Community Oncology Practice Economics - Podcast Part 3 of 3

In the final episode of Oncology Practice Economics, John and Lee finish their conversation, focusing on emerging models of success for oncology practices. Watch the full conversation above, or listen to Parts 1 and 2 here.

Ashutosh Sheth: Welcome back to HMP Market Access Insights Q2 2024 podcast on oncology practice economics with special guest, John Hennessy. Here in part 3, we pick up on the conversation where Lee and John are talking about emerging models of success for oncology practices.

[14:07]

Lee Blansett: So I'm curious—the other thing that may end up reducing drug volume would be some of the more advanced therapies we're seeing now, like cellular therapies and bispecifics. How do you see that playing out for the community providers? 

John Hennessy: I think it'll get figured out. I don't see a 3-doctor practice ever getting into CAR T therapy, but it's clear that there is a lot of democratization going on in CAR T therapy. CARTOX is an app that MD Anderson has made publicly available. It's a 36-page PDF, and it will tell you how to manage the toxicities that come along with CAR T therapies. That doesn't mean it's easy. You still have to get doctors who are willing to get up at 2 in the morning, and, quite frankly, a lot of oncologists don't like that.

I tell my friends that oncologists don't like to take care of sick patients, they prefer healthy patients who are well, patients who don't have side effects or surprising side effects. I think of the practice that I ran—a 35-doctor practice—where you would find 2 or 3 folks who would say, "You know what? This is something we ought to do. We shouldn’t have our referring physicians think that it has to go off to a university setting. Let's find a way to bring that in." We're learning incredibly fast about how to take care of these patients. First, we started in an inpatient bed, and I remember seeing some of those bills where you would see this big bill for a Abecma or a Carvykti, a big line item on the bill, and everything else was for lab and room costs.

It was very clearly a patient waiting for something to happen, running labs all day long, and watching TV on a small TV up on the wall, but not that much else going on. We've seen the CAR T programs now who have reengineered themselves to be outpatient programs, reengineered themselves to have patients in hotel settings, rather than in outpatient hospital settings.

I think we'll continue to see that. The bispecifics will help to make that transition. For the practices who really want to do this and see that as something that they are providing to their community, it can be made successful in a community setting. It's not easy; it's going to take some work, and there are other therapies like that, which I think are fantastic therapies and you see some amazing results, but they do require practices to reengineer themselves or say, as we would have, “Let’s take 2 or 3 guys, maybe 1 site and we're going to do this particular procedure here, and get really good at it,” rather than having everybody do 1 a year and hoping it all works out okay.

Lee Blansett: You mentioned reengineering the process and focusing the volume on 1 or 2 providers. “He who does more does better.” How does it work for the hotel and the hospital relationship? How do they split up the duties there? 

John Hennessy: We had a blood marrow transplant program and we worked on something very similar with the American Cancer Society, with Hope Lodge. I was in Kansas City, it was not uncommon for folks from western Kansas who needed a blood marrow transplant to come into Kansas City. They would have to stay there for some time. They didn't have housing, so worked out an arrangement with the American Cancer Society and the Hope Lodge to set aside 4 rooms that were relatively separated from the rest, so when people were immune-compromised, they weren't with a more general population, and basically give the caregiver the tools to recognize when something bad is about to happen. So that rather than a big fire drill, you can call the team and the team can say, "Okay, I think this might be the start of cytokine release syndrome (CRS), come into the outpatient clinic or come into urgent care, rather than going to an ER, waiting for 8 hours, and things getting worse.”

There are some interesting tools there. I saw 1 at the American Society of Clinical Oncology (ASCO) annual meeting a few months ago. It's a company called TempTrack, if we can make a plug like that. It's basically a temperature management tool that is on the body, using your smartphone, and is sending messaging off to the clinical team, and will send an alert saying, "Hey, Mrs Smith, their temperature is starting to rise a little bit, maybe you want to give them a call." Or maybe the caregiver gets notified. It is a little bit of a responsibility on the caregiver, but also empowerment. For the patients who have decided to go down that path of CAR T, they tend to be the folks who you can empower to do a little bit more self-management.

