Is this the first Domino to Fall?

[Ursus Martimus]

http://www.businessweek.com/news/20...s-cancer-clinic-operator-files-for-bankruptcy

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[medgator]

Obvious risk factors that were well disclosed to any of Oncure's investors, per their 10-K filing back in 2010

http://www.oncure.com/investors-files/2010-10K-OnCure-Holdings.pdf

Risks Related to Our Business

We depend on revenues generated by our affiliated physician groups from Medicare and Medicaid programs for a significant amount of our net revenue and our business could be materially harmed by any changes that result in reimbursement reductions.

If revenues generated by our affiliated physician groups by managed care organizations and other third-party payors decrease, our net revenue and profitability would be adversely affected.

Our treatment centers are concentrated in Florida and California, which makes us particularly sensitive to regulatory, economic and other conditions that affect those states.

Reforms to the United States healthcare system may adversely affect our business.

The radiation therapy market is highly competitive.

And the list goes on.....

 

[medgator]

Hopefully this limits further proton expansion, I just don't see a need for any more proton centers in this country until data actually supports its clinical implementaton. No data for prostate supporting it, really should be used for peds, re-treat, base of skull only but then you have places offering it for prostate, breast, etc without a shred of data supporting any benefit. Does this country really need more than 10 or so centers?

Oncure was just bread and butter freestanding photon centers (or so I thought). Were they trying to expand into protons big time and is that what caused this?

 

[domestique]

"The company said it has $210 million in senior secured notes maturing in 2017 with an interest rate of 11.75 percent. "

Everyone other than student loan debtors and these guys apparently has been aggressively refinancing at much much lower rates since 2008. It would be interesting to know if they could have avoided bankruptcy if they refinanced. 11.75 percent on $210 million with a EBITDA of only $94 million is brutal. Even if reimbursement was flat, it seems these guys have been wicked over levered and probably on the edge for a while.

 

[Pointless]

Yeah, these clowns were issuing the junkiest of junk bonds and were insanely overleveraged even before any changes to reimbursement. This little saga provides no insight into our future, other than stupid people who take on a bunch of debt tend to do poorly.

Hmmm... I took on a bunch of debt for med school........

 

[Gfunk6]

I concur with what others have said. Oncure was dangerously over-extended. In addition, neither CA nor FL are CON (certificate of need) states. This means that you can pretty much open Rad Onc facilities wherever you'd like without having to prove that there is a clinical need. This can lead to market oversaturation. Furthermore, if independent doctors learn that you are a corporate-owned practice it can be quite challenging to obtain referrals from them.

 

[domestique]

To your point, Gfunk, they have 3 centers in the OC alone!

 

[medgator]

Surprised no one posted this earlier...

Investors Try to Push Half-Built Cancer Center Into Bankruptcy

Several investment funds with ties to Texas billionaire Tim Headington are trying to push an unfinished Atlanta cancer treatment center into bankruptcy protection.

Lawyers for Zeitgeist Capital LLC and two other funds filed an involuntary bankruptcy petition Friday for the partially built Emory Proton Therapy Center, stating in court documents that the funds are owed more than $8.2 million.

Advanced Particle Therapy’s San Diego treatment center began seeing patients in February 2014, and its second center in Baltimore began treatments last month, according to federal court documents.

Advanced Particle Therapy’s partially built treatment center in Dallas, which is scheduled to open in 2018, filed for bankruptcy in September during a payment dispute with investor Kelcy Warren, a billionaire oil tycoon.

For the Dallas Proton Treatment Center, Mr. Warren extended a $20 million loan in August 2013 meant to help developers buy 4.6 acres of land for the Dallas center and begin construction, according to court documents. The center’s owner allegedly failed to make interest payments on the loan, as required in legal documents, in February and March. That failure led Mr. Warren to push to collect the entire loan.

Developers have proposed to build 30 proton-beam centers in the U.S. by 2018, many at the construction cost of $100 million to $200 million. Yet, some insurers are balking at paying premium rates for proton therapy for such common cancers without more evidence that it does improve patient outcomes.

In 2014, Indiana University closed its money-losing facility in Bloomington, citing the high upgrade cost.

