Cancer Care Costs in Different Settings

By October 5, 2017Commentary

Cancer is a common and often-life threatening disease, but new treatments have made it more like a chronic condition or may even cure it.  The costs of these treatments is rising rapidly, however, and the pipeline is full of even more expensive ones.  A report from Xcenda, a unit of AmerisourceBergen, reveals differences in treatment costs depending on the site of service.   (Xcenda Report)   Total cancer costs are estimated to be $170 billion by 2020.  One trend pushing prices up, as it has in other areas of health care, is the purchase of oncology practices by larger hospital systems.  Since 2008, there has been a 121% decrease in community-based oncology practices and a 172% increase in hospital acquisitions of these practices.  Prior research suggests that treatment costs may be 20% to 39% lower in community-based practices.  This would be consistent with general findings that hospitals increase prices charged by the physician groups that they acquire.  For this paper, the Xcenda researchers looked at breast, lung and colorectal cancer patients treated between July 1, 2010 and June 30, 2015, and compared hospital versus community setting for overall costs and utilization, using an IMS database, which was largely composed of commercially insured patients.

The patients were matched to ensure that factors different in hospital setting versus community setting patients were accounted for.  A total of around 6675 patients’ treatment was analyzed.  The average total cost per month was $12548 in a community-based practice versus $20,060 in a hospital oncology practice.  That is a massive difference.  Almost all of this difference was in medical costs, not in the cost of drugs or chemotherapy agents.  Regardless of use of generic or branded agents, chemotherapy costs in the community-based practices was 40% lower, an average per month of $4933 versus $8443 in the hospital groups.  The results were similar for all three cancer types.  And no surprise, the difference was largely accounted for by a huge gap in costs for physician visits, an average per month of only $820 for community oncologists versus $3500 for hospital-based ones for breast cancer, $709 versus $3015 for lung cancer and $538 versus $2791 for colorectal cancer.  There were also slightly higher emergency room visits and inpatient days for hospital-based practices.  The results of studies like this should further buttress policymakers in putting an end to hospital acquisitions of physician practices.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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