There’s a little coordination, but I think the caregiver is as much a big part of that team as the facility is. 

Lee Blansett: When you see the CAR T being delivered, is that the physician group that's billing for the CAR T treatment itself or is that still a hospital? 

John Hennessy: I think we're going to see both. There are going to be places where the physician group is going to say, "We just don't want to be in that sort of risk scenario." Others are going to say, "This is a core to what we do, and while it's a big chunk of money in 1 transaction, it's not necessarily all that different from a year's worth of money in different types of transactions. One of the reasons you would see practices align with OneOncology or US oncology is to solve that cash flow issue a little bit, but you make a really good point. If I'm a 5-doctor practice and I have to float half a million dollars for I don't know how long, that's probably not sustainable, unless you've have a really unique relationship. 

Lee Blansett: How about the bispecifics? They seem to be a better fit because you have the ongoing therapy. 

John Hennessy: They're both good fits. They both require a bit of specialization. They both require a rock-solid reengineering. If I were running a practice today, I would do as we talked about—I’d find 2 or 3 guys or maybe a team within each of my larger sites and say, "That's where we're going to do this."

But when you look at the protocols being built for managing the side effects for bispecifics, they look very similar to those for CAR T. What you will probably see a lot is people starting with the bispecifics and saying, "Hey, we can make this work in our setting. Let's look at patients who fit our profile for doing a CAR T." I know that a couple of the CAR T companies have started to add physician practices around the country and are looking to see if that is a way to grow their networks, which is important because getting to CAR T isn't easy for a lot of folks, and we've talked to practices who've said, "It's only 90 minutes away, but it's 90 minutes and I've got to relocate my life for 28 days."

Those alone are barriers, and you can look at the science and say, "Wow, this is, potentially, a therapy that gives you a very long time off of therapy, which is highly valued." But for a lot of folks, it's tough if you're in a single-parent household, or you're taking care of your parents, or you have no one to take care of your dog.

Those don't seem like insurmountable barriers, maybe to you or I, but to people who otherwise are challenged by other social issues, bringing CAR T closer to home is going to improve access for those folks. 

Lee Blansett: So that's where the role of the community provider will be important for doing that?

John Hennessy: I think so. I'm going to bring an analogy in, in urology. We see that, in communities, there are small urology practices that do a lot of meat-and-potatoes stuff, and at some point, they refer complex stuff up to the larger practices. I think you'll see something like that; it probably happens today, but on a less formal basis.

Lee Blansett: Thinking about the outlook then, what you're describing to me is a situation where between CAR T, bispecifics, the newer drugs, by and large, are going to require more infrastructure, more clinical capability, coverage, things like that, maybe a better relationship with the hospital. What's this mean for consolidation? Is this going to actually encourage further consolidation? 

John Hennessy: In and of itself, there are a lot of other market forces that are driving consolidation. I don't know that I would be running a practice and say, "I need to consolidate to do this." I would be thinking about a lot of other reasons why that might make sense. Interestingly, as much as we're seeing practices join the large groups, we're seeing practices take the other approach and say, "Do I still gain value out of this large group?" Those conversations are probably jaded by relationships that we don't have insights into.

In the whole concept of the practice management company, you have to believe that 1 plus 1 equals 1.5 or something like that. The minute you become convinced that somehow the management fee that you're paying is coming out of your E/M codes and you did all this work, you can work yourself into a bit of a tizzy with that.

What I think has to happen, and I suppose it does—and I certainly remember this from my days at US oncology—is we have to continue to remind ourselves the value of these relationships. Sometimes you can put it in the dollar and cents, but sometimes it's about being able to recruit people. If you're a community practice now, you're not just recruiting against the big academic centers; you're recruiting against US Oncology and OneOncology, who are doing a perfectly good job of figuring out who's coming out of school, what they want, and trying to make that match happen at the same time you're scrambling around, throwing an ad in Journal of Clinical Oncology (JCO), and thinking good thoughts.

