Let's talk economics

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scarbrtj

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TL;DR
Outside of all discussions re: possible increase demand for XRT, possible increased patients, possible increased indications.... the year-on-year national cost and reimbursement for rad onc is dropping. It must increase by ~30-40% (ie projected growth in rad onc MD numbers) over the next 10 years so that rad onc MD salaries will not drop. This will be unprecedented/unlikely. Alternatively, rad oncs must increasingly make successfully demand more of a percent of their collections.


Suppose all of the following are true:
1) Spending, and reimbursement, in radiation oncology have held steady or slightly declined for the last 10 years. Reasons: decreasing fractionation, steady/decreasing XRT utilization rates, and moving to SBRT and SRS e.g. (which reimburses less than high-fraction IMRT), and a decline in IMRT reimbursement. There are numerous lines of evidence for this; e.g., Medicare rad onc allocations were about ~$1.67 billion in 2012 and ~$1.58 billion in 2018. This number might have been as high as $2.2 billion in 2012. Suffice it to say the number is going down it seems.
2) Given #1, assume "average" rad onc spending makes up about 7% of all cancer spending (~$2 billion on average out of ~28.7 billion CMS cancer spending e.g.) in 2012 and rad onc won't claim a GREATER share 5-10y from now. (I.e., systemic/biologic spending will outpace rad onc spending.)
3) This ~7% figure will hold steady over time, perhaps decrease and little evidence it will increase.*
4) Let's say that ~550,000 new XRT patients will "occur" in 2020 and the rate of new XRT patients will hold mostly steady over time, at least 5-10y time frames (meaning repeat XRT patients will too; an equilibrium is or will be reached eventually).
5) Given #2, we can calculate about $6.1 billion spent for radiation for all payers in 2012 (7% times 87.5 billion).
6) We can also arrive at this figure another way. We can guess about 480,000 XRT patients in 2012. The average cost of a course of XRT is about $12,000. This gives us ~$5.8 billion (480,000 * $12,000). So the $6.1 billion from #5 and ~$5.8 billion agree very well.
7) Let's assume $6 billion as a round number therefore, and that this $6 billion/year captures ALL rad onc payer reimbursement (including the difficult to quantify repeat XRT business etc.).
8) Given all past ~10y trends, assume $6 billion being the number for 2025 and 2030 (esp given that the average cost of xrt per patient is steady/declining).
9) So...$6 billion seems to be the "pie." And it's a steady pie. And that is optimistic.

Now for the "economics..." if you accept all the above (which seems solid to semi-solid...you can see where this going). In 2012, if we have ~3900 rad oncs, that is $6E9/3900 = $1.5 million billed per rad onc. If we allow ~25% of global per rad onc, that's a $384,000 annual salary on average. In 2020, we will be at $6E9/5000 rad oncs (at best), at a $300,000 annual salary. By 2025 we can assume $6E9/6000 and a $250,000 annual salary. Running these numbers out to 2030 shows a $215,000/year salary is possible in 2030. These are AVERAGES. (And like a single BED calc, maybe it's not the raw number that counts as much as the trend and comparison to another raw number. That trend being there could be a ~30% salary decrease that rad oncs are facing 10y from now.)

Either average salaries will go down in the future, or they won't. If they don't it means only one of two things: radiation oncologists will begin making more of a percent of what they collect, or there will be a historically unprecedented (minor) explosion of the "$6 billion pie." The focus is on the $~6 billion "pie." To be totally transparent, you can pick different numbers to make the salary average predictions be better. But, if we are also still being honest, we can pick numbers making them worse.

*[edit: rad onc's slice of cancer cost pie held steady for commercial 2004-2014 at 4% e.g.]

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Yah a bit brutal. There will be, best-case, 30% more rad oncs 10y from now. This means national rad onc spending needs to increase by 30%, to about $8 billion per year, to keep pace and keep average salaries steady. There's no published set of numbers that show that is really possible. If the number is 40% more rad oncs, which is a possible trend, it must be $8.4 billion or so. And if we want salaries to keep track with inflation, and there's a ~40% rad onc growth rate in 10y, this number will need to be ~$10 billion 10 years from now.

The simple math: every percent growth in MDs needs to be offset by a concomitant growth in rad onc spending. If not, salaries will decrease over time. (edit: or more and more rad oncs can clamor to try and collect more and more percent from their employers... a bit economically infeasible IMHO.)
 
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It is a hard fact that supply of residents had doubled in past 15-20 yrs. it is really the Burden of programs to show that demand and spending have doubled if they want to be competitive for medstudents. (and of course it hasn’t)
 
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The numbers for radiation spending are all over the place and I would suspect the publicly available numbers you have cited may be incomplete


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CMS is of the opinion that radiation oncology spending is increasing. They likely have the most the most accurate data, and the current APM is fueled by the belief that radiation spending is increasing. The only numbers I could find used in the report to Congress cite the data 2000-2010, however, as noted here many times those numbers are inaccurate.

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I think it is misguided of CMS to focus on radiation when drug costs are soaring through the roof, but that is beyond the scope of this discussion. It is likely related to the poor representation radiation oncologists have in congress and lack of our presence in that arena to advocate for our field.

Nevertheless, I suspect there are numbers out there that we do not have access to that indicate there is a larger amount being spent that is triggering CMS to specifically target radiation oncology. If the costs were truly declining, it would be a monumental waste of resources to enact large scale changes for costs that are decreasing on their own. The promulgation of private proton centers means there are venture capitalists that also believe that the pool of radiation oncology spending is "untapped" so to speak.

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It is a hard fact that supply of residents had doubled in past 15-20 yrs. it is really the Burden of programs to show that demand and spending have doubled if they want to be competitive for medstudents. (and of course it hasn’t)
It hasn't. But, I would wager academic programs, because they have "cannibalized" ("Radiation oncologists also are shifting from working primarily in private practice to treating patients at academic centers and hospitals") so much business from the non-academic side in the last ~10y, have somewhat falsely seen a growth in spending/reimbursement. So if you're in academics, you have not felt the ~$6 billion pie holding steady. As far as academics is concerned, it's a growing pie, and their salaries have thus been growing or maybe at worst steady. But the pie has not grown... only academics' slice has. And thus residency expansion seems to be a correct maneuver (or at least not against one's own self-interest) for a rational actor within the market. But if economics is a real thing this has reached or has nearly reached its limit. Perhaps soon even those in academics will see they are not acting in their own self-interest.
 
The numbers for radiation spending are all over the place and I would suspect the publicly available numbers you have cited may be incomplete


View attachment 292454


CMS is of the opinion that radiation oncology spending is increasing. They likely have the most the most accurate data, and the current APM is fueled by the belief that radiation spending is increasing. The only numbers I could find used in the report to Congress cite the data 2000-2010, however, as noted here many times those numbers are inaccurate.

View attachment 292457


I think it is misguided of CMS to focus on radiation when drug costs are soaring through the roof, but that is beyond the scope of this discussion. It is likely related to the poor representation radiation oncologists have in congress and lack of our presence in that arena to advocate for our field.

Nevertheless, I suspect there are numbers out there that we do not have access to that indicate there is a larger amount being spent that is triggering CMS to specifically target radiation oncology. If the costs were truly declining, it would be a monumental waste of resources to enact large scale changes for costs that are decreasing on their own. The promulgation of private proton centers means there are venture capitalists that also believe that the pool of radiation oncology spending is "untapped" so to speak.

View attachment 292455
I think we can all agree even if (my) numbers are off, radiation represents INCREDIBLE value to society. Drug costs are "soaring" as you say. The avg cost of XRT per patient is falling though. (Just look at what a prostate patient reimburses today vs 10y ago, or breast... the two most common pts in a rad onc dept. And SBRT courses supplanting multi-week courses generally reimburse a little less.) This is great for society, but has certain... implications... for MD salaries if correct. Is rad onc spending truly "untapped"? If so, we have nothing to worry about (in terms of salaries).
 
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I think we can all agree even if (my) numbers are off, radiation represents INCREDIBLE value to society. Drug costs are "soaring" as you say. The avg cost of XRT per patient is falling though. (Just look at what a prostate patient reimburses today vs 10y ago, or breast... the two most common pts in a rad onc dept. And SBRT courses supplanting multi-week courses generally reimburse a little less.) This is great for society, but has certain... implications... for MD salaries if correct. Is rad onc spending truly "untapped"? If so, we have nothing to worry about (in terms of salaries).

Definitely agree radiation represents an incredible value to society. In fact, I think it is severely underutilized. Is it underutilized enough where there is enough "untapped" potential as it currently stands to compensate for an exponential oversupply of new practitioners? Doubtful. But there is literally nothing we can do about the oversupply problem for the next 5 years at least. Those spots are locked. Like you have said, even if we cut all new spots to 0, there is a giant problem that still exists.

The best near term (and potentially long term) solution I see is to increase the demand for services by producing new indications for radiation, or making sure that underutilized indications get used appropriately (ie salvage radiation for prostate etc). I think my posts get mistaken as not acknowledging a supply problem, which is not the case. Spots should definitely be decreased, but that is one amongst the many things we should to do sustain the field
 
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Definitely agree radiation represents an incredible value to society. In fact, I think it is severely underutilized. Is it underutilized enough where there is enough "untapped" potential as it currently stands to compensate for an exponential oversupply of new practitioners? Doubtful. But there is literally nothing we can do about the oversupply problem for the next 5 years at least. Those spots are locked. Like you have said, even if we cut all new spots to 0, there is a giant problem that still exists.

The best near term (and potentially long term) solution I see is to increase the demand for services by producing new indications for radiation, or making sure that underutilized indications get used appropriately (ie salvage radiation for prostate etc). I think my posts get mistaken as not acknowledging a supply problem, which is not the case. Spots should definitely be decreased, but that is one amongst the many things we should to do sustain the field

We have a demand problem, a supply problem, an innovation problem, and a payors who think we spend too much on RT.

When you have that many problems, it’s best to face the truth. None of them are going to be solved in a controlled or even conscious matter. Pick a specialty with more leverage.

Rad onc will never have the influence that pharma wields which is why we are test guinea pigs. We are too small to matter. The best we have been able to do in the last 10 years is a disappearing act.
 
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The numbers for radiation spending are all over the place and I would suspect the publicly available numbers you have cited may be incomplete


View attachment 292454


CMS is of the opinion that radiation oncology spending is increasing. They likely have the most the most accurate data, and the current APM is fueled by the belief that radiation spending is increasing. The only numbers I could find used in the report to Congress cite the data 2000-2010, however, as noted here many times those numbers are inaccurate.

View attachment 292457


I think it is misguided of CMS to focus on radiation when drug costs are soaring through the roof, but that is beyond the scope of this discussion. It is likely related to the poor representation radiation oncologists have in congress and lack of our presence in that arena to advocate for our field.

Nevertheless, I suspect there are numbers out there that we do not have access to that indicate there is a larger amount being spent that is triggering CMS to specifically target radiation oncology. If the costs were truly declining, it would be a monumental waste of resources to enact large scale changes for costs that are decreasing on their own. The promulgation of private proton centers means there are venture capitalists that also believe that the pool of radiation oncology spending is "untapped" so to speak.

View attachment 292455
BTW a couple other points:
1) Number of XRT patients only grew ~8% from 2012 to 2020 and will be ~550K (high end estimate) this year. This is due to the decreasing incidence of cancer not foreseen by prev models, very mild decrease in XRT utilization too.
2) Would love to see any data showing that we spend more for XRT in ~2020 than ~2012 (although granted it appeared to be ~2.2 billion in 2012 and ~2.4 billion in 2015 as you showed). I have not seen that data and again per the CMS budget it shows a decrease in $$$ over time, and that makes sense to me more than a increase. Also data shows a pretty strict hold for private payers, who make up most of rad onc spending. I am first to say significant contradictory data invalidates a theory so if there is contradictory data (ie rad onc spending is increasing) this would be ... good. The contradictory data needs to be a possible or projected net 30-40% increase in rad onc spending over 10y, or more, rather than the stability/decline the data cited appear to show.
 
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