Episode 20: Who’s The Boss: Convergence and Consolidation in Cancer Care [PODCAST]
In this episode, Foley Partners Adria Warren and Alexis Bortniker sit with Michael Kolodziej of ADVI Health about the upcoming Cancer Center Business Summit and the current convergence and consolidation in the oncology industry and what that means for the future of cancer care.
Adria Warren is a health care lawyer advising hospitals, providers, and health care enterprises on complex transactions, corporate, and regulatory compliance matters. Her experience includes mergers, acquisitions, joint ventures, and other affiliations and strategic transactions; forming provider groups, networks, and alliances; and advising on fraud and abuse and HIPAA compliance, employment, reporting and disclosure requirements, and marketing compliance. She is a member of the Health Care and Technology Industry Teams.
Alexis Bortniker is a health care transactional lawyer in the San Diego office of Foley & Lardner LLP and is chair of the firm’s health care transaction group. Alexis is a strategic advisor, working with health care providers, payers, private equity companies, and technology companies on joint ventures, mergers and acquisitions, payment structures, and complex business transactions. Alexis has extensive experience in alternative payment models, population health management, risk-based reimbursement systems, and payer/provider alignment. She has significant experience working with providers in Medicare Advantage and CMMI demonstration models. Alexis also advises emerging companies in navigating the move away from direct-to-consumer payment models to third party payment strategies, including commercial payment, direct to employer, centers of excellence and more.
Michael Kolodziej, M.D. is a Senior Advisor at ADVI Health. Dr. Kolodziej practiced oncology with New York Oncology from 1998-2013. During this time, he also was chairman of the US Oncology Pharmacy and Therapeutics committee. In this role, he helped direct the implementation of the USON clinical pathways initiative. He joined Aetna in January, 2013 as National Medical Director, Oncology Solutions. While at Aetna, he directed Aetna’s oncology programs and was the architect of the Aetna Oncology Medical Home. Dr. Kolodziej joined Flatiron Health in July, 2016 as National Medical Director, Managed Care Strategy. He joined ADVI in October, 2017. He is a Fellow of the American College of Physicians.
Please note that the interview copy below is not verbatim. We do our best to provide you with a summary of what is covered during the show. Thank you for your consideration, and enjoy the show!
My name is Adria Warren and I am here with my co-host, Alexis Bortniker, and our guest, Michael Kolodziej. We're really excited to talk to you today about the upcoming Cancer Center Business Summit (CCBS). It's going to be held March 2nd to 4th—in Washington DC. It's a very exciting program. Foley co-founded the CCBS 15 years ago, and now it's co-hosted with the Association of Community Cancer Centers (ACCC). It really is the preeminent conference looking at the business of oncology and it brings together all those that are involved in oncology—community oncologists, hospitals, payers, organizations that support cancer, health IT, digital, and new technologies, and personalized medicine and pharma—all coming under one roof and thinking about how to strategize to survive and take oncology into the future.
We are excited this year to actually be able to be able to meet in person. We met in person just before the world shut down in March two years ago with no known cases of COVID, thankfully. Last year, we were able to put on the program virtually with about 1,000 people attending. We are going to be back in person with a live stream component this year, so we look forward to seeing all of our longtime attendees and participants. So again, I'm Adria Warren, I'm a partner in the Foley & Lardner Health Care Practice Group in the Boston office. I focus on health care transactions, provider-provider, provider-hospital affiliations, and joint ventures. As you can imagine, we're seeing a lot of that in oncology, and that's what we're going to be talking about today. Alexis?
Thank you, Adria. My name is Alexis Bortniker, I'm co-chair of Foley & Lardner's Payer-Provider Convergence Group. I've spent a good amount of time in my practice working with oncology groups as they work through physician hospital alignment, convergence strategies, and navigation of payment models. I'm very excited to introduce you today to Mike Kolodziej, a longtime supporter of the CCBS, a member of the CCBS advisory board, and a CCBS panelist this year. Mike is the Vice President and Chief Innovation Officer of ADVI Health and will be moderating an important panel for us at the summit titled, "Industry Reconfiguration: Who's the Boss?" On this panel, he'll be managing a conversation between key stakeholders, including health plans, health care providers, oncologists, and health tech companies about the topic of consolidation. Mike, tell us a little bit about yourself.
My name is Mike Kolodziej and I'm a medical oncologist. After finishing my fellowship at the University of Pennsylvania, I was briefly an academic physician and then subsequently went into community practice with the US Oncology Network. I practiced for over 20 years, the majority of those in upstate New York. During my tenure at US Oncology, in addition to having a busy private practice, I also was very involved with the US Oncology executive team physician leadership. I was chairman of the P&T Committee for a decade and part of the executive committee for many years as well.
