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Our Take: Community providers form independent cancer care network

Sep 17, 2018

Three large cancer practices have teamed up to create OneOncology. Announced Wednesday, OneOncology includes Tennessee Oncology, New York Cancer & Blood Specialists and Memphis-based West Cancer Center, comprising more than 225 providers and over 60 locations. The new company is being infused with $200 million in funding from New York-based private equity firm General Atlantic and will be technology enabled by Flatiron Health.

OneOncology’s president and CEO is Tracy Bahl, formerly CVS Health’s executive vice president of health plans. Other leaders include David Chernow as board chairman, Phil Watts as general counsel and Robin Shah as chief development and marketing officer. The company is headquartered in Nashville, Tenn.

“Cancer is increasingly being treated like a chronic condition rather than a terminal diagnosis,” said Bahl. “Working together with world-class oncologists, we will drive the change that community cancer needs through continual learning, creative and smart evolution, and a collective desire to positively impact the lives of every person touched by cancer.”

Our TakeIn one view, the merger is about survival—about community-based practices remaining independent, staving off takeovers by larger entities or avoiding the need to shut their doors because of financial difficulties.

That’s the picture painted in a recent release of the 2018 Community Oncology Alliance (COA) Practice Impact Report, which monitors data on practice closures, hospital acquisitions and corporate mergers. Since 2008, according to COA,1,653 community oncology clinics and/or practices have closed, been acquired by hospitals, undergone corporate mergers or reported that they are struggling financially. (Click on the image below for an interactive map.)

Now, we don’t know how that compares with other specialties, but we are aware of a broader trend of physician practice consolidation. Often, these mergers escape the ire of regulators because they’re among relatively small groups. It costs more to run a practice today than it did a decade ago—think technology, increased support staff, declining reimbursement and alternative payment models as some of the reasons why.

A 2016 Milliman study commissioned by COA showed that independent community cancer practices delivered about 50 percent of cancer care in 2014, down from 84 percent in 2004. According to Milliman, the shift from community practices to the more expensive hospital setting cost Medicare about $2 billion in 2014 alone.

Tennessee Oncology is one of the nation’s largest community-based cancer care specialists. The deal, in a sense, is a way for the southern powerhouse to expand into the New York market. Whether or not you view this as a merger of equals, look for OneOncology to expand into other markets in the future. That $200 million in funding will help it get there faster.

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