Standalone Cancer Centers Challenged by Shifting Healthcare Landscape

Standalone cancer centers may be particularly vulnerable to shifting market pressures and healthcare reforms, and if they hope to survive they must demonstrate value and align themselves with the right partners, a new report says.

"It's the basic blocking and tackling response. How do you deliver greater value of quality and cost, and what is the strategic response, what is the right alignment to preserve long-term viability?" says Andy Ziskind, MD, a cardiologist and author of the brief Can Standalone Cancer Centers Survive?, published by Huron Consulting Group.

Ziskind believes that standalone cancer centers will have a harder time finding patients with the advent of integrated care.

"As health systems are integrating themselves more to create truly integrated delivery systems and they are hiring oncologists, they are trying more and more to keep their patients in the system," he says. "There is more resistance to cancer patients traveling to freestanding cancer centers. Also, a less but still relevant piece is the insurance models of narrow networks are growing. Narrow networks are here to stay, and that may limit access for some patients from an insurance perspective to go out of network."

The competition for patients will increase in an environment of continued downward pressure from government and private payers. And even as those reimbursements decline, cancer centers and other healthcare providers will see costs continue to rise. "So, there is a need to be more efficient operationally. That is in terms of basic nuts and bolts and in terms of reassessing how to create better clinical care processes," Ziskind says.

While the need to improve value and efficiency isn't limited to standalone cancer centers, Ziskind says the centers are particularly vulnerable because of their size. "In theory, if there were a large orthopedic or cardiovascular hospital, the same dynamics would apply," he says. "But for the most part, the imaging centers, the behavioral health centers, even the orthopedic ambulatory centers, tend to be smaller and more responsive to local market dynamics, whereas a cancer center might get referrals from a multistate region."

Over the next five years, Ziskind says he anticipates that standalone cancer centers will follow the rest of the healthcare sector and consolidate. In the meantime, he says, cancer centers have to return to the basics around clinical and financial alignments.

"The first thing is there has to be a rigorous, disciplined focus on becoming cost-effective and generating value in the sense of quality over cost—true clinical value and cost-effectiveness. That has to be embedded into the way they do their work," he says. "The other is reevaluating their affiliations and alignment models. That may mean affiliations or mergers or acquisitions. But the cancer center needs to be assured that there is a primary and a specialty referral source that is durable."

While healthcare reform and market pressures will create challenges, Ziskind says they will also produce opportunities for high performers, particularly specialists.

"Under healthcare reform and payment reform and accountable care, the ideal is that the patient should go to the right place at the right time for the right treatment by the right people," he says. "That will tend to favor the highly specialized treatments, like bone marrow transplants or stem cell transplants or potentially proton therapy. What it will discourage is routine cancer care being delivered at the freestanding cancer center—things that can be done locally."