In 2013, I left US Oncology and went to Aetna where I was National Medical Director and was in charge of the oncology programs. Subsequently, I moved over to Flatiron Health for a year and a half. And then for the last four years, I've been working with ADVI, which is a health care policy and strategy firm based in Washington, D.C. and Austin, Texas. Our clients
include run he gamut; life science companies, both therapeutic and diagnostic, and medical device, as well as oncologists, professional societies. As I said, my interests historically have been around cancer care delivery, and that's why I have been asked to moderate this panel at the upcoming CCBS.
Thanks, Mike. Can you tell us a little bit about your panel, how it came to be, and who's going to be on it?
I think it's fair to say that over the last ten, fifteen years, the configuration, or org chart if you will, for oncology has evolved. I joined US Oncology in 1998, and the 1990s, were the era of practice management companies, not just in oncology, but elsewhere. What we saw was that a not insignificant portion of the oncology practices chose to align themselves with practice management companies because practice management companies were good at management. They were good at billing and coding and minimizing DSOs, and contracting around the price of drugs, and helping you explore ways to diversify your practice if you were not in a CON state, all kinds of stuff to make you better at delivering care, at executing on the office management, the community oncology management of oncology. And then what happened was that the last ten years or so have seen sort of a plateauing on the number of practices that choose to pursue practice management strategies, at least until very recently
Over the last decade or so, we've seen a massive increase in the number of oncology practices that are owned or operated in some sort of professional agreement based in the hospital setting. So when I started, it was 80/20—80% community, 20% hospital based—but more recently, it's more like 50/50, and the dynamics of an oncology practice working for a hospital are really, really different than the dynamics of working in a freestanding oncology practice, whether or not you’re affiliated with a practice management organization. Probably the most common model has been acquisition of the practice by the hospital system, which as you can imagine, dramatically changes the power structure and the org chart.
Now, hospitals have historically liked to acquire oncology practices because the oncology service line is, or can be, quite lucrative. In addition, hospitals have become very facile at marketing their oncology practices. They become very good at taking advantage of certain programs, such as 340B, to maximize their margin. Typically, hospitals have deep pockets when it comes to capital improvement, so they could buy new PET scanners or Proton Beam machines. Hospitals really got into the cancer business and community oncology practices, particularly those in markets where there were really, really dominant hospital systems or community oncology practices that might have been struggling to survive, they found hospital acquisition to be a safe harbor.
It seems to me that that has plateaued a little bit. What we've seen instead is that other folks have started to get interested in inserting themselves into this oncologic org chart, and that actually is the genesis of our panel.
For our panel, we're going to address three areas. One is the emergence of health plans, specifically big national payers as practice acquisition organizations. Now, we've seen this for a while in the primary care space, but we're going to see it more and more in the subspecialty space. And we are seeing it specifically in oncology. The second novel approach is really, if you will, sort of an outgrowth of the emergence of accountable care organizations. Accountable care organizations—and their close sister integrated delivery networks—have developed mechanisms by which they attempt to control subspecialty cost by developing sort of narrow networks, preferred provider organizations that are driven by, if you will, the mothership, and the mothership is driven by primary care physicians by and large.
For example, we will have one of the founders of an organization called VillageMD. VillageMD is very interesting because they're building a network of primary care practices around the country, but this network is going to be supported by network management of preferred oncologists, so we're going to talk about what VillageMD sees the future of oncology practice, and specifically what it means for current oncology practices. Then the third thing we're going to talk about is the evolution of the large academic medical center, so I think everybody who's listened to this knows very well about the big nationally recognized academic medical centers getting their names out for the purposes of branding. But some of them actually put up a brick and mortar in their regions to provide oncologic practice, theoretically in support of the mothership. But City of Hope, interestingly, has taken a completely different tack, so we'll have somebody from City of Hope talking about what they see is the future relationship between oncology practices, specifically community oncology practices, as well as hospital-based practices and a large national, even internationally recognized practice.
So it used to be binary. It's not binary anymore. It's not just hospitals and practices (with or without management companies). It's going to be a whole panoply of new bosses, and they're going to have to certain expectations from a business perspective and they're going to have certain influence over how care is delivered at their practice site partners.
Thanks, Mike, I'm sure it will be a very interesting discussion. I think you have some great panelists and some really diverse perspectives. You touched a little bit on why we're seeing this convergence or consolidation now, and it's looking different than it did a few years ago when it really was hospital driven. What is your sense on why is there an acceleration right now? Is it there a lot going on in health care? I think obviously, COVID has had a big impact. I think there's a big push to value based care—there's new technology—but what, if any of these, factors do you think are helping to drive this, and do you think any of them are particularly more important or more focused than others?
