Cancer Care Rx: Consolidation
The modern stacked-stone façade in downtown Grand Rapids gives way to patient-friendly features inside: a fireplace, comfortable upholstered furniture in waiting areas, options for privacy or companionship during chemotherapy treatments, a café with menu suggestions from cancer survivors, a store catering to needs of cancer patients and a dramatic two-story waterfall in the lobby.
Spectrum Health treats about two-thirds of the approximately 3,000 new cancer patients diagnosed in Kent County annually. It joins other major health systems in West Michigan in combining chemotherapy and radiation treatment, two of the three major approaches to cancer treatment, under one roof.
The Cancer Center at Metro Health Village opened June 30, in a serene corner of the Wyoming development, for chemotherapy, with radiation expected to become available by the end of 2008.
Pressure on reimbursements from Medicare, managed care and private insurers are encouraging consolidation in the delivery of medical and radiation oncology, said practice management consultant Ron Barkley, principal of the Cancer Center Business Development Group in New Hampshire.
"What is going on nationally right now, in quite a robust way, is a consolidation of the community oncology sector, driven by a reduction in reimbursement in an aggressive way for cancer services," said Barkley, who called cancer care "the hot sector du jour."
Just this year, West Michigan is witnessing the opening of three new cancer treatment facilities, an investment of nearly $100 million, in addition to the $45 million Lacks Cancer Center at Saint Mary's Health Care that opened in 2005.
New Era for Cancer Treatment
New Era for Cancer Treatment
Lemmen-Holton Cancer Pavilion
Opened: June 2008
Square feet: 284,000
Cost: $92 million
Fundraising: Total undisclosed
Radiation units: Four
Total Weighted Radiation Treatments, 2006: 32,509 (Blodgett, Butterworth combined)
Medical Directors: Dr. Alan D. Campbell, Spectrum Health Oncology Program; Dr. Mark Campbell, executive director, Spectrum Health Regional Cancer Network
Noteworthy: Lavish new building centralizes care
Saint Mary’s Health Care
Opened: January 2005
Square feet: 172,000
Cost: $45.4 million
Fundraising: $42 million
Inpatient beds: 42
Radiation units: Two
Total Weighted Radiation Treatments, 2006: 20,135
Operating rooms: Four
Medical Director: Dr. Thomas Gribbin
Opened: June 2008 (chemotherapy only)
Square feet: 21,000
Cost: $9 million
Radiation units: One (slated for December)
Medical Director: Dr. Michael Zakem
Noteworthy: First cancer center for the traditionally osteopathic Metro Health
Mercy Health Partners,
Opened: April 2008
Square feet: 25,421; 7,246 to be added in 2009
Cost: $13 million
Fundraising: $3.6 million
Radiation units: One (two in 2009)
Total Weighted Radiation Treatments, 2006: 20,688 (Hackley Hospital)
Medical Director: Dr. Nina Johnson
Noteworthy: New facility shifts cancer care to Mercy Campus
Lakeshore Area Radiation and
Opened: May 1993
Square footage: 10,000; 2,300-square-foot expansion ready in 2009
Cost: $1.9 million; $5.5 million expansion, renovation opens in 2009
Radiation units: One
Total Weighted Radiation Treatments, 2006: 9,701
Administrative Director: Mary Mencarelli
Noteworthy: Construction to bring new radiation unit, additional services, expanded waiting areas
Square feet: 55,000
Radiation units: Three
Total Weighted Radiation Treatments, 2006: 31,878
Medical Director: Dr. Radha Vemuri
President & CEO: Terry McKay
Noteworthy: Example of hospital cooperation in competitive
Spectrum Health's $72 million building on Michigan Street, the $9 million Cancer Center at Metro Health Village and the $13 million Johnson Family Center for Cancer Care in Muskegon all bring outpatient chemotherapy and radiation treatment under one roof. While the Lacks Center also provides inpatient services, the others have retained those services inside their respective hospitals. Plus, the four-hospital consortium that runs the Lakeshore Area Radiation and Oncology Center in Holland has a $5.5 million expansion and update underway.
"This is about competition. This is about following the money," said Michael LaPenna, a health care consultant and principal of The LaPenna Group.
Faced with a growing burden of uninsured patients and the hovering worry of cuts in government program reimbursements, "hospitals are fighting for any disease line that captures segments of the paying, insured population," LaPenna said. "So Saint Mary's, Metro Health and Spectrum all have to have their own competing cancer centers. But cancer is one great opportunity for a community to come together in a community model and have multiple organizations participating."
Pressure on cancer treatment reimbursements is not new, but cancer remains a line of service that provides a steady stream of revenue, added Lody Zwarensteyn, president of the Alliance for Health.
