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Oncology Carve-outs Another Managed Care Option

Oncology Carve-outs Another Managed Care Option

As managed care grows, oncologists will have to decide who to "bond" with, then learn how to develop financially sound contracts with their new partners, Lee E. Mortenson, DPA, said at the 1995 Oncology Symposium of the Association of Community Cancer Centers (ACCC).

Oncologists can bond with other physician groups, hospitals, or university programs. Or they can choose to associate with one of the carve-out organizations that are managing physician practices across the country, said Dr. Mortenson, ACCC executive director.

In a carve-out, practice management organizations acquire physician practices, then contract with managed care plans to provide just one piece of patient care, such as medical oncology and radiation. The carve-out organization sometimes strikes a deal with an area hospital to rent beds for inpatient oncology treatment.

Currently, carve-out organizations are maintaining relationships with hospitals, although eventually they may become competitors. Right now, the organizations are concentrating on signing up physicians, particularly the major oncology practice in a large market area. In the future, they may add laboratory, chemotherapy, x-ray, and other services to offer an integrated oncology practice, he said.

Physicians wishing to participate in these new practices will need to develop a managed care bid. The "classic way" to do this is to look at the population demographics, number of cases currently under treatment, and previous experience of insurance; then calculate the likely number and types of cases that will be treated in the future, Dr. Mortenson said.

But this method doesn't guarantee the anticipated return. Physicians need to learn how to "manage their managed care contracts" to ensure they get the margin expected, he said.

He gave this advice:

Develop site-specific, stage-specific global management costs that include hospital costs, outpatient costs, radiation oncology, and medical oncology.

Review your contract on an ongoing basis. "Look at the original bid, discounts, and financial projections. Then examine what you actually had in terms of patients and expenses," he said. This will require monitoring of costs and results-including length of stay and survival rates-by cancer site.

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