I believe that a big driver of this is the unrealized potential of accountable care organizations. So with the emergence of the ACA/Obamacare, we had a universe in which that was going to be the way we went from fee for service to some sort of truly value driven care. And we haven't gotten very far in the accountable care organization front. That's my personal opinion. I think I'm sure I would find people who would debate that, but I think there's a lot of opportunity still. It's just that hospitals are not really good vehicles for accountable care. Why? Because they're conflicted. So now, we're seeing the emergence of novel primary care models, and the people who are interested in these novel primary care models recognize that they have to get control of cost and quality within their panel of patients who have serious chronic medical illness, or as I've said, many times, you can't save money on healthy people.
You can only save money on people on whom you are spending money. Cancer patients, in the commercial population, only make up about 1% of all commercial claims, which is tiny. And yet, they make up for probably close to 15% of the spend, so the health plans recognize they really do need to continue to transition to a value based approach. And let's be honest, they're hearing that from the self-insured plan sponsors, from the employers who are really the payer for about two thirds of all Americans with commercial health insurance or a working age. So listen, people still think that there's opportunity to improve quality and control cost via alternative payment models and they just think that there needs to be a different vehicle. And the three areas that we're going to talk about are all potential vehicles.
It's so interesting, Mike. We're seeing a lot of more flexibility in the regulatory world too, and pushes also in reimbursement to try and move towards more innovation and value-based care arrangements. The vertical integration that you're talking about, and the touch points across the continuum and up and down the supply chain, I don't know if it's resulting from or contributing to, or maybe a bit of both. So are there more technologies being adopted as a result of this trend? Or do you see it shifting in how technologies will be used and pushing health forward?
Oh, yes. So let's be very precise in what we mean by technology. We're not really talking here about what we've sort of traditionally thought about is technology in the oncology space. We're not talking about novel therapeutics. What we're talking about here is appropriate understanding and management of risk based on data, so what we will see, I think for sure, is the emergence of complex artificial intelligence driven care management platforms, novel mechanisms of interacting with patients and understanding who's at risk and how we might intervene to reduce their risk.
I think some of the startups in the primary care space, some of which are very well known and are publicly traded, are already doing this for their primary care doctors. We have not yet seen this on oncology except in a very, very small area. But if you are in charge of a big organization, let's say you're in charge of VillageMD, you are going to understand really well what your oncology risk is, and that's going to be driven by really sophisticated analytics partnered with really sophisticated care management. That is coming to your neighborhood really soon.
Mike, what does this mean for your average community oncologist? How are clinicians reacting to this, focusing on this? This is a new way to collaborate, to treat patients. It's a new way to think about what it means to be successful. Is this sort of more paperwork for the oncologist, or is this a more wholesome model that can work for folks?
So that's a little bit of a hard question, but as to whether it's more paperwork, probably not. What does it mean to the average oncologist? I'm not sure what the average oncologist really is, and given my life experience, there's a lot of different kind of subsets of oncology practice and God knows what. When we think about the CCBS, we try to aim for the majority of these practices, but there are first movers, and then there are folks that are influenced highly by their, if you will, business partners or owners. We will see, I think for sure, continued pressure on small to medium sized oncology practices to become affiliated, associated with larger organizations. I've said this for many years. I have continued to be shocked by the fact that there continue to be some practices that have not had interest in engaging. Part of that is geographic, but I think we will see, first of all, some movement into at least loose affiliations that allow pooling of expertise to allow success in the new model. So that's one thing.
Second thing is I think the companies that are building these new technologies, they're going to be hungry. They're going to be hungry for developing relationships with other oncology providers with health plans, with primary care networks, and they're going to be driven to execute on a really sophisticated product that meets the needs of the marketplace, and that's good. The third thing is we're going to see, I think, I hope, I pray some responsiveness in the electronic medical record community to allow easy access to the kind of information that's going to be required for among other things, risk stratification, quality measurement and reporting. We saw a little movement with the oncology care model down that route, but God knows not nearly enough.
So I'm hopeful that that's going to happen. And then I think the last thing we're going to see is, and this will probably happen very, very soon, is some indication of what these business relationship contracts might look like. Initially, it will be simple network management, but I would fully expect that we are going to start to see some sort of subcap or episode-based reimbursement. We may see it initially in radiation oncology, but I think we will see it in medical oncology as well. And in fact, we have seen some of this already with some of the pilots that have gone on in the last several years. So I expect that the oncologists will become comfortable with whatever it takes to be part of these networks, and I fully believe that some of the more sophisticated practices and practices affiliated, for example, with these large practice management organizations, to jump all over this. They're going to be ready to go right out of the gate, and then we'll see what happens with the second wave.
We are seeing a number of practices going on to the national platform management model that you're referencing as an alternative to hospital alignment or choosing between the two. Do you see any particular pros or cons on various models?
There's a lot of people unhappy with the hospital model, I think. There's a long list of practices that, