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Article
Evidence-Based Oncology
Beyond McKesson and Florida Cancer Specialists, Deals Are Reshaping Community Oncology
Author(s):
Key Takeaways
- McKesson's acquisition of FCS' Core Ventures integrates FCS into The US Oncology Network, expanding its reach to over 700 locations and 1.5 million patients annually.
- The consolidation trend in oncology is driven by declining reimbursements, with practices seeking economies of scale and avoiding sales to local health systems.
When word got out on August 26, 2024, that McKesson Corporation had agreed to pay $2.49 billion for a controlling interest in a unit of Florida Cancer Specialists & Research Institute (FCS),1 the news was jolting but not unexpected. There had been reports2 and speculation for more than a year on who would be the winning suitor for FCS, with its 100 sites and a huge footprint in both the Florida market and the research community.
Under the deal, McKesson will acquire 70% of Community Oncology Revitalization Enterprise Ventures (Core Ventures), FCS’ administrative services arm, and FCS will join The US Oncology Network (The Network), which includes giants such as Texas Oncology and Rocky Mountain Cancer Centers.1 Once the transaction closes, The Network will have more than 700 treatment locations, well over 3000 providers, and serve approximately 1.5 million patients per year, based on the combined publicly released data of The Network and FCS.1,3
“This milestone marks an important step forward in our efforts to advance community-based oncology care,” Brian Tyler, PhD, CEO of McKesson, said in the statement. “By growing our oncology platform, we will bring advanced treatments and improved care experiences to patients while also reducing the overall cost of care.”1
Although the pending FCS transaction may be the deal of the year, it’s far from the only one reshaping community oncology. Over the past 5 years, entities such as The Network and management services organizations (MSOs) have competed mightily to offer marketing, technology, operational, and other services to physician-owned oncology practices, who now have multiple options to achieve economies of scale and avoid selling to the local health system.
These transactions are coming at a faster pace, and they don’t just involve practices aligning with networks or MSOs. More recently, these entities and their parent companies—drug distributors McKesson; Cencora, Inc; and Cardinal Health—have moved aggressively into cancer-related or cancer-adjacent businesses, seeking synergies for both the short and the long haul. If you need a scorecard to keep up, you’re not alone.
Networks, MSOs, and Alliances
The need for oncology practices to jointly seek solutions, both to retain specialized talent and to achieve savings in purchasing, technology services, and certain clinical areas comes down to 1 word: survival. For years, the Community Oncology Alliance has sounded the alarm about the loss of independent practices due to declining reimbursements, and there is evidence that when practices sell to the area hospital system, costs rise. A 2018 study led by Lucio N. Gordan, MD, president and managing physician for FCS, was one of the first to show that the same treatments for common types of cancer cost less in a community setting than in the hospital.4
Nonetheless, a group critical of the FCS transaction and another—Cardinal Health’s proposed acquisition of Integration Oncology Network (ION)—has called on the Federal Trade Commission (FTC) to block both deals because they would pair drug distributors with oncology practices that use some of the most expensive drugs.5 However, community oncology groups have argued that vertical integration among payers and specialty pharmacies has helped fuel practices’ financial challenges. A 2024 study using FTC classifications found rapid consolidation of oncology practices from 2015 to 2022, and the solo practitioner is almost nonexistent.6
The US Oncology Network, founded in 1999, emphasizes that its physician practices are independently owned, and The Network provides support. MSOs can perform tasks such as leasing space and equipment, patient scheduling, and billing and revenue cycle management (RCM).7 Alliances may provide purchasing and business services or function as trade associations, advocacy groups, or research collaborations. Depending on how the entity is set up, practices may access clinical trials, pathways programs, support for biomarker testing, or assistance in complying with both commercial and Medicare payment models. The Network, for example, is also very active in government relations at the state and federal levels. Services may be under the oncology entity itself or the parent company; for example, in 2020, McKesson, the parent company, created Ontada, a technology and research business that uses its iKnowMed electronic heath record system to generate real-world evidence.8
Having support from a larger entity can offer an independent practice the resources to expand within its market or into a new market, or add a service line, as Coastal Cancer Center did in February 2024 when it seized an opportunity to buy 2 radiation oncology centers.9 At The American Journal of Managed Care’s September meeting, the Patient-Centered Oncology Care® (PCOC) Conference, Emily Touloukian, DO, president of Coastal Cancer Center, said this move would not have been possible without the backing of OneOncology, which Coastal Cancer Center had joined in May 2023.
One of the greatest benefits of aligning with OneOncology is something Touloukian couldn’t have predicted. On February 21, 2024, Change Healthcare, a unit of UnitedHealth Group that acts as a claims exchange across the entire health care system, suffered a ransomware attack that shut down payments to providers nationwide.10 To this day, some are still owed money. While other physician leaders were taking out personal loans to make payroll,11 Touloukian told the PCOC audience that OneOncology practices were spared this fate.
“The Change Healthcare cyberattack had a huge impact on private practices who couldn’t get paid for weeks or were getting paid very small percentages of what they previously brought in,” she said. “I believe practices are still recovering from that, and the reason I say ‘I believe’ is because, frankly, I don’t know.
“We are on accrual-based accounting instead of cash-based accounting with OneOncology, so my practice felt nothing. OneOncology held the brunt of that burden and did not pass it to the practices…that was a huge benefit.”
FCS’ Long Journey to McKesson Pairing
The deal with McKesson comes after a multiyear journey for FCS, which once aspired to build its own national MSO. In 2017, practice leaders sought to bring their expertise to smaller practices struggling with reimbursement cuts under the 2015 Medicare Access and CHIP Reauthorization Act. With its own physicians as investors, FCS incubated the American Oncology Network (AON), managed by then-FCS CEO Brad Prechtl and other FCS leaders, several of whom are with AON to this day. In a 2018 interview, Prechtl said, “We believe this will be as big or bigger than Florida Cancer Specialists within 5 years.”12
Less than 2 years later, however, the practice and AON were parting ways. The split followed the April 2020 announcement that the practice would pay a $100 million penalty and cooperate in a US Justice Department investigation regarding FCS’ founder, William N. Harwin, MD, who was later charged in a 17-year market allocation scheme with a radiation oncology practice in southwest Florida.13 Harwin pled guilty on April 24, 2023.14
Both entities moved on. Under CEO Todd Schonherz, former FCS chief operating officer, AON now serves more than 250 providers across 38 practices in 21 states.15 A year ago, AON added Alti Rahman, MBA, MHA, as its chief strategy and innovation officer. Features of AON include its innovative methods for helping smaller sites experience same-practice growth, participate in value-based care models, and retain independence.15 In its Q1 2024 earnings, AON reported that revenue was up 20% from the prior period in 2023, and patient encounters were up 7.1%.16
Nathan H. Walcker, MBA, who joined FCS as chief financial officer in 2019, became CEO in August 2020.17 Under Walcker, Gordan, and Trevor Heritage, PhD, senior vice president and data officer, FCS expanded its offerings under Core Ventures, created an in-house genomics laboratory, and launched a data analytics company, Vita Nova Insights.18 Today, 40 years after its founding, FCS’ website lists more than 130 clinical trials that are enrolling patients; it has more than 250 physicians and 280 advanced practice providers.1
“This is a historic moment for FCS and reflects the evolution of our practice and the forward thinking of physician leadership, our board, and the entire organization at large,” Walcker said in the announcement. “The US Oncology Network and FCS share a mission, and we both aim to strengthen patient-centered cancer care in the community to improve outcomes. We are thrilled to partner with McKesson and join The Network, which furthers the joint commitment to bringing the best medicine and innovation for patients into communities across Florida.”1
Independent ownership, research. The terms of the FCS-McKesson transaction include a key element: physician ownership. Although McKesson will own 70% of Core Ventures, the practices’ physicians will retain a minority stake in Core Ventures, and the practice itself will remain independent.
Through its Sarasota Drug Development Unit, which conducts phase 1 trials, FCS has enjoyed a long-standing collaboration with Sarah Cannon Research Institute (SCRI) in Nashville, Tennessee, which entered a joint venture with HCA Healthcare and McKesson to form a research network across 250 locations in 2022.1,19
Additional practices join The Network. Besides FCS, 8 other practices have joined The Network since January 2023: Illinois CancerCare; Tennessee Cancer Specialists (Knoxville/Johnson City); SCRI Oncology Partners, which was formed of physicians at SCRI; Cancer Center of Kansas; Regional Cancer Care Associates (Connecticut/New Jersey/Maryland/Washington, DC); Epic Care (Northern California); and Nexus Health (Santa Fe, New Mexico).20
Competition for Practices
Besides AON and The Network, there are other entities competing to offer both financial and purchasing services and research partnerships to practices.
OneOncology. In terms of size, the closest rival to The Network is OneOncology. Based in Nashville, OneOncology was founded in 2018 and offers member practices a combination of business, purchasing, and clinical services. Founded by 3 practices—Tennessee Oncology, New York Cancer & Blood Specialists, and West Cancer Center—OneOncology is driven by a culture and a governance system that includes members from all practices on its physician advisory board, as well as broad representation in its clinical pathways process.
In April 2023, OneOncology announced that TPG/Cencora announced an acquisition of OneOncology for $2.1 billion from General Atlantic, whose original investment was $200 million.21 Since that time, OneOncology has announced improvements to its centralized information technology, RCM, precision medicine, and pathways services. It has also continued to add practices to the platform, for a current total of 24. During the presentation at PCOC in September, OneOncology representatives said that the network has approximately 1300 providers.
Additional practices join OneOncology. Nine practices have joined in the past 2 years. Besides Coastal Cancer Center in the Myrtle Beach area, other South Carolina practices to join OneOncology in the past 2 years include Lowcountry Associates (Charleston) and Anderson Area Cancer Center (upstate); additional practices joining the platform are the Connecticut Oncology Group, Carolina Oncology Specialists (Hickory, North Carolina), Clearview Cancer Institute (Alabama), Mid Florida Cancer Centers (Orange City), Pacific Cancer Care (Monterey, California), and Hematology-Oncology Associates of The Palm Beaches (Lake Worth, Florida).22
Cardinal Health buys ION. Before the McKesson announcement on FCS, news reports stated that other potential partners included Cencora and Cardinal Health.2 On September 20, 2024, Cardinal Health announced plans to acquire ION, a physician-led network with more than 100 providers at 50 sites in 10 states, for $1.115 billion. ION’s support services cover medical oncology, radiation oncology, urology, diagnostic testing, and other ancillary services, according to the statement.23
The pending acquisition aligns with Cardinal Health’s development of Navista, an oncology service alliance that builds on Cardinal Health’s technology portfolio, which had been upgraded to help practices navigate the Enhanced Oncology Model (EOM). ION practices will become members of Navista, with access to its data and artificial intelligence services.23 In an interview, Dan Duran, general manager of Navista, said that the suite of support and technology services will offer clinicians and practices flexibility based on their needs, whether that’s in reimbursement, practice development, or help with alternative payment models. “Independence is critical,” he said.
Does he anticipate more interest now that CMS is offering more generous reimbursement under the EOM, along with codes for navigation services? “The evolution from [the Oncology Care Model (OCM)] to EOM has been very interesting,” Duran said. “We look at it as an opportunity, but not the singular opportunity…. We’re focusing on enabling financial success for the practice, easing the administrative burden with a technology platform that can be leveraged throughout with practice intelligence services, and really helping physicians focus their time on patient care.
“We’re cocreating the future with physicians,” he said.
ONCare Alliance. In late February 2024, Sibel Blau, MD, of the Quality Cancer Care Alliance Network; and Barbara McAneny, MD, of the National Cancer Care Alliance (NCCA), announced that they had merged the groups to form ONCare Alliance, LLC. Before the merger, the entities had announced the creation of Exigent Research. At press time, the alliance announced the addition of 2 new members, for a total of 32 practices and 472 providers. ONCare’s statement said it is “redefining excellence in cancer care, emphasizing agility, independence, and a comprehensive support system for clinical trials, advocacy, education, and training, all while maintaining a commitment to high-quality accessible care.”24
Other Cancer-Related Businesses
The Network and MSOs often exist alongside other players in a broader health care company; they may benefit from investments by the parent entity or make purchases of their own. Community oncology has seen some of each in recent months.