The medical cost of cancer in the U.S. in 2007 was $89 billion, according to the National Institutes of Health. Sixty percent of new malignancies are found in people age 65 and older, making Medicare a major funder of cancer care. Treatment of elderly cancer patients costs Medicare $21.1 billion over five years, according to a study recently published in the Journal of the National Cancer Institute.
Barkley said margins are stronger on radiation services than on chemotherapy. Over the years, chemotherapy services have bounced between hospitals and private doctors' practices, depending on the reimbursement environment, he said.
"Radiation is the big margin service," Barkley added. The service has escaped the more intense scrutiny insurers have applied to chemotherapy, he said. Margins have been strong enough to attract investment from private equity groups into for-profit radiation companies, although none of them operate in West Michigan, Zwarensteyn said. Hospital-based radiation services are reimbursed at a higher rate.
"How long margins will remain attractive remains to be seen," added Barkley, who is chairing the second annual Cancer Business Summit conference slated for October in Chicago.
"The bottom line is, you want to be more efficient," said Dr. Mark Campbell, president of the Cancer & Hematology Centers of Western Michigan, the medical oncology group in the state, which delivers chemotherapy services at the five consolidated cancer centers in West Michigan. He is a top doctor at Lemmen-Holton, where CHCWM is occupying the third floor.
"If you get paid the same amount, there needs to be an environment that is more efficient — nice for patients, but it has to be operationally efficient or you're not going to be able to recover your expense."
Campbell said that consolidating cancer care creates efficiencies not only in operations but in clinical expertise and research opportunities, as well as for patients' convenience. In the past, health care has been fragmented, but expensive and increasingly complex treatment options for cancer have helped to make the case for consolidation, he said.
"Cancer is a large population of patients who hospitals take care of. Heart and cancer are the two biggies," said Campbell, whose 18-doctor practice is the primary provider of chemotherapy services from Cadillac to Hastings.
"They want to protect what they call the ancillary revenue," he added. "If you're treated for cancer and you need a CT scan every year for follow-up, they want you to use their CT scan machine, lab tests and scans. If you get treated in Ann Arbor and every year you drive back for ancillaries, the local hospital never gets to keep the CT scan busy."
In an effort to attract patients, the new cancer centers include amenities such as televisions and accommodations for companions at chemotherapy stations, where patients may spend hours every day for several weeks; on-site pharmacies that offer expertise in cancer drugs and keep special medicines in stock; counseling from social workers and psychologists; on-site food service; and electronic medical records that are seamless between specialists.
Cancer centers also try to distinguish themselves with research, which can serve as another source of revenue, and with state-of-the-art technology in radiation.
"Unlike other disease processes, there's constantly new drugs and protocols coming out," LaPenna noted.
"The drug company can say, 'Can you test this new protocol and we'll pay you extra for it?' If you're just one doctor who's got 150 patients, they can't take the time. There is value in having a critical mass," he said.
The Lacks Cancer Center, for example, touts its linear accelerator from TomoTherapy Inc., which combines CT scan imaging and intensity-modulated radiation therapy to improve the treatment's focus on tumors and decrease damage to surrounding tissue.
Trinity Health, the parent company of Saint Mary's Health Care in Grand Rapids and Mercy Health Partners in Muskegon, is marshalling its cancer treatment options for patients at its hospital across the state, said Saint Mary's Vice President Micki Benz.
"Right now, we're looking at all the resources we have and deciding, is there a way to make this a more coordinated effort so patients have a more seamless experience," Benz said. "How can we mobilize all the resources we have across the state to better serve the patient who might be in Cadillac and may need TomoTherapy and it isn't there. How can we make that easier for patients?"
Two years prior to the April merger that created MHP, Mercy General Health Partners sought state approval to acquire a linear accelerator, bringing an end to a "gentlemen's agreement" that placed cancer care at Hackley Hospital and heart care at Mercy General. That led to the post-merger opening of the Johnson Center in April.
St. Joseph Mercy Health Systems in Ann Arbor has heavily marketed its "CyberKnife" system, which combines a linear accelerator with a robotic arm that can deliver treatments from any direction.
Competition between cancer centers is giving consumers more choices, but it's tough to make good decisions when your life is on the line, LaPenna said.
"It just means I've got a consumer choice to make," he said. "I only have cancer once. Now I have to figure out, among the three competing entities (in Grand Rapids), where do I go? Do I base it on proximity? Who's got free parking? Where my daughter was born? How do I choose?
"Everybody is certainly well-meaning, but now we have division among the hospitals. I go to the closest emergency room — I don't look in the Yellow Pages, but if I'm told I've got prostate cancer, I rush to a computer to try to figure out where I can best treat it, and where my insurance is going to have a chance of being honored. It's very, very tough on consumers." HQX