Lee Blansett: Yes. The last group we've been working with a little bit found out about the disadvantage, because the other thing we haven't talked about here really is the management infrastructure and leadership of some of these groups. This group has a significant challenge that way; they're making a fair amount of money, but they're doing that by dramatically underinvesting in management infrastructure, ie, they have no executive director, each of the doctors has a little side job as an admin. They recently had an opportunity to actually do an important expansion geographically and in terms of volume. By the time they finally decided that this made sense, that they should start thinking about how to hire a doctor, US oncology had already moved in. 

John Hennessy: We've been around physician practices for quite a while. There are practices that are really thoughtful, and it sure looks like a big expense item when you've got all these administrators on. But if you want to be a player in your marketplace, whether that's a player with payers, whether it's with employers, we always thought of ourselves in Kansas City as a community resource; that meant you had to be out in the community and doing things like that. That said, from a governance perspective, for my practice, we did pay our doctors to spend time doing it, and I think some practices don't invest enough in making sure that the people who are involved in running the practice are compensated fairly for that.

They're not generating work relative value units (RVUs) when they're doing these things. You shouldn't have to manage a practice from 7 to 10 o'clock, 1 night a week. Those aren't sustainable things when you talk about burnout and things like that. I do think that for the practices who underresource, it's hard to get out of that spiral. You can't earn your way out of it anymore. 

Lee Blansett: What I have seen consistently, though, in the last 10 years in particular, is the first practice we worked with had a really strong practice manager. They're still doing pretty well. If I look around the country, some of the practices appear to be doing very well.

One of the key denominators there is always the fact they have a strong lay practice manager. The doctors may or may not be in charge of the group, but there's somebody there who's making all the business decisions, making sure the claims go out, double-checking the claims to come back to make sure they're being priced correctly, following up on appeals, ensuring accounts receivable (AR) is under control. We actually saw, in this 1 practice we were talking to, their AR just spun out of control 2 years ago, and they lost a biller. They have all this outstanding, uncollectible stuff, and now they're past a year, so they should really be writing it off. But I see this conventional wisdom, which is the doctor should be able to run the group, when you talk to the doctors. Yet when I look around, I see the successful groups, they all have a John Hennessey, or a Harvey Bichkoff or somebody like that running the place. 

John Hennessy: The other part of that is the physician leadership dyad, and well-run practices have both. Dr Mark Myron was my practice president for the entirety of the time I was there, and we were a good partnership because he was a very good leader. He was a leader of physicians, and a lot of times in practices, the practice leader is the guy who didn't step back fast enough. We had good leaders, we invested in leaders; we invested in training our leaders to be leaders. We did that with our administrative staff as well.

We do have a new generation of leaders in oncology, and you and I go way back. We go back to the average wholesale price (AWP) days where a good administrator's job was to watch the fax machine for the best deal on Neupogen. That's how far back it goes. That's not how you become a good administrator anymore. You have to take advantage of the data. You have to be able to read the tea leaves a little bit as well. You have to figure out if your practice isn't just able to sign up for the Enhancing Oncology Model, but can you be successful doing it? Can you manage the downside risk in a way that's economically sound so that you don't wake up 1 morning and there's no money there?

I always told people, there's 2 ways you can lose your job as an administrator. You can screw up financial compensation to the doctors, or you can change an electronic medical record (EMR). As long as you don't do those 2 things, you're probably in good shape. We're fortunate now in oncology; we have some really good practice administrators out there and practice leaders, and they are good practice leaders not just in running their practices, but in terms of advocating for oncology in Washington, DC, and their state legislatures, and being a vocal part of the community.

Bob Baird and some of things that we're doing with Access Hope—we’re really doing a good job of communicating to employers who are paying for all this that we're doing a good job in the community and in academic settings as well. So I think we have a better group of folks there.