As Evidence-Based Oncology went to press, McKesson announced the launch of InspiroGene, which will support cell and gene therapy commercialization. The entity will feature third-party logistics programs, specialty distribution services, a biologics specialty pharmacy, and a patient hub with case management and support services for patients and caregivers.25
OneOncology enjoys strong external relationships with leaders in specialty care, reflected in its August acquisition of United Urology Group. OneOncology CEO Jeff Patton, MD, said in an interview that there were opportunities for collaboration in drug procurement, group purchasing organizations, management of radiation therapy, and clinical trials. Finding a physician-driven culture was also important, he said.
However, the big news was OneOncology’s buy of Navigating Cancer, creator of the popular platform for electronic patient-reported outcomes. Some of the best research validating the platform’s cost-savings potential comes from Texas Oncology. A statement on the purchase promises that Navigating Cancer will be a standalone business “and will maintain its focus on all community oncology practices regardless of their [MSO] affiliations.”
It’s not yet clear how FCS’ recent ventures will fit into McKesson; the practice’s research record is equally strong in real-world evidence. Although FCS passed on the EOM, it was part of the OCM and has strong experience in value-based care.
“Above all else, our patients are the true beneficiaries of this transaction, as we seek to drive meaningful outcomes and deliver sustained value with every interaction. Through the power of our combined operational expertise, we can bolster community oncology’s role in increasing access to high-quality, affordable care,” Gordan said in the announcement.1
References
1. McKesson signs agreement to acquire controlling interest in Florida Cancer Specialists & Research Institute’s Core Ventures. Press release. McKesson; August 26, 2024. Accessed September 27, 2024. https://bit.ly/4gTxpbw
2. Davis MF. McKesson, Cencora and Cardinal Health circle Florida Cancer Specialists. Bloomberg. Updated July 17, 2024. Accessed September 27, 2024. https://www.bloomberg.com/news/articles/2024-07-17/mckesson-cencora-and-cardinal-circle-florida-cancer-specialists
3. The US Oncology Network. Accessed October 2, 2024. https://usoncology.com/physicians/join-our-network/
4. Gordan L, Blazer M, Saundankar V, Kazzaz D, Weidner S, Eaddy M. Cost differences associated with oncology care delivered in a community setting versus a hospital setting: a matched-claims analysis of patients with breast, colorectal, and lung cancers. J Oncol Pract. Published online October 31, 2018. doi:10.1200/JOP.17.00040
5. Economic Liberties and partners call on FTC to block McKesson and Cardinal Health acquisitions. Press release. American Economic Liberties Project; September 26, 2024. Accessed October 2, 2024. https://www.economicliberties.us/press-release/economic-liberties-and-partners-call-on-ftc-to-block-mckesson-and-cardinal-health-acquisitions/
6. Milligan M, Erfani P, Orav EJ, Schleicher S, Brooks GA, Lam MB. Practice
consolidation among US medical oncologists, 2015-2022. J Oncol Pract. 2024;20(6):827-834. doi:10.1200/OP.23.00748
7. MSOs for oncology practitioners. Cohen Healthcare Law Group. Accessed October 2, 2024. https://cohenhealthcarelaw.com/2023/01/msos-for-oncology-practitioners/
8. McKesson launches Ontada, an oncology technology and insights business dedicated to help advance cancer research and care. Press release. McKesson; December 3, 2020. Accessed October 3, 2024. https://www.mckesson.com/about-mckesson/newsroom/press-releases/2020/mckesson-launches-ontada-oncology-technology-insights-business/
9. Munz K. OneOncology and Coastal Cancer Center acquire radiation oncology centers. AJMC. February 7, 2024. Accessed October 3, 2024. https://www.ajmc.com/view/oneoncology-and-coastal-cancer-center-acquire-new-radiation-oncology-centers
