Navigating the Community Oncology Relationship With the Local Hospital

There had been plenty of tension between oncologists with Alliance Cancer Specialists (ACS) of southeastern Pennsylvania and Jefferson Health, which operates multiple hospitals in the Philadelphia region. After spurning offers to be bought out, ACS was evicted in 2020 from space it had used for 25 years in a building Jefferson now owned.

Moshe Chasky, MD, FACP | Image credit: COA

But Moshe Chasky, MD, admitted that he was shocked when he received the envelope last July that let him know his hospital privileges at Jefferson Health-Northeast would end in mid-September, thus forcing him to either hand off patients admitted to those facilities or reroute them farther away.

Alliance filed suit in federal court, alleging antitrust violations. In doing so, the practice, which is part of The US Oncology Network, opened a new front in the ongoing battle between oncology practices fighting to stay independent and hospital systems constantly on the hunt for new revenue, according to those who took part in the panel, “Hospitals: Friend or Foe? Examining Independent Practice-Hospital Relationships & Trends,” which opened the 2024 Community Oncology Alliance Community Oncology Conference in Orlando, Florida.

Joining Chasky, who served as moderator, were:

• Barak Bassman, JD, of Blank Rome, LLP, of Philadelphia;
• Jeff Hunnicutt, of Highlands Oncology Group, of northwest Arkansas;
• Martin Palmeri, MD, MBA, Messino Cancer Centers in Asheville, North Carolina; and
• Jeffrey Vacirca, MD, FACP, of New York Cancer & Blood Specialists.

The panelists shared varied experiences with hospitals in their regions, from a highly productive collaboration that Vacirca’s practice launched during the pandemic with Memorial Sloan Kettering Cancer Center (MSK), which helped MSK monitor its off-site patients, to the situation between Alliance and Jefferson that landed in federal court and on the front page of The Philadelphia Inquirer.

What’s key, the panelists said, is that hospitals behave based on what works to their financial advantage—and that will shift over time. Patient concerns can take a back seat amid the hardball tactics, they said.

Palmeri said he’s experienced this firsthand. Years ago, he joined a physician group with a service agreement with the regional hospital that allowed for a faster pace of growth than would have occurred organically based on referrals. This was a 340B hospital, but it was not-for-profit. When a for-profit entity took over, it wanted all the physicians to become direct employees, but many of the terms were unacceptable to the physician group.

The hospital parted ways with the longtime oncology group and sought to replace all the doctors, withheld bonuses, limited access to patient records, and wouldn’t let the doctors tell patients what was happening.

“Now, fortunately, as things unfolded, all the doctors banded together, our staff banded together, the community that supported us banded together,” Palmeri said. “And in about 6 months, we were able to open up 5 new clinics across western North Carolina and get our practice fully up and going again. We noticed that in that first year after we left, our referrals went up by about 30%, and our practice continued to grow over the course of the last few years. So, what I'm pleased to say at this point is that we've had a very successful extraction from the hospital system.”

Hunnicutt, in a rapidly growing part of the country, enjoys a peaceful relationship with the local hospital at this stage. “We’re in a unique position of being a community oncology practice with no competition in a market,” he said. “What that leads to is that we get to play the game of grow as fast as the region can grow, it's different set of challenges—there are challenges nonetheless—but consequently, our relationship with our hospitals is productive.”

There are 3 hospital systems in the area, and Hunnicutt said when his practice adds a service line such as surgery, it takes the approach of not affecting any one system more than the others. “It makes everybody just a little bit angry,” but not enough for any of the systems to walk away from the relationship.

Vacirca, operating in the New York metropolitan area, has a completely different dynamic of having multiple National Cancer Institute–certified centers around him. He cautioned against taking today's relationship with a hospital for granted. "Because tomorrow, there's another administration that's going to completely change that which you had already planned,” he said. “We're seeing this with some of our major relationships now. Nothing is stable, and it's all dictated by what system they're coming from.”

The Jefferson-ACS Litigation

Jefferson’s move against ACS sent off shock waves across community oncology that are still being felt. ACS was not granted a temporary restraining order, Chasky said, even though the judge was sympathetic. The proofs needed to show damage under antitrust law and the harm being done to continuity of patient care are not the same.

“What I learned: there's no playbook for this,” he said. “It's not like any legal team made drastic mistakes here…. We were literally ground zero for this.”

Chasky said many of the problems are created by hospitals’ pursuit of 340B status, which allows hospitals to buy prescription drugs at discount and bill all payers at regular prices. This financial strategy helped fuel the ASC dispute. The lawsuit documents how Jefferson-Northwest facility received 340B designation for a new infusion center just before ACS lost its lease in 2020; however, the independent physicians were able to find new space and continue practicing. The effort to capitalize on 340B proved a financial bust because the ACS doctors continued to get a significant number of referrals from Jefferson hospitalists, Chasky said, until Jefferson took additional steps to reduce referrals.

ACS has found “work arounds,” including gaining hospital privileges under internal medicine instead of oncology, he said. Surrounding hospitals such as Fox Chase, Trinity Health, and the University of Pennsylvania have been supportive. ACS even had a “world class” surgeon, Mark Shahin, MD, FACOG, FACS, come to the practice from Jefferson.

“We've actually gotten more successful,” Chasky said. “All of a sudden, now I'm walking into the hospital at 7 PM at night to see my patient in a hospital where I have don't have oncology privileges," and the hospital staff, the nurses, the maintenance staff, and people in the community see this and end up making referrals.

"They're like, ‘Oh, I want those doctors that don't even have privileges in this hospital, they come in at 7 PM at night to take care of me,'” he said.

The Health System Mindset

Bassman, who represents large health systems, said these entities don’t necessarily see community oncology practices as the competition—they have their eyes on competing health systems. They do, however, stay focused on 4 areas, which he called “hearts, brains, bones, and oncology,” as prime revenue streams. “That’s what keeps the lights on—everything else loses money.”

Over the past decade, the health system’s more typical encounter with independent oncology is that a practice is failing and wants to be bought out, he said. “That is a regular experience of a CEO, particularly in a big system."

Because of resource disparities, “They’re going to fight with you. They can outlast you,” Bassman said. And, fair or not, he said immunity statutes at both state and federal levels tend to favor hospitals. So, how can community oncology fight back?

• Hospital boards care about quality and safety, so any issues that can be presented on these fronts will gain attention.
• Finding allies on the medical staff will make hospital leadership less likely to move against an independent practice. Large practices that have good relationships with the hospital CEO tend to fare better than solo practitioner.
• Especially in suburban and rural markets, board members are community leaders and have the real power in the health system.

Vacirca pushed back a bit on Bassman’s assessment, saying that community oncology has competed very effectively in recent years. “We don’t have to live off the crumbs of the hospitals’ table,” he said.

And Hunnicutt said despite the challenges, community oncology is still a better proposition than a hospital for a physician who wants control over his or her income, practice, and lifestyle. “You're never going to have an opportunity for more directional input into your organization as you do in independent practice. The data is clear on the cost of care in independent practice vs [the] hospital,” he said.

He did admit that community oncology needed to "crack the nut" and once and for all demonstrate that community oncology has superior quality.

“If we can crack that nut, honestly, it's an overwhelmingly convincing sales pitch to say, 'come and join the independent system,'" Hunnicutt said. "[Physicians] didn't spend 4 years of college, 4 years of medical school, 3 years of residency, 3 years of fellowship to be led around them by the nose by some mid-level bureaucrat administrator in a hospital system and be told what to do."