To your point, when money gets tight, that's maybe where people start looking. You have to be thoughtful about that. I'm hopeful that 1 of the things that we will see over time with AI or big data is an opportunity out there to get a little bit better at the transactions we're doing. There are some tools out there to improve the way we do prior authorizations, collections, things like that and not have things fall off the table. You're not going to be able to revolutionize practice by finding the pennies in the seat cushions, but if you can do that a little more efficiently, you can get a couple of percent out every year. Between that and growing when you can grow, and as we're seeing here, more lines of therapy, more oral therapies, you can maintain the solidity of that model. Do that in a practice setting in the community, which isn't buoyed by 340B or buoyed by reimbursement rates from managed care companies that are probably at risk at some point.

Lee Blansett: Speaking of being at risk, we haven't talked about yet—and what I see as being the biggest transformation—I don't have a slide on it yet; we're going to be doing an analysis in Q1 and Q2 where we look at the tipping point between how a drug margin runs the model versus upside gain from capitation or shared risk. Again, as I talk with doctors around the country, many outside of the US Oncology, the OneOncology, and other big outfits, seem to be poorly equipped to manage through that transition. What do you see as being the key factors to look for in a group that's going to survive that transition? 

John Hennessy: We're at a pathways conference, so I'm going to start with pathways. Jack Silverson was a consultant for MGMA for years, and he coined this phrase, "Practicing alone together." I've seen some of those. When I was doing consulting for ASCO, I have a very fond memory of a practice, which was exactly that—there are 5 physicians, they call themselves a group, but when you got in there, in the weeds, they were each doing their own thing. And because of that, it's a little bit of a "not in my backyard," but also a little bit, "I can do what I want because everybody else is going to behave appropriately."

You have to get your arms around that, because there are things you can't control. You can't control new drugs. You can't control the seventh-line therapy that's on NCCN guidelines. But you can do a really good job of making sure that you don't have a lot of unneeded variation, that you know what your costs are going to be, that you are evaluating and sticking with them, and that you're being thoughtful about the choices you make.

There are probably not a whole lot of drugs that are strictly substitutable, but there are 2 drugs in the same line of therapy that do the same things. There's a cost element to that in terms of acquisition costs, but there's also the cost of managing the adverse events (AEs). Different AEs have different costs associated with them.

At some point you can manage the ER visits; you can manage the inpatient. You have to do that; you have to do your blocking and tackling. But that next layer is how can you be efficient with your staff? We're seeing really interesting things from folks who are leveraging regional capabilities, who are dotting the I's and crossing the T's. Texas Oncology had a great poster at ASCO's annual meeting this year with their regional pharmacists and how they've been able to reduce waste and get the right people on the right drug at the right time. It's 2 things: the intellectual curiosity to pursue those and the culture that allows nonphysician clinical leads to come up with these innovations and implement them.

That culture thing is really important, and a lot of times you go to the smaller groups or independent groups, and particularly those that have an older group of physicians and a younger group of physicians, that culture is still in transition. Those are going to be practices that will really struggle with “What's my short term take out of this vs how do I make this a survivable entity for my community?”

Lee Blansett: And am I willing to start practicing in a way where I'm giving up some of my autonomy and agreeing we're going to use the same dosing schedule for, say, rituximab? We need to continue the discussion about what happens under value-based care and risk sharing. What really struck me is earlier this week, I heard Barry Russo say, "I don't care about margin; what I care about is total cost of care." When you see somebody who's been as successful for as long as Barry has been at running a large oncology practice, that tells me that the game is changing, and it's changing now.

John Hennessy: It's changing, but you've picked the acme. It's really fun to have people talk about the total cost of care and things like that, and you get about 15 minutes into the conversation, and it's still about transactional economics.

That is absolutely aspirational. We used to do analysis in my practice, asking, “What would I have to charge per hour if I didn't charge anything for the drugs? What would my hourly rate be, like a lawyer’s would be?” You start looking at things like that to say, "How do I make this a survivable entity when the world changes on me?" Whether it's because of value-based care or reducing margins, when you're thinking like that, you're thinking in a way that's going to make the practice successful. The challenge is to get more practices thinking that way. 

Lee Blansett: Yes, what are the new metrics we're looking at? Thank you very much for your time. And I think this will be a first of hopefully many. 

John Hennessy: Thanks! 

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