02/05/2015 04:32 pm ET Updated Apr 07, 2015

The Danger in Consolidating Cancer Care

Our nation's hospitals are contributing to the escalating cost of cancer care.

Over the past eight years, 313 cancer treatment facilities have closed and 544 community cancer practices have been acquired by or affiliated with hospitals. According to the Community Oncology Alliance's 2014 Community Oncology Practice Impact Report, this constitutes an 82 percent increase in cancer clinic closings and a 143 percent increase in consolidation into hospitals since the first report in 2010, which reported on activity from 2008 to 2010.

The sad reality is that the 340B drug discount program, which provides a very valuable safety net for helping to ensure that patients receive needed medical treatment, is being unfairly used by some hospitals to acquire physician-owned community cancer clinics. These acquisitions add to hospitals' operating profits by creating incentives that can be detrimental to patient care and that have led to increased costs for Medicare, insurers, and, more importantly, patients.

In 2005, 87 percent of chemotherapy was administered in community cancer clinics, but by the end of 2011 that number declined to 67 percent. This is because current Medicare policy incentivizes care provided in more expensive hospital outpatient departments and creates access barriers to cancer care -- especially in rural areas. Further, sequester cuts to cancer drug reimbursement have forced cancer centers to refer patients to the more expensive hospital outpatient departments.

Community oncologists across the nation have argued for site payment parity, whereby cancer care is paid for the same regardless of the setting. However, the Centers for Medicare and Medicaid Services has ignored the recommendations of MedPAC and members of Congress and is instead creating further payment disparity that is increasing the cost of cancer care.

What we know is that the consolidation of community-based oncology service providers into large hospital systems makes chemotherapy and other cancer treatments more complicated and more expensive.

Costs for cancer treatment at hospital outpatient centers have skyrocketed upwards of 53 percent higher than the costs of treatment by community oncologists, according to a 2013 study by Milliman.

What's more, cancer care delivered in hospital outpatient departments costs Medicare $6,500 more per beneficiary on an annualized basis versus care provided in physician-owned community cancer clinics. Hospital-based care also costs seniors $650 more in out-of-pocket co-payments compared to community-based care.

A recent Bloomberg article echoed what we have been saying all along: "[P]atients in some areas of the country may have difficulty finding their services as small, rural practices close and the doctors join larger companies."

Nearly 20 percent of Americans live in rural areas; and if the only community cancer clinic in a rural town gets absorbed by a hospital, a morning treatment may evolve into a daylong excursion. And when the patient finally reaches the hospital, the same services they once got from their community specialist have now drastically increased - leaving them further buried in medical costs.

It took nearly 50 years to build this country's cancer care delivery system. With so many patients to treat, it is dangerous to let consolidation continue as the norm.

Congress needs to pass Medicare and 340B reform legislation to stabilize the cost of cancer care regardless of the site of delivery. They need to recognize that we cannot continue to favor the large hospital networks over the boots-on-the-ground cancer specialists in our communities. Continuing on this path will be costly and potentially harmful for Americans needing cancer treatment.