Dr. David Eagle: The Hospital Squeeze

DC EKG

Dr. David Eagle discusses the alarming decline of independent oncology practices, which have dropped from 85% of cancer care in 2000 to roug

Key takeaways

• Independent oncology practices have seen a massive decline from 85% market share in 2000 to approximately 45% today.
• Hospital-based billing models significantly increase patient costs, with some co-pays rising from $50 to over $300 for the same service.

Main topics

• Hospital consolidation
• Oncology reimbursement policies

Notable quotes

We've got these drugs that are Ferraris, but we're driving on dirt roads.

Conclusion

Preserving independent medical practices is essential to maintaining a

Transcript preview

Speaker 3 (0:00) You know, her copayment went from like $50 to $70 a visit to over $300 for a visit. And they would just, you know, like send us messages saying, look, I want to keep seeing you, but I can't afford to do this. And they had to find other doctors. And a lot of times the question for me was, what other doctors in the community would you recommend? You know, same office, same doctors, same patients. I mean, you get the same service, and the only thing that really changed was the cost. The efficiency went down, too. I think that's just an example of what the health care system doesn't need anymore. But yet, I think that's played out in hundreds of clinics across the country. Speaker 1 (0:30) This is DCEKG, exploring the intersection of politics and health care by diagnosing Washington and prescribing solutions. We take a deep dive into the legislation, regulation, and innovation. impacting policymakers, providers, and patients. Now, America's health policy expert, Joe Grogan. Speaker 2 (0:54) Welcome back to DCEKG. I'm your host, Joe Grogan, joined today by Dr. David Eagle from New York Cancer and Blood Specialists. He's also the vice president of the American Independent Medical Practice Association, past president of Community Oncology Alliance, and your board-certified hematologist-oncologist, and you've got over 20 years of experience. I had to read all that because it's Speaker 3 (1:18) a Speaker 2 (1:18) lot of stuff here, doctor. Thanks so much for joining the show. Speaker 3 (1:21) Joe, thanks for having me. Appreciate it. Speaker 2 (1:22) You have a tremendous broad area of expertise and a lot of experience in the medical community. I want to start by asking you why independent medical practice, especially in oncology, is so important in your view for the practice of medicine, for patients, and for our healthcare system. Speaker 3 (1:44) Yeah, I think independent practice is both important for community oncology. I think it's also important in general medicine. You know, I think it just means a lot when doctors actually have more say and control over how patients are managed. I've been on both sides of this over my career. A lot of my career has really tracked some of the policy reimbursement changes that have come out of Washington, D.C. You know, doctors that control the practice. Every time I've been in a private oncology practice, we've always had a policy to have new cancer referrals. We offered an appointment in the office within two working days. When I worked for a hospital system, which I did for three years, I had no control over that. When I, you know, when I work as an independent office, I bill under the physician fee schedule, there's no facility fees. When I worked for a hospital system, they pivot to hospital-based billing and patients paid massively higher co-pays to come see the same doctor, get the same service. in the same building, but just paid more. Nothing changed other than the payment that the patients made. And I lost a lot of patients that way. You know, I think independent medicine preserves competition, which we really need in our healthcare system today. And also, you know, one thing I've really, really noticed is that, you know, independent doctors really grow roots in the community. You know, they don't, you know, hospital administrators, they tend to move on to different positions after a few years. There's nothing wrong with that. That's just kind of part of their career track. But I've seen more of my physician colleagues migrate into the hospital systems. In fact, they kind of parallel that. They don't tend to grow roots in the community. They don't really tend to put down roots and really are in the community for the long haul. When I first started my private practice in Charlotte, you know, almost. 26 years ago, there was no idea that we would ever leave. I was a second partner in the practice, a senior partner, and I were there, and none of us ever thought we would ever leave the practice or move on to any other thing. So I think there's lots of advantages, but I think lower cost care, high quality care, focusing on the patient the way the doctors really know to give them care, and preserving competition, I think those are just critical things, particularly as our healthcare system gets more and more consolidated. Speaker 2 (3:37) So what's the state of current independent oncology practices now? Speaker 3 (3:42) So when I started in 2000, community independent medical practices were 85 % of cancer care. It depends on how you define the number, but that's probably somewhere between 40 and 50 % since that time. And there's just been a kind of a steady migration, you know, from the community practice setting into hospital-based employment. It really started in 2003 with the Medicare Modernization Act when the old AWP system transitioned to the ASB system. That was the start of it. But then more things followed. They applied the sequester to the ASP system. So the add-on payment of 6 % became 4.3%. Meanwhile, hospitals were getting the benefits of 340B, increasing consolidation in the hospital systems, increasing compliance issues for private practices like macro MIPS and meaningful use requirements. Really what happened was you just got this very unlevel playing field develop. And, you know, it was just very hard for practices to remain independent. That's