Despite closing two of its five hospitals this year, Cancer Treatment Centers of America is poised for growth, its CEO says.
That won't come in the form of new hospitals, though. Cancer Treatment Centers of America (CTCA), based in Boca Raton, Florida, is expanding its reach beyond the three markets it currently serves by entering into as many as 100 partnerships with healthcare providers in other regions, such as Georgia and Iowa, over the next two years, said Dr. Pat Basu, who has been CEO since 2019.
Experts caution the strategy is not without risks, especially for not-for-profit hospitals that must ensure partnering with a for-profit company like CTCA doesn't conflict with their charitable missions. Hospitals also will need to make sure their patients aren't saddled with large out-of-network bills.
A year ago, CTCA reportedly was exploring a sale to private equity buyers. CTCA didn't deny the rumor at the time, but also didn't divulge much, offering only that it was exploring partnerships with like-minded organizations that could help it serve more patients.
While the company has indeed turned its focus outward to joint ventures or mergers and acquisitions, CTCA was "never proactively looking at a sale," Basu said. "There is no explicit part of our growth plan that says the overall entity is for sale or anything like that."
CTCA currently has hospitals and outpatient clinics in the regions around Atlanta, Chicago and Phoenix. The company sold its Philadelphia hospital to Temple University Health System and shuttered a facility in Tulsa, Oklahoma, last month.
CTCA closed those hospitals because reimbursements in those markets are set by "local monopolies," Basu said. Now, hundreds of patients who were getting care at those hospitals are traveling to CTCA sites in the Chicago, Atlanta or Phoenix areas, he said.
"It's sad for them and it's sad for us, but at some level, to do the quality of care they need, we need the reimbursement to support that," Basu said.
CTCA is having the opposite experience in its three remaining markets, where the company is enjoying double-digit, year-over-year growth, Basu said. As a private company, CTCA is not required to disclose financial data such as revenue or profit. Basu declined to share any details about the company's finances.
Referral deals
Cancer Treatment Centers of America is partnering with traditional acute-care hospitals that offer dozens of specialties by making its cancer doctors available to patients around the country, either in person or via telehealth to enhance their partners' cancer care. Likewise, primary care physicians or orthopedic surgeons from other partner hospitals can perform services at CTCA facilities, Basu said.
"We talk to hospitals all the time and might say: 'We'll do your stem cell transplants, intraoperative radiation and surgical procedures, but for more basic things like primary care and screening, you guys do that,'" Basu said.
Before Regional Health Services of Howard County linked with CTCA, the Cresco, Iowa-based hospital didn't offer any cancer care beyond screenings such as colonoscopies and mammograms, said Katie Rieks, the hospital's chief nursing officer.
Under its agreement, Regional refers cancer patients to CTCA, checking first to make sure their insurance will cover treatments in-network. Regional's patients often travel to CTCA's hospital in Zion, Illinois—about an hour north of Chicago and five hours east of Cresco—for an initial workup.
The rest of their treatment takes place mostly at Regional, where providers trained by CTCA perform chemotherapy infusions. Patients also have weekly telehealth visits with CTCA oncologists, Rieks said.
That relationship is similar to a partnership CTCA has with Iowa Cancer Specialists in Davenport, which refers patients to the Zion facility for services the Davenport site doesn't offer, such as surgery and genetic counseling, said Amber Rankin, Iowa Cancer Specialists' practice administrator. After an initial visit to Illinois, patients can continue their care at Iowa Cancer Specialists and, via telehealth, with CTCA, she said.
"It's just a great benefit for patients even though the distance may be kind of hard for them," Rankin said. Despite that drawback, it's still more convenient for patients than having to visit multiple local providers to access the services they need, she said.
So far, CTCA has seven affiliated partners, mostly in Iowa and Georgia, and the company hopes to reach between 50 and 100 alliances over the next two years. In Georgia, CTCA has made deals with Miller County Hospital in Colquitt, Dorminy Medical Center in Fitzgerald and Georgia Bone & Joint in Newnan. In Iowa, CTCA is affiliated with Regional Health Services of Howard County, Iowa Cancer Specialists and Iowa Specialty Hospital in Clarion. The company also partners with Iroquois Memorial Hospital in Watseka, Illinois.
Special considerations
While it's not uncommon for hospitals to buy oncology practices because they are profitable, it would be "highly unusual" for, say, orthopedic cases to get treated in a cancer center, said Monique Lappas, CEO of Q Consulting Services, which specializes in healthcare.
"I just don't see how or why they would want to partner with Cancer Treatment Centers of America unless there was some financial incentive, and then you hit all kinds of legal issues," Lappas said.
When a not-for-profit hospital partners with a for-profit company, its leaders must carefully structure the agreement so that the activity is not perceived as commercial and inconsistent with the not-for-profit's charitable mission, said Richard Zall, chair of King & Spalding's healthcare transactional and regulatory practice.
Under the terms of a classic partnership with a tax-exempt hospital, CTCA would need to operate in a way that's consistent with the hospital's charitable mission, which includes treating patients who rely on Medicaid or Medicare.
"That may be a change in their M.O.," Zall said.
Partnering with CTCA might not be good marketing for a hospital, especially a not-for-profit one, Lappas said.
"It takes away the community aspect of the hospital's nonprofit business," Lappas said. "It takes away the community strength, supporting the community with your community physicians. Instead, it's this big nationwide group that's for-profit."
CTCA cherry-picked patients based on their insurance coverage, according to a Reuters investigation in 2013. CTCA has also been criticized for overhyping the success of its treatments. Reuters also found CTCA used misleading survival claims in advertisements. In 1996, CTCA settled with the Federal Trade Commission over allegations it made false and unsubstantiated claims when advertising and promoting its treatments.
CTCA notes that those incidents took place years ago. Since then, the company has focused on quality, innovative delivery and patient satisfaction, CTCA maintains.
CTCA has made progress contracting with health insurers, Basu said. The company previously provided most of its services as an out-of-network provider. Recognizing that quality is connected to access, Basu worked to change that when he became CEO. Now, about 92% of the company's patients have coverage with CTCA in their provider networks, compared with 40% a few years ago, he said.
"The company's decision previously—when I wasn't here—for various reasons was to not do that," Basu said. "It left some provider-payer friction."
In-network status also has led to more referrals from physicians who don't have to worry about their patients' coverage, Basu said.
The expansion of insurance coverage was a factor behind Iowa Cancer Specialists' decision to work with CTCA, Rankin said. "We always do benefits investigations because we don't want patients to be stuck with this big bill," she said. "It is very reassuring."
CTCA isn't legally bound to contract with the same insurance companies as its hospital partners, but that's likely something the hospitals want to ensure for their patients, Zall said.
"In organizing these ventures, that's an important consideration," Zall said. "It's not required but I think that could be a problem if it's not done that way."
None of this precludes CTCA from eventually being sold to private equity. In fact, it might even make a buyout more likely, said Angela Humphreys, chair of Bass Berry's healthcare practice and co-chair of its healthcare private equity team.
"That increased strategic alignment with hospitals and health systems I think would definitely make the company a more attractive target to private equity, quite honestly," she said.
