Mergers, New Locations for Care, and the Oncologist

Bruce Feinberg, DO, vice president and chief medical officer for Cardinal Health Specialty Solutions, recently chaired a discussion centered on the flurry of megamergers in healthcare: Walmart and Humana, Aetna and CVS, Cigna and Express Scripts, and Amazon and PillPack.

Panelists Michael Kolodziej, MD, FACP, an oncologist who is now vice president and chief innovation officer with ADVI Health; Dana Macher, senior vice president at Avalere Health; and Mark Soberman, MD, MBA, FACS, medical director of the Oncology Service Line and physician executive at Monocacy Health Partners, Frederick Regional Health System, discussed these developments and what they mean for cancer care delivery, in light of pressures on the oncologist at the practice level.

Kolodziej offered background on how the 1980s and 1990s brought the early waves of change to oncology, as practice management companies sought to help physician groups bring economies of scale to their business operations, as well as assist in dealing with pharmaceutical companies. The “bigger is better” concept began to prevail, even before the pressures of the 340B drug discount program—which Macher said brought a whole new set of challenges.

Soberman noted that the model changed on the pharmaceutical side as well. Research and development, once done all in-house, now occurs in small biotechs that take on the early risk before being acquired by larger companies.

The nature of today’s consolidation is different, Macher said. “A lot of that was horizontal,” she continued. “Now, we’re looking at a very different type of consolidation...with a lot of vertical integration going on.”

Goals have changed, too, Soberman said. The first wave of managed care in the 1990s was strictly about cost containment, and “there was not a lot of emphasis on outcomes and on quality of care.” Health systems are now doing what the practice management companies once did: looking for ways to find savings and do things differently, even if it is not within the hospital walls.

The Shift to Quality and Vertical Integration

Today’s emphasis on outcomes will manifest itself in a host of ways, from where care takes place to breaking down barriers be- tween retail and healthcare functions. Kolodziej said payers realize there is only so much money to be made managing claims—and Macher agreed, costs themselves must come down. The difference today is that data can reveal how to do this.

“The big driver now, in terms of why it’s happening more, is that we have the capability. We have the data that are driving these mergers and acquisitions,” she said.

Models like Geisinger—fully integrated payer and provider systems—are pointing the way for others. Although the Department of Justice (DOJ) rejected mergers of the largest national payers—Anthem and Cigna, Aetna and Humana— because these deals would deplete choice in certain markets, the DOJ has allowed recent vertical deals to go through. The panelists generally thought the recent megamergers made sense.

Soberman called the Amazon—PillPack deal “brilliant,” and Feinberg noted the obvious need for Amazon to gain pharmacy licenses in all 50 states to realize its ambitions of becoming an online pharmacy.

Kolodziej liked the merger between Walmart and Humana as it brings together a retailer that is already in the pharmacy space with a payer heavily invested in Medicare Advantage. He sees opportunities for in-store chronic disease care, where nutritionists can assist clients with healthy food shopping. Plus, Walmart is accessible in states with high rates of chronic disease. “As somebody said to me once, there are many places in America where Walmart is a heck of a lot closer than your doctor’s office,” he said.

Macher noted that the Express Scripts and Cigna deal made more sense after Express Scripts severed its relationship with Anthem, which is now building its own pharmacy benefit manager (PBM). Kolodziej, who previously worked for Aetna, said CVS was always the PBM of choice for that payer, so this merger makes sense. Soberman said he is watching the situation with UnitedHealth and Optum, and Feinberg agreed, adding, “I’ve heard rumors they’re not going to be in the payer business much longer.”

As these transactions unfold, Kolodziej said 2 things are essential to make them work: (1) attention to outcomes and (2) attention to cost. Soberman said large employers are finally starting to create innovative contracts around these bottom lines, and Feinberg agreed that employers “are going to be the catalyst that’s going to push this forward.”

Will Employers Step Forward?

Kolodziej said physicians and oncologists in particular are “intimidated” by the prospect of a merger between Aetna and CVS (the American Medical Association opposed it), because they believe it “is going to do nothing but empower the health plans to exercise increased leverage over their day-to-day life.” Soberman pointed out the transaction is dwarfed by Medicare, which already has great power over the lives of physicians, and Feinberg wondered aloud what will come of the effort by Berkshire Hathaway, Amazon, and JP Morgan Chase, who have engaged Atul Gawande, MD, MPH, to design a joint venture to shake up healthcare.

