Zachary Hafner
Advisory Board

Last fall in Managed Care, I talked about opportunities to help “Joe” better meet the challenges of cancer care through an integrated care model, a concept strongly supported by rapidly evolving trends in the health care environment.

What a difference six months can make. The 2016 election has brought sea change to Washington, calling into question the future of the ACA, value-based payment models, and key tenets of value-based care itself. Even without the election, 2016 was an eventful year: MACRA was finalized, site-neutral payment solidified, and CMS-­driven, oncology-specific payment reform was launched. While these factors do not fundamentally change key market pressures—such as increasing consumerism—they do potentially affect how payers and providers respond to those pressures.

So what does all of this mean for Joe and other cancer patients and the integrated care I was so optimistic about last year?

Historically, three generalizations held true for cancer patients: They were deferential to physician recommendations for care, unlikely to switch providers, and generally satisfied with the care they received. However, the rise of the consumer-oriented marketplace and growing customer financial exposure have led to better-informed patients who are more likely to shop for cancer care. This has led to a “borderless” competitive environment where access, transparency, brand, experience, outcomes, cost, and quality are differentiators that set one program apart from another.

Competition for more patients is intense. Significant investment is pouring into the development of cancer centers where research, diagnostics, treatment, and support services are co-located and coordinated, packaged with an exceptional customer service wrapper. This push to enhance the customer experience plays well in either fee-for-service or fee-for-value constructs, and—interestingly—has been a boon for top-rated cancer programs, which are expanding rapidly through arrangements where they lease their brands to regional providers.

Zachary Hafner

Zachary Hafner

On the funding front, two key trends have particular relevance to the development of integrated cancer programs: continued growth in the self-funded employer market and booming expansion of Medicare Advantage. Both shift financial risk from traditional stakeholders to new ones, and these new stakeholders have demonstrated critical differences in thinking from their predecessors. They appreciate the “total cost of care” concept. Anyone taking on financial risk in health care quickly discovers that a small number of individuals typically drive a significant portion of total spend in any given year, so they are motivated to prevent costly acute episodes, even if it means making upfront investments in new capabilities to do so. While today’s integrated cancer centers are not typically known for low unit costs, reducing total cost of care is one of their key objectives. They are also willing to narrow the provider network. For those providers that are able to demonstrate a real value proposition that includes lower total cost of care, this trend is of paramount importance and will play a key role in driving future growth.

Room to innovate

In recent years, payers and providers have also made huge investments in tools and technologies to better coordinate and manage care. For all the dollars spent, few have enjoyed commensurate gains in market position. This may not seem surprising—when everyone is making similar investments it amounts to basically keeping up with the pack. Perhaps, more importantly, the level of true innovation (and integration) has been low. This presents an opportunity for payers to redesign how their investments are put to use in ways that monetize benefits through clear wins for the customer.

So, back to the outlook for our friend Joe. It is clear quite a bit has changed over the past six months. The incentives motivating key market players look a lot different than they did not long ago. Despite this, the argument for building integrated, effective cancer programs remains strong. And that should give Joe—and all of us—great hope for the future.

Zachary Hafner leads the Advisory Board’s strategy consulting practice.

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