When he completed his fellowship at Fox Chase Cancer Center in Philadelphia, Moshe Chasky, MD, joined a small five-person practice that rented space from the city’s Jefferson Hospital in Philadelphia. The arrangement seemed to work well for the hospital and the small practice, which remained independent.
Within 10 years, the hospital sought to buy the practice, Alliance Cancer Specialists.
But the oncologists at Alliance did not want to join Jefferson.
The hospital eventually entered into an exclusive agreement with its own medical group to provide inpatient oncology/hematology services at three Jefferson Health–Northeast hospitals and stripped Dr. Chasky and his colleagues of their privileges at those facilities, Medscape Medical News reported last year.
said Jeff Patton, MD, CEO of OneOncology, a management services organization.
A 2020 report from the Community Oncology Alliance (COA), for instance, tracked mergers, acquisitions, and closures in the community oncology setting and found the number of practices acquired by hospitals, known as vertical integration, nearly tripled from 2010 to 2020.
“Some hospitals are pretty predatory in their approach,” Dr. Patton said. If hospitals have their own oncology program, “they’ll employ the referring doctors and then discourage them or prevent them from referring patients to our independent practices that are not owned by the hospital.”
Still, in the face of growing pressure to join hospitals, some community oncology practices are finding ways to survive and maintain their independence.
A Growing Trend
The latest data continue to show a clear trend: Consolidation in oncology is on the rise.
A 2024 study revealed that the pace of consolidation seems to be increasing.
The analysis found that, between 2015 and 2022, the number of medical oncologists increased by 14% and the number of medical oncologists per practice increased by 40%, while the number of practices decreased by 18%.
While about 44% of practices remain independent, the percentage of medical oncologists working in practices with more than 25 clinicians has increased from 34% in 2015 to 44% in 2022. By 2022, the largest 102 practices in the United States employed more than 40% of all medical oncologists.
“The rate of consolidation seems to be rapid,” study coauthor Parsa Erfani, MD, an internal medicine resident at Brigham & Women’s Hospital, Boston, explained.
Consolidation appears to breed more consolidation. The researchers found, for instance, that markets with greater hospital consolidation and more hospital beds per capita were more likely to undergo consolidation in oncology.
Consolidation may be higher in these markets “because hospitals or health systems are buying up oncology practices or conversely because oncology practices are merging to compete more effectively with larger hospitals in the area,” Dr. Erfani told this news organization.
Mergers among independent practices, known as horizontal integration, have also been on the rise, according to the 2020 COA report. These mergers can help counter pressures from hospitals seeking to acquire community practices as well as prevent practices and their clinics from closing.
Although Dr. Erfani’s research wasn’t designed to determine the factors behind consolidation, he and his colleagues point to the Affordable Care Act (ACA) and the federal 340B Drug Pricing Program as potential drivers of this trend.
The ACA encouraged consolidation as a way to improve efficiency and created the need for ever-larger information systems to collect and report quality data. But these data collection and reporting requirements have become increasingly difficult for smaller practices to take on.
The 340B Program, however, may be a bigger contributing factor to consolidation. Created in 1992, the 340B Program allows qualifying hospitals and clinics that treat low-income and uninsured patients to buy outpatient prescription drugs at a 25%-50% discount.
Hospitals seeking to capitalize on the margins possible under the 340B Program will “buy all the referring physicians in a market so that the medical oncology group is left with little choice but to sell to the hospital,” said Dr. Patton.
“Those 340B dollars are worth a lot to hospitals,” said David A. Eagle, MD, a hematologist/oncologist with New York Cancer & Blood Specialists and past president of COA. The program “creates an appetite for nonprofit hospitals to want to grow their medical oncology programs,” he told this news organization.
Declining Medicare reimbursement has also hit independent practices hard.
Over the past 15 years, compared with inflation, physicians have gotten “a pay rate decrease from Medicare,” said Dr. Patton. Payers have followed that lead and tried to cut pay for clinicians, especially those who do not have market share, he said. Paying them less is “disingenuous knowing that our costs of providing care are going up,” he said.