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I subscribe to the Bridge Oncology email list and they typically send weekly updates. There was an excellent summary they just posted of the problems facing our field. Although none of this information is new, I though it was put together very well in a digestible format.
[td]
Understanding Supply and Demand in Radiation Oncology: A Misalignment with Operational Reality
The principles of supply and demand assume that the value of a product or service remains relatively stable. When that value fluctuates—particularly due to rising operational costs or declining reimbursement—the model begins to break down. This is precisely the challenge facing radiation oncology today.
In a traditional economic model, if demand for a service remains constant, and supply is stable, prices and margins should also remain relatively consistent. However, in radiation oncology, while demand remains steady or increases due to rising cancer incidence, the reimbursement per unit of care has steadily decreased. At the same time, the costs to operate—driven by staffing shortages, regulatory requirements, equipment upgrades, and maintenance—have risen significantly.
This creates a widening gap between cost and revenue. Unlike a typical market, radiation oncology departments cannot simply raise prices to compensate. Medicare and commercial payers set fixed rates, often decreasing year over year, regardless of inflation or cost escalation. As a result, maintaining the same margins requires one of three responses:
It is a flawed assumption that just because a radiation oncology service line exists, it should be maintained at all costs. Financial sustainability must be part of the strategic equation—particularly as hospitals face broader margin pressure. Radiation oncology once carried many institutions by subsidizing other underperforming or mission-based service lines. But the reversal of that dynamic means it now needs intentional investment, performance monitoring, and business discipline to survive.
As reimbursement models evolve and operational challenges mount, health systems must recognize that preserving access to radiation oncology requires more than legacy thinking—it demands a recalibrated strategy rooted in economics, efficiency, and innovation.
[/td]The principles of supply and demand assume that the value of a product or service remains relatively stable. When that value fluctuates—particularly due to rising operational costs or declining reimbursement—the model begins to break down. This is precisely the challenge facing radiation oncology today.
In a traditional economic model, if demand for a service remains constant, and supply is stable, prices and margins should also remain relatively consistent. However, in radiation oncology, while demand remains steady or increases due to rising cancer incidence, the reimbursement per unit of care has steadily decreased. At the same time, the costs to operate—driven by staffing shortages, regulatory requirements, equipment upgrades, and maintenance—have risen significantly.
This creates a widening gap between cost and revenue. Unlike a typical market, radiation oncology departments cannot simply raise prices to compensate. Medicare and commercial payers set fixed rates, often decreasing year over year, regardless of inflation or cost escalation. As a result, maintaining the same margins requires one of three responses:
- Increase patient volume, which may not be feasible due to workforce constraints or geographic limitations.
- Decrease operational expenses, often difficult without compromising care quality, staffing, or compliance.
- Generate halo revenues, by integrating radiation oncology into broader care pathways that capture downstream value (e.g., diagnostics, pharmacy, infusion, or hospital admissions).
It is a flawed assumption that just because a radiation oncology service line exists, it should be maintained at all costs. Financial sustainability must be part of the strategic equation—particularly as hospitals face broader margin pressure. Radiation oncology once carried many institutions by subsidizing other underperforming or mission-based service lines. But the reversal of that dynamic means it now needs intentional investment, performance monitoring, and business discipline to survive.
As reimbursement models evolve and operational challenges mount, health systems must recognize that preserving access to radiation oncology requires more than legacy thinking—it demands a recalibrated strategy rooted in economics, efficiency, and innovation.