The owner of the cancer-fighting Radiance 330 Proton Therapy System machine filed for bankruptcy in May while trying to finish its first project for a Michigan hospital. That project was supposed to be ready to treat patients in December 2012 but was only about 85% complete at the time of the filing, court papers said.

 

[Gfunk6]

With MIPS/MACRA payment reform on the horizon, the days of proton proliferation are numbered. There will always be a few protons centers in this country (appropriately so) for real clinical indications, not low-risk prostate cancer.

 

[medgator]

With MIPS/MACRA payment reform on the horizon, the days of proton proliferation are numbered. There will always be a few protons centers in this country (appropriately so) for real clinical indications, not low-risk prostate cancer.

Have you seen much come out on how MIPS/MACRA will affect RO, specifically? The OCM model and other things I've seen really address things on the MO side.

I guess there is the sharing of cost savings between the insurer and the group, but anything beyond that?

 

[Krukenberg]

I recall from last year's ASTRO session on the labor market that one of the presenters said MDACC was developing a payment model that gave rad onc a seat at the risk-sharing table. Anyone know more details about that?


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[Gfunk6]

Have you seen much come out on how MIPS/MACRA will affect RO, specifically? The OCM model and other things I've seen really address things on the MO side.

I guess there is the sharing of cost savings between the insurer and the group, but anything beyond that?

No but I definitely have my eyes open. We have > 20 Med Oncs in our practice and we are participating in OCM (actually started last week). We have asked CMS directly if there is any RO component and there is not (for now). I personally don't think global interests will be served if the RO ivory tower academics are driving this conversation, but they have the political clout.

 

[Chartreuse Wombat]

No but I definitely have my eyes open. We have > 20 Med Oncs in our practice and we are participating in OCM (actually started last week). We have asked CMS directly if there is any RO component and there is not (for now). I personally don't think global interests will be served if the RO ivory tower academics are driving this conversation, but they have the political clout.

I regret to admit it but I am considerably less sanguine about the "political clout" you assign to the "ivory tower academics". The fact is that radiation oncology has no significant political power; their priority has been in-office ancillary services exemption for a number of years and nothing has changed.

Taken verbatim from ASTRONews (emphasis mine)

Senate Finance Committee releases Stark Law White Paper
Last week, the Senate Finance Committee released its white paper on the Stark law, entitled "Why Stark, Why Now? Suggestions to Improve the Stark Law to Encourage Innovative Payment Models." This report is the result of a roundtable discussion and subsequent comment period late last year when the Senate Finance Committee asked stakeholders to provide feedback on ways to modernize the Stark law to ease MACRA implementation. Though ASTRO, along with members of the Alliance for Integrity in Medicare (AIM) coalition, provided substantial comments on the in-office ancillary services exception that is routinely exploited for financial gain, the Committee failed to address that issue in this white paper but indicated that they may address it at a later date.

 

[Gfunk6]

Oh to be clear, I was bemoaning ASTRO political stances not supporting them. In the situation you cited above, I am pleased at the outcome. I would prefer to have ASTRO bumble its way through politically charged topics that would potentially damage private practice and shift everyone to an employed model, than competent political leadership which effectively destroyed us.

Given our tiny size as a specialty, the lack of political clout is not really surprising.

 

[DebtRising]

I know this is beating a dead horse but... how many academic centers do you think simply don't care about reimbursement because they have expanded their residency programs which allows them to use a $48-60K employee to bill more consults / follow up visits by senior providers? Meanwhile the senior guys can keep their share of the cut without much more work.

 

[medgator]

No but I definitely have my eyes open. We have > 20 Med Oncs in our practice and we are participating in OCM (actually started last week). We have asked CMS directly if there is any RO component and there is not (for now). I personally don't think global interests will be served if the RO ivory tower academics are driving this conversation, but they have the political clout.

My biggest concern is the "gatekeeper" model wherein MO might become the primary disburser/overseer of oncology spend, because ASTRO doesn't advocate effectively regarding the utility and importance of radiation therapy from both a curative and palliative standpoint. As you well know, they'd much rather attack Urorads (after that ship sailed long ago) and freestanding centers (by allowing the disparity with Hospital-based RO reimbursement to widen over the last several years, and remaining silent on site-neutral payment models).