However, Soberman said it is more important to pay attention to the direct contracting relationships happening between Home Depot and Cleveland Clinic for heart surgery, or MD Anderson and other employers for specialty cancer care. Feinberg was not so sure—he said employers have been pretty unwilling to directly manage costs, save for few, such as Boeing.

Although the panelists agreed the jury was still out on the venture between Berkshire, Amazon, and JP Morgan Chase, they wondered whether the midsize employers—those with 5000 to 10,000 workers who Feinberg said pay for 60% of healthcare in the United States—would ever exercise leverage over costs. Kolodziej said most rely on third-party consultants or administrators, but innovators like Amazon could change things.

Integrated Delivery Networks and the Oncology Care Model

What makes a hospital an “integrated delivery network” (IDN), and what does this mean for cancer care? Soberman said hospitals realized that they are not islands of care, and in time they may not even be the anchor. “I think oncology has been the poster child for this,” he said, offering examples of how groups like the Cleveland Clinic now organize care around a patient's disease, not "radiation oncology" or "surgery."

Feinberg asked what components are needed to be an IDN, and Macher replied that breadth of services matters. Kolodziej noted that hospital systems have been buying nursing homes, which is significant because under the Oncology Care Model (OCM), the cost of postacute care is significant—and can be hard to control. “Nobody asked the oncologist which nursing home to send the patient to because the hospitals don’t care what the model says about what nursing home to use,” he said. “But hospitals have caught on to this.”

The discussion also noted that the IDN movement has brought about hospital closures in rural areas. The push-and-pull over how many services health systems can provide, and where, is an ongoing issue. Will there be freestanding emergency departments? Will we see more systems like Geisinger in Pennsylvania and Kaiser as it exists in California?

In oncology care, the 340B program has changed the dynamic by driving consolidation of practices into hospital systems—until recently, care in hospital-owned facilities was reimbursed at much higher rates than care in community settings.

Although 340B is not solely responsible for the change in where care occurs, Feinberg said, “There has been a significant shift in the site of care for cancer patients, where 80% of it 5 to 10 years ago was being provided in the community setting in private practice clinics, now it’s half that number today. The half that’s not there is being treated at a site of care, usually in a facility owned by an IDN, however we define it.”

Soberman called it “unreasonable” to pay more for care in different settings, and that his health system put care in a setting where the physician fee schedule applied, because “we want to be less expensive, not more expensive.”

IDNs that are not all working in concert can present challenges for practices enrolled in the OCM, Soberman said, because “it makes the medical oncologist responsible for a whole lot of things they have no control over.”

Macher agreed. The OCM is transforming patient care, she said, but from a financial perspective, it still has some flaws. “There are a lot of kinks to be worked out in the [OCM] and they’re working hard to do that.”

Burnout in Oncology Care

Changes in reimbursement, stresses from 340B, adapting to technology, and the modern challenges of running a practice have all contributed to the loss of small 3-to-5-member oncology practices, Feinberg said, asking the panelists to comment.

“The burnout factor, interestingly, is not just a private practice phenomenon,” Soberman said. “It’s just the emotional toll that being a cancer care provider takes.”

More must be done to improve working conditions and increase the time providers spend with patients, not on paperwork or in front of a computer. “Getting that joy of practice back in is a real challenge,” he said.

Kolodziej agreed that the electronic health record is a huge problem, and Feinberg agreed that hiring a scribe does not completely eliminate the problem.

Can an IDN do a better job than the traditional practice? Feinberg focused on the term “patient engagement” and asked, what does this really mean? Macher said it can mean many things, but “the one that certainly bubbles to the top is adherence ... and having the ability to engage the patient at certain points along the continuum if they’re not adhering to their therapy.”

IDNs excel here due to technology and care coordination. But, Feinberg said in his conversations with community oncologists, being close to patients is exactly why they are best for this role.

“I’ll offer a cynical response that, at this point, most technology solutions have been embraced by the well, the worried, and the wealthy,” Feinberg said, “but not by the patients who really need them.”

Macher and Kolodziej said this will change as millennials move through the healthcare system, because they are heavier users of technology. “They care less that their doctor went to Harvard and more that their doctor answered their email,” he said.

“I would say the world is changing, and it’s going to change in ways that we cannot predict,” Kolodziej said.