what happened to me at my practice in Charlotte. We basically, you know, had offers from one of the hospital systems over for years. We weren't particularly interested, but they knocked on our door one day and said, you know, you really ought to think about joining us because if you don't, we're going to hire doctors to compete against you. We're at least going to have to think about hiring doctors to compete against you. And we were a three-person practice at that time. What do you mean hiring a doctor? Like setting up? Setting up their own hospital-based practice nearby to compete against you. A Speaker 2 (5:05) clinic down the street. Down Speaker 3 (5:06) the street. And then Speaker 2 (5:07) they would be able to refer patients in. Speaker 3 (5:10) Exactly. So they would have the benefits of higher commercial reimbursement. They would have the benefits of 3.40B reimbursements. And just as you mentioned, the other practices and other specialties that they had acquired over the few years, they could direct the referral specifically to their doctors. Speaker 2 (5:23) Right. And we Speaker 3 (5:24) knew that could happen. In-network as opposed to out-of-network. And we knew that they could do that because they had done it to our friends in other parts of the city. So we knew that that threat was to be taken seriously. So we ultimately did join the hospital system. And a year later, they pivoted the hospital-based billing that I described. So that's kind of been the story. So my story is an example of what's been happening around the country for years now, not just a few doctors, but the hundreds, if not thousands of oncologists. Speaker 2 (5:52) So you, when they took over your practice, obviously don't reveal details if you can't reveal, but it's a year before they switched you to hospital-based. They did. So that was a transition period. And then suddenly... your patients are faced with higher co-pays because of that? So the hospitals will charge Speaker 3 (6:09) facility fees and not all insurance plans will pay the facility fees. So some of my patients, for example, a patient of mine with breast cancer. Her copayment went from like $50 to $70 a visit to over $300 for a visit. And they would just send us messages saying, look, I want to keep seeing you, but I can't afford to do this. And they had to find other doctors. And a lot of times the question for me was, what other doctors in the community would you recommend? So that was the – and it just – it's kind of a – you don't get that many natural experiments in healthcare, but this was a fairly clean natural experiment. It was the same office, same doctors, same patients. coming to get the same service. And the only thing that really changed was the cost. The efficiency went down, too, and we'll come to that. But that, you know, I think that's just an example of what the health care system doesn't need anymore. But yet, I think that's played out in hundreds of clinics across the country. Speaker 2 (6:59) So I want to go back to something, rewind this a little bit, for those... listeners who don't understand, can you just walk through what happened with the AWP to ASP switch and how it changed your reimbursement? Speaker 3 (7:11) Yeah. So it was in 2003 as part of the Medicare Modernization Act. And it basically just shrank the add-on payment that doctors get for drugs. And, you know, in oncology, the typical oncologist has about eight staff for every medical oncologist. It's a, you know, we need a lot of support to help care for our patients. And it's only getting worse. But things like the fee schedule, the infusion codes just don't cover those costs. So kind of the first part of the dynamic is when they shifted from average wholesale price reimbursement to average sales price reimbursement. It was just a net reduction in revenue. And some practices were able to kind of figure out ways to survive. Others didn't. And that was kind of the beginning of the trend. You know, that was the first thing to kind of set off that wave of migration to the hospital. But a lot of things have piled onto that since then. Speaker 2 (7:54) And then you mentioned the sequester, which was, again, a budget-saving move. Yes. It used to be ASP plus six. They whacked it down. Doctors then get screwed. Now, there's a lot of economists in health care will say that the Part B system is convoluted and not the best economic model. Part D is a better model. And maybe they don't appreciate the real world ramifications of what they're talking about when they, because all these things interact, right? I mean, the oncologist, to your point, they purchase the drugs through Part B, Speaker 3 (8:28) and Speaker 2 (8:29) they have to hold on to those drugs for a while. And then you're subsidizing all this other care associated with it. So it's not just about gravy on top and figure out which is a more expensive drug that I can use so that I can get a higher percentage off of the price, right? Speaker 3 (8:47) No, it's not like that. Speaker 2 (8:48) And, Speaker 3 (8:49) you know, I mean, again, we first oncologists, we've never, ever set up the reimbursement system. So, you know, the ASP is never something that we asked for. It's what we got and we had to adapt to it. And I think the one thing oncologists have always tried to do is to adapt. You know, for Medicare patients, there's only three lines of revenue to support the practice. There's the fee schedule, there's the infusion codes, and there's the add-on payment under the ASP system. And if people don't like the ASP system, they can present alternatives. But right now, that's what we have. And if you look at the fee schedule for the last – particularly when you zoom out is the only way to understand it. It's been just terribly suffering compared to inflation over the last 20 years. When the 2015 macro law went into effect, there were no inflation updates into the fee schedule. So doctors somehow have to live in a world. where, you know, we pretend that inflation doesn't exist. So they call it the physician fee schedule. I really wish they would call