Each year, more than a million Americans are diagnosed with cancer.
Technological innovations during the past decade mean that the vast majority of those patients will receive most of their care on an outpatient basis.
Increasingly, for-profit networks of ambulatory-care cancer centers are providing that care. Although some hospitals view the clinics as important pieces in the cancer-care provider network, offering opportunities for partnerships, others see them as interlopers drawing off lucrative business and threatening continuity of patient care.
From 1996 to 1998, outpatient cancer centers doubled to 806, according to SMG Marketing Group, a Chicago-based healthcare information and consulting firm. From 1997 to 1998, hospital-based centers saw their market share increase to 23% from 16%, according to SMG.
Despite those increases, experts believe the field of outpatient cancer centers is still far from crowded.
"Unfortunately (cancer treatment) is a growth business, and there is enough market share to go around," says Christopher McFadden, a Richmond, Va.-based analyst for First Union Capital Markets.
Not-for-profit, full-service academic cancer centers, such as Houston's M.D. Anderson Cancer Center, Seattle's Fred Hutchinson Cancer Research Center and New York's Memorial Sloan-Kettering Cancer Center, will continue to play a crucial role in patient care and treatment development, industry watchers say.
But an estimated 85% of cancer care is delivered in community-based centers or physician's offices, and for-profit chains continue to add facilities.
The impending merger of the nation's two largest cancer management companies is the most visible sign of the growth in outpatient cancer treatment facilities.
Top players teaming up. In a $715 million transaction expected to be completed in June, Houston-based American Oncology Resources and Dallas-based Physician Reliance Network will merge to form an oncology physician practice management company with 750 affiliated doctors treating an estimated 13% of all new cancer cases in the U.S.
The new US Oncology will also run the nation's largest network of outpatient cancer centers, with 52 sites in 24 states at inception and a dozen centers in the pipeline.
Dale Ross, American Oncology Resource chairman and chief executive officer, and Lloyd Everson, M.D., company president, will keep their posts in the new firm. Ed French, Physician Reliance's president and chief operating officer, will become the merged company's COO. Joseph Bailes, M.D., Physician Reliance's medical director and president of the American Society of Clinical Oncologists, will be an executive vice president at the new company.
American Oncology, Physician Reliance and other cancer management companies say their centers make access to cutting-edge care more convenient.
"We bring state-of-the-art cancer care closer to (the patient's) house," providing the same quality of care as the larger academic centers, says Mark Ahern, American Oncology's vice president of development.
Ellen Stovall, executive director at the National Coalition for Cancer Survivorship, says that claim is entirely possible. She says no data exist showing that a patient is necessarily better served at one type of cancer center compared with another.
"There is no doubt that there are academic centers that have grown up around specialty care in cancer and do much better (with certain cancers) because they see so many of them," she says, referring to a recent Institute of Medicine study showing that medical centers that perform certain procedures in high volumes tend to see better outcomes from those procedures.
Many of the procedures the Institute of Medicine studied, however, including surgery for pancreatic cancer and esophageal cancer, are done on an inpatient basis, and it is unclear how the organization's findings apply to patients with more common types of cancers treated at outpatient centers.
Nevertheless, "there really isn't any quality assurance" for either the large academic centers or the smaller community-based practices, including the outpatient centers that Physician Reliance and similar companies run, Stovall says.
Martin Rayber, M.D., vice president of strategic and business planning at M.D. Anderson, agrees that centers like Physician Reliance can provide good care. "Particularly in cities where there isn't easy access to academic centers, (for-profit cancer centers) probably provide better cancer care than is otherwise available."
In a recent review of patients treated at M.D. Anderson, oncologists there determined that up to 80% of patients could have been treated just as well at outside centers, Rayber says.
Collaboration, competition. While M.D. Anderson competes with outpatient cancer centers for some patients, particularly those eligible for certain clinical trials, Rayber says the rivalry is tempered by collaboration.
"It's hard to feel threatened by PPM companies because they are often our referring physicians," he says.
Collaboration is the watchword for many outpatient cancer-care clinics. Physician Reliance, for instance, runs 34 centers in 12 states. Fifteen of those centers are on or next to a hospital campus, according to company President French.
Some of the 50 centers operated by Response Oncology, a Memphis-based cancer center company, are also located on hospital property, with mixed results for the hospitals involved.
The Baptist-South Miami Regional Cancer Program, run by Baptist Health Systems of South Florida, treats about 3,000 new cancer patients per year. Baptist Hospital in Miami reports that since 1995 it has lost most of its outpatient chemotherapy business to the Response Oncology physician practice on the hospital campus.
But the arrangement also has its upside. The center expands Baptist's patients' access to new treatment protocols and creates a ready referral base for hospital services, a Baptist spokeswoman says.
In other markets, the picture is more adversarial. When a Physician Reliance cancer center opened across the street from HealthEast St. Joseph's Hospital in Maplewood, Minn., the hospital lost most of its oncology staff and 40% of its outpatient radiation treatment volume.
Phyllis Novitskie, associate administrator at the hospital, says that when cancer patients diagnosed at the hospital are "plucked out and moved into the competition for outpatient chemotherapy and radiation," it interrupts the continuum of their cancer care.
She also notes that the hospital used to depend on margins from its outpatient business to support nonreimbursed care, including extensive psychosocial support and other nonmedical services. HealthEast has since contracted with another group of oncologists and is slowly restoring its treatment volume.
Trial and error. Physician Reliance and other for-profit cancer companies contend one advantage they offer over other treatment sites involves clinical trials, which many in the industry consider a key measure of access to state-of-the-art care.
About 75% of clinical research is conducted through community medical practices. Many trials are offered simultaneously through a handful of unaffiliated academic centers, with physicians at each center enrolling patients at their own pace.
Some community hospitals are reluctant to participate in clinical trials because of the cost, although new evidence indicates clinical trials may be less costly than previously thought. A study published in the May 19 Journal of the National Cancer Institute by Rochester, Minn.-based Mayo Clinic oncologist Steve Alberts, M.D., and others showed the five-year cost of treating patients enrolled in clinical trials is about 10% higher than the cost of standard care.
By contrast, for-profit cancer centers have tended to see clinical trials as money-makers, contracting with pharmaceutical companies to enroll appropriate patients in trials and collect the necessary data.
Steve Benner, M.D., group director at Bristol-Myers Squibb Co.'s pharmaceutical research institute, says cancer center networks make it easier for the company to complete a large trial rapidly because they have a high volume of patients.
But he points out that the doctors participating in trials run by the for-profits are often the same ones who participate in trials sponsored by the National Cancer Institute. For-profit cancer centers may not actually expand the number of doctors performing clinical trials or increase overall patient access to such trials, he says.
So far, patients who seek treatment through such centers do not seem more likely to be enrolled in a clinical trial.
In 1999, French says, Physician Reliance plans to enroll 3,000 patients in clinical trials, out of a total of 60,000 new patients, or about 5%.
Even if the company achieves that goal, it's only slightly higher than the 3% national average estimated by the National Cancer Institute. And it's much lower than that claimed by some federally funded cancer centers. M.D. Anderson's Rayber says that on average about 15% of new and existing patients treated at the center are enrolled in a clinical trial in any given year.
American Oncology Resources' Ahern acknowledges that the company's track record for clinical trial enrollment is not as good as it would like.
"But as a network we are going to have access to more and more clinical trials protocols because of our relationships with the major drug companies," he says.
Help on line. To expedite that access, American Oncology is banking on a new service matching clinical trials with patients. Launched last fall, SecureNet is a World Wide Web-based system that screens patients for eligibility to participate in trials currently run from its centers.
The federal government also maintains a database of clinical trials. It's available to any doctor or patient with Internet access.
Unlike the federal database, called PDQ, American Oncology's system will cross-reference trial enrollment criteria with patient data and then send e-mails to doctors each time the system determines a patient is eligible for open trials conducted through the company's network. But SecureNet currently doesn't match patients with trials conducted outside the American Oncology network, including many listed in PDQ.
Response Oncology also is developing a Web-based system that will help affiliated doctors identify which patients are eligible for ongoing clinical trials at its centers.
All patients with high-dose chemotherapy at Response Oncology centers are enrolled in clinical trials, most of which are sponsored by pharmaceutical companies. That's about 650 patients last year, says CEO William West.
The centers, West explains, provide a "one-stop reproducible program for high-dose chemotherapy for breast cancer."
West says the cookie-cutter approach to the outpatient centers allows Response Oncology to "lower the cost without jeopardizing (patient) safety."
The company's strategy has been to secure contracts with managed-care payers on a case-rate basis, agreeing to provide or procure all inpatient and outpatient treatment for an all-inclusive price.
"It's a real soup-to-nuts program," West says.
But financially, times have been bumpy for the company. While American Oncology and Physician Reliance were profitable last year, Response lost $17 million, or $1.45 per share, on revenues of $128 million in 1998. Losses stemmed from three money-losing physician practices, two of which it shed this year. In this year's first quarter, Response turned a modest profit and may be back on track to financial health.
In 1998, American Oncology earned $30.2 million, or 63 cents per share, up 32% from the previous year's gain of $22.9 million, or 50 cents per share. Revenues rose 42% to $456 million.
Physician Reliance earned $29.8 million, or 56 cents per share, in 1998, compared with a net loss of $7.2 million, or 14 cents per share, in the previous year. Revenues rose 25% to $398 million.
Lawrence Piro, M.D., president and CEO of Los Angeles-based Salick HealthCare, is also focusing on increasing clinical trials enrollment for his 12 comprehensive outpatient cancer centers. Salick centers are located on or near hospital campuses in four states. A spokeswoman declined to specify the financial nature of the hospital affiliations.
In 1997, United Kingdom-based Zeneca Group completed its buyout of the Salick cancer centers for $434 million. Zeneca is the parent company of Zeneca Pharmaceuticals, a major producer of chemotherapeutic drugs in the U.S.
Salick's Web-based clinical trials matching system will be launched in June when the company opens a permanent home for its flagship New York center, automatically informing doctors when their patients are eligible for open clinical trials. The New York center will be allied with Saint Vincents Hospital and Medical Center and is currently housed in the hospital.
Like American Oncology, Salick will match patients only with trials in which the cancer center's doctors are participating.
Piro says that such time-savers are crucial. "In oncology, most doctors want to do clinical research. But the time spent researching all of those papers and facts (to match patients to trials) is too much."
One longtime critic of for-profit medicine, Harvard Medical School associate professor Steffie Wollhandler, M.D., voices concerns about the close relationships between cancer treatment and drug companies, and in particular Salick's relationship with its sister pharmaceutical company.
"It's really important for physicians to keep their independence from their pharmaceutical companies," she warns. Close ties with pharmaceutical companies could create financial incentives for doctors to use a particular drug, she says.
But Piro says Zeneca doesn't use the centers as conduits for its drugs.
"We are a business that makes sense on our own," Piro says. "Investigators in our company might have one or two research studies going on (with Zeneca products) out of a total of 50 or 60, just like if we weren't owned by them (Zeneca)."