10.Stupp C, Nash KS. Months after Change Healthcare hack, some medical providers wait for claims payments. Wall Street Journal. September 13, 2024. Accessed October 3, 2024. https://www.wsj.com/articles/months-after-change-healthcare-hack-some-medical-providers-wait-for-claims-payments-ac792ae8
11. Capoot A. Cyberattack on UnitedHealth firm forces doctors to dig into personal savings to stay afloat. April 30, 2024. Accessed October 3, 2024. https://www.cnbc.com/2024/04/30/change-healthcare-cyberattack-doctors-tap-personal-savings-for-costs.html
12. Gordon M. Cancer services giant tackles expansion — outside of Florida. Business Observer. November 30, 2018. Accessed October 3, 2024. https://www.businessobserverfl.com/news/2018/nov/30/cancer-services-giant-tackles-expansion-outside-of-florida/
13. Leading cancer treatment center admits antitrust crime and agrees to pay $100 million criminal penalty. Press release. US Department of Justice; April 30, 2020. Accessed October 3, 2024. https://www.justice.gov/opa/pr/leading-cancer-treatment-center-admits-antitrust-crime-and-agrees-pay-100-million-criminal
14. Doctor pleads guilty to role in antitrust conspiracy that limited cancer patients’ options for life saving care in southwest Florida. Press release. US Department of Justice; April 24, 2023. Accessed October 3, 2024. https://www.justice.gov/opa/pr/doctor-pleads-guilty-role-antitrust-conspiracy-limited-cancer-patients-options-life-saving
15. Delivering better care together. American Oncology Network. March 2024. Accessed October 3, 2024. https://investors.aoncology.com/static-files/146b81ac-0883-4d5a-a3ff-3d3a604826c8
16. American Oncology Network, Inc. announces first quarter 2024 financial results. News release. American Oncology Network; May 15, 2024. Accessed October 3, 2024. https://investors.aoncology.com/news-releases/news-release-details/american-oncology-network-inc-announces-first-quarter-2024
17. Brad Prechtl, MBA to retire as CEO; Nathan H. Walcker named successor of statewide community oncology practice. News release. Florida Cancer Specialists & Research Institute; July 13, 2020. Accessed October 3, 2024. https://flcancer.com/articles/florida-cancer-specialists-appoints-new-chief-executive-officer/
18. Florida Cancer Specialists & Research Institute announces formation of healthcare analytics company. News release. Florida Cancer Specialists & Research Institute; March 27, 2024. Accessed October 3, 2024. https://flcancer.com/articles/vita-nova-insights-announcement/
19. McKesson and HCA Healthcare announce plans to form an oncology research joint venture to advance cancer care and increase access to oncology clinical research. News release. HCA Healthcare; June 23, 2022. Accessed October 3, 2024. https://bit.ly/3LNq9yI
20. Blog. The US Oncology Network. Accessed October 3, 2024. https://usoncology.com/our-company/news/blog/
21. TPG and AmerisourceBergen to acquire leading specialty practice network OneOncology from General Atlantic. News release. OneOncology; April 20, 2023. Accessed October 3, 2024. https://www.oneoncology.com/blog/tpg-and-amerisourcebergen-to-acquire-leading-specialty-practice-network-oneoncology-from-general-atlantic/
22. Partnering with leading practices. OneOncology. Accessed October 3, 2024. https://www.oneoncology.com/partners
23. Cardinal Health to acquire Integrated Oncology Network, a physician-led
independent community oncology network. Press release. Cardinal Health; September 20, 2024. Accessed October 3, 2024. https://newsroom.cardinalhealth.com/2024-09-20-Cardinal-Health-to-acquire-Integrated-Oncology-Network,-a-physician-led-independent-community-oncology-network
24. Steady growth for ONCare Alliance with the addition of two new practices in Nebraska and Illinois. Press release. Newswire. October 3, 2024. Accessed October 4, 2024. https://lnkd.in/gpSuj7XA
25. McKesson launches InspiroGene, a dedicated business to guide and support the commercialization of cell and gene therapies. Press release. McKesson; October 1, 2024. Accessed October 3, 2024. https://www.mckesson.com/about-mckesson/newsroom/press-releases/2024/mckesson-launches-inspirogene-a-dedicated-business-to-guide-and-support-the-commercialization-of-cell-and-gene-therapies/