It'll be interesting in my neck of the woods if that happens, as there is a lot of cross-referral between RO and MO in my practice, as well as with other MOs we work with who are also independent.

 

[BobbyHeenan]

I know this is beating a dead horse but... how many academic centers do you think simply don't care about reimbursement because they have expanded their residency programs which allows them to use a $48-60K employee to bill more consults / follow up visits by senior providers? Meanwhile the senior guys can keep their share of the cut without much more work.

It absolutely helps the work flow and mitigates unhappy "uncovered" attendings. However, I don't think the overall finances of the department are made or not based upon resident numbers. There are some scenarios though (see below) where I think residency expansion was definitely factored into the model/revenue streams of departments....

The way the academic departments have generated more revenue in the past dozen or so years is by buying up fledgling or competing community practice in their general vicinity. They can often negotiate good deals with the community hospital to provide an "academic" name, poster/billboard, etc that in turn gets them some revenue both in terms of professional fees and often times technical revenues as well. Having residents to cover those clinics is certainly helpful for work flow, but I'm not sure it's a financial windfall or anything. You can pay "acadaemic" salaries while potentially getting a cut of technical fees and even professional fees that may be higher than that of your salary output to your doctor staffing that location.

Billing consults or follow up visits is a small blip on the radar as compared to technical revenue. It all comes down to the number of patients treated, and you grow patients treated by either buying up more clinics or increasing your market share. Your mileage may vary as to whether or not having more residents helps that.

 

[Mandelin Rain]

I would assume that academic departments are also able to negotiate very favorable contracts with private insurers.

 

[Krukenberg]

Oh to be clear, I was bemoaning ASTRO political stances not supporting them. In the situation you cited above, I am pleased at the outcome. I would prefer to have ASTRO bumble its way through politically charged topics that would potentially damage private practice and shift everyone to an employed model, than competent political leadership which effectively destroyed us.

Given our tiny size as a specialty, the lack of political clout is not really surprising.

If ASTRO was interested in a model for effective advocacy and publicity, it's totally spelled out for them over in Austrialia and New Zealand. The joint rad onc society decided that radiation was underutilized, the public had little understanding of it, and GPs had little understanding of it.

They created a highly organized publicity campaign that is all over social media called "Radiation Oncology: Targeting Cancer" with a slick website and phased communications strategy: http://www.targetingcancer.com.au/ . They even created patient education videos and a TV documentary (available free on the home page) with paid endorsers.

From the campaign's strategy statement (emphasis mine):

One reason for this less-than-optimal utilisation rate is the low profile of radiation therapy.

The Campaign aims to increase awareness of radiation therapy as an effective, safe and sophisticated treatment for cancer. It is designed to reach people with cancer, their families and loved ones to improve their knowledge and access to this (sometimes overlooked) treatment.

The Campaign also strives to educate health professionals about radiation therapy, in particular, general practitioners. This website is a trusted source of information developed by radiation oncologists who are the medical specialists highly trained in the care of patients with cancer, in particular, where management may involve the use of radiation therapy.

There is a part of the website that has a nice table laying out for GPs for what cancers RT is the primary modality, adjuvant modality, palliative modality, etc. They have even hosted "GP Oncology Education Evenings" at treatment centers where they teach GPs about basic RT and run through a couple cases where a radiation oncology consult is a must.

If anyone is interested in a more detailed layout of the strategy, it's available here: http://www.ranzcr.edu.au/about/faculty-of-radiation-oncology/ro-campaign

I'm sure some would say that a spiffy publicity campaign does not equal power, but winning hearts and minds over social and mass media means you have an engaged constituency and politicians respond to that. Targeting Cancer has laid out a perfect model for what ASTRO should be doing from an advocacy perspective.

 

[BobbyHeenan]

I would assume that academic departments are also able to negotiate very favorable contracts with private insurers.

Exactly. You're in a stronger position to negotiate when you own the vast majority (or the only) of linacs in town.