Tough Times for Small Practices

How one oncology practice views its challenges

Houston, TX—Hard times are getting even tougher for small oncology practices, said Leonard Natelson, Chief Executive Officer, Hematology/Oncology Associates, Rockland, NY, at the Second Annual Conference of the Association for Value-Based Cancer Care.

Hematology/Oncology Associates is an independent practice of 5 physicians, which in the Northeast region is considered “large,” Mr Natelson said. He cited 5 main challenges facing community oncologists today:

  • The gridlock in Washington, DC, and the lack of progress in fixing the sustainable growth rate (SGR)
  • Drug shortages
  • Implementation of HIPAA (Health Insurance Portability and Accountability Act of 1996) 5010 and ICD-10 (International Classification of Diseases, Tenth Revision)
  • Reduced reimbursements
  • Leadership in the transformation of cancer care.

The inability to settle the SGR continues to plague practices such as Mr Natelson’s. With a “lame duck” Congress around the bend, progress this year seems doubtful, he said. In addition, should the SGR not be “patched” again, providers will be hit with a 30% cut in reimbursement in January 2013, and this, compounded by other potential economic difficulties, will worsen the payment delays that continually threaten the fiscal viability of oncology community practices.

Mr Natelson suggests that using bundled payments is not the solution to the current fiscal unpredictability, because this approach eliminates flexibility. “With the patients we see, this would be problematic,” he said.

Nor is hospital-based cancer care the answer. “Does Congress really believe that pushing physicians to a hospital setting will cut costs for Medicare? Costs are 34% higher in the hospital for the same type of patient visit,” Mr Natelson said. “This was tried 15 years ago, and it did not work” so care was pushed back into the community. “This time, there would be fewer community practices to push back out to.”

Further driving practice inefficiency of community practice is the drug shortage crisis. In 2005, 61 drugs were in short supply; this number now approaches 250. The causes include low profit margins for generic drugs, few manufacturers, and poor quality control. “I am chasing my tail all the time,” Mr Natelson said.

Conversion difficulties with HIPAA 5010 compliance and the future ICD-10 coding system create additional work, without increasing revenue. “My practice spent $30,000 on information technology infrastructure upgrades, and this does not generate more revenue for me, but it does generate expense. I am also hearing that practices that have converted to 5010 are getting erroneous denials of claims, which is delaying payments,” he said. “Some practices are still waiting for payments from November.”

A decrease in reimbursement is an obvious challenge. Of Mr Natelson’s practice’s drugs, 46% are “under water,” and this makes it “much more challenging to provide the kind of care we want to provide,” he said. “We need wiggle room so that our physicians can spend time with patients.”

His practice is also experiencing more denials caused by medically unlikely edits. “Any time we have to pay for a drug up front, and we do not get reimbursed in time to pay that bill, these denials put us further behind,” he added.

The last of the 5 issues considered most critical by Mr Natelson pertains to leadership in the transformation of cancer care. The question is whether community-based oncology will continue to be relevant in the delivery of cancer care, he said.

“Two hospitals are after me, as is another large consortium. I do not want to be owned by a hospital. This will only drive up cost, not improve the quality of care I give,” he maintained.

?Ironically, community oncology is in the best position to operate efficiently and “bend the cost curve,” Mr Natelson said. “We are a small business. It is more real time in community practice. We have to watch what we spend, what we take in, make sure people pay us. We do not have deep pockets like the large institutions that get by if they are not paid for 6 weeks. I would hate to see all oncology practices move to the hospital setting, and then we figure out that it costs more —which is something we already know.”

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