully, and have our distributors match prices when better
pricing is available on the market.
We also buy extra drugs when cash pemits before the manufacturer increases prices. Finally, we bid out our drug and supply costs every couple of years to make sure the pricing is competitive. As far as rent goes, we locked in a long-term lease so we know our future costs. And in some instances, you are able to also negotiate tenant improvement allowances on rental deals.
As it relates to staffing, we are members of ASCO's PracticeNET. We benchmark our practice against other oncology groups. We found that we are efficient but higher cost. We invest in our employees, and have lower turnover, and outstanding patient satisfaction results.
We are in a high-cost area, but believe we should pay a premium because working in cancer is tougher than other specialties. We also cross-train our staff to cover sick days and vacations. We're very fortunate to have great and committed a team of employees.
Marin Cancer Care offers integrative medicine, everything from acupuncture to music therapy. What's your secret, especially considering that integrative medicine is both desirable and in demand. How can practices offer these options while still doing more with less?
That's a good question, Lauren, and it's been a challenge for us. We started a integrated program in our practice over 20 years ago, as one of our physicians had a passion for these services based on his own personal experience. He's since retired, and one of our new physicians, who also has a commitment to the program, has allowed it to continue to grow and prosper.
I think the most important element is having a physician that is committed to these programs. Over the past several years we've had a co-management agreement with our hospital. They pay us for administrative time, and to run the integrative and cancer program overall.
The hospital has been extremely committed to the integrative medicine program. They've hired several navigators in the areas of breast, prostate, GI, and survivorship. They've supported the lung cancer screening program. And recently hired palliative care physicians and mid-level providers. It will be very difficult for us to do this on our own, and have a robust integrated program without the hospital support.
Absolutely. What are some key steps for private practices to innovate and survive?
I think the primary way to innovate and survive is to always put
the patients and their families first. We hire staff who are
genuinely interested in customer service, and clinicians who are
focused on patient-centered care. We have an excellent reputation
for quality and good relations with the local academic medical
We were the first practice to join ASCO's CancerLinQ, and are accredited by a national organization, the AAAHC. We're always involved in multiple quality initiatives on how to improve patient care. Our practice has also invested in an experienced management team. It seems like most successful practices have made that investment.
We talked a little bit about the cost side minutes ago. It may be even more important to talk about the revenue side. We are paid fairly well by our commercial carriers, and we look at them as partners. We know many of the medical directors who vouch for our quality after analyzing our cost data, and they're willing to pay us more based on our evidence-based practice of medicine. This is extremely important as costs rise and the markets get more competitive.
Finally, it's not easy to turn back once you've sold. It is costly to create a work force, and difficult to renegotiate commercial contracts. Some doctors are biting the bullet and starting over due to their dissatisfaction with their hospital partners.
Thank you so much. Again, my guest today has been Mr. Harvey Bichkoff. Thank you for joining us.
Thanks for the opportunity, Lauren. I hope it's helpful to other independent practices.
Thank you. And to our listeners, thank you for tuning in to the ASCO Daily News podcast. If you're enjoying the content we encourage you to rate us and review us on Apple podcast.