Note: For supplemental figures that provide concrete illustrations of a number of the authors’ points, click here.
The Opportunity
The public tends to think of healthcare reform as being primarily about healthcare coverage for the uninsured. Certainly, that is one of its most important features, and it will likely bring about striking changes in the broad healthcare marketplace. Based on an "intent to buy" survey we conducted, we expect roughly 39 million of those currently uninsured to enter the market in the next few years, bringing with them $150 billion in annual buying power. But there has always been more to reform than signing up the uninsured. The economic forces set in motion as these consumers buy coverage will lead to a dramatic transformation in how care is delivered, therapeutic area by therapeutic area. The hope is that competition and the new business models enabled by the Affordable Care Act will tame the relentless medical inflation that has marked the past two decades and will make healthcare affordable for Americans.
Few segments of medicine will be more affected by healthcare reform than oncology. The cancer marketplace is ripe for change, the sort of change that leads to better care for patients, lower costs, and—for provider organizations capable of reinventing themselves—greater profitability. The aging of the American population and advances in treatments are expanding the market. Leading oncologists have recognized that a major opportunity is emerging to change the value formula at a time when payers and consumers alike are looking for more value. In fact, a few leading cancer service organizations have figured out how to increase the value of cancer services (measured in terms of improved outcomes and greater patient satisfaction), while decreasing the cost by 20 percentage points.
When viewed through the lens of healthcare value and affordability, cancer is a high-opportunity market—but to take advantage of the opportunity, fundamental change is required. Drivers of growth and change include the following:
Cancer is a growth market
Thomas Main, MBA, Andrew Chadwick-Jones, MA
The US cancer market has been growing strongly at more than 5% per annum in recent years, and cancer-related spending looks set to surpass $100 billion in the next 5 years (Figure 1). This is partly a product of the aging of the population, which has increased the number of people diagnosed with cancer. Within the next 5 years, cancer will surpass heart disease as the leading cause of death in the United States, and cancer will be diagnosed in one in every two men and in one in three women. But the growth in the cancer market is also related to the availability of break-through treatments that let many patients live—and receive treatment—longer, thereby increasing both the prevalence and the cost of the disease.
Brand excellence leads to expansion
Healthcare organizations have a great deal to gain from delivering superior cancer care and building brand equity. Cancer patients value clinical excellence and are willing to travel to access high-quality care. And organizations with a reputation for excellence have consistently expanded both their market share and their geographic service area. This pattern of brand excellence leading to market dominance is seen in a number of major European and American cities (see Supplemental Figure A).
Clinical and patient care excellence changes the game
As policy makers, health plans, government sponsors, and employers struggle with the affordability of healthcare, the market is poised for a historic shift. The fee-for-service model, in which the more you do the more you make, will give way to a fee-for-value model, in which payment models and profit dynamics are tied to performance and outcomes. Imagine a world where physicians collaborate on an integrated value-based treatment plan and work with patients to set the optimal course—hospice care instead of surgery for some late-stage lung cancer patients, or informed decision making for patients with prostate cancer, or more consistent use of evidence-based guidelines for chemotherapy.
Cancer Care Market Value Trends and Market Opportunity
This move to value is being driven by the groups that ultimately pay for health benefits—sponsors and consumers. The latter group has traditionally not had a great deal of influence with the insurance industry, but that will change rapidly starting in 2014, as an estimated 39 million new customers move into a new government-sponsored retail insurance market. Most health plans assume that to win in that market they will need products priced 20% below standard employer-sponsored products. Provider organizations stand to gain much—but only if they can develop a deep understanding of the clinical economics of complex cancer care and then build systems that deliver both excellence and value. The stakes are high and the clinical change agenda is complicated, but those who take the lead will have an advantage in the new value-based market.
The Existing Model Is Broken
When we think about the delivery of cancer care in the US healthcare system, an old Irish saying comes to mind: "If you want to go there, you shouldn't start from here." The existing system, for all its achievements, is in no way aligned to deliver consistently excellent cancer care at an affordable cost. Outcomes are good by international standards, but they vary widely, and they are costly (Figure 2). Patient experience varies as well.
Cancer Outcomes Vary Substantially, Both Nationally and Internationally, As Shown in This Graph of Lung Cancer 5-Year Survival
Cancer treatment involves a lot of moving pieces: physicians, treatment options, and delivery sites. In most models, the job of managing those pieces is left to the patient. In addition, the specific treatment requirements of different tumor sites and stages vary greatly, forcing cancer practices to stretch their organizations to be flawless and diligent at routine activities (such as breast screening programs), while at the same time coordinating the most advanced technologies.
The complexity of cancer treatment means that many patients are ill-served by the existing fragmented provider systems. Patients can find themselves being passed—without coordination—between independent diagnostics organizations, major acute hospitals for surgery, and even treating physicians. The result: many provider networks fail at what should be considered basic, threshold capabilities—and "value leakage" in cancer care is surprisingly high. Top sources of this sort of leakage include:
• Limited control of practice variation across the whole continuum of care.
• Absence of recommended molecular profiling and personalized medicine.
• Limited multi-disciplinary treatment planning and collaboration.
• Limited patient navigation.
• Inconsistent supportive care and survivorship care.
• Gaps in clinical information needed to enhance decision making.
• Absence of quality assurance systems aligned across all modalities.
• Insufficient access to clinical trials.
• Sub-scale depth in specific tumor sites and related treatment options.
It is no surprise that four of the top ten cancer hospitals in the US News and World Report rankings are cancer-focused centers, and that none are community-based. These centers offer focus, scale, technology, training, patient programs, and immersion in clinical trials and the science of cancer treatment, all of which are directly correlated with program excellence.
In a fee-for-value marketplace, America's cancer practices will be challenged to deliver excellence and to change the value formula; on the basis of our client work, we are convinced that a reasonable goal is 10% more value for 20% less cost. Without continued improvement in cost and quality, coverage will become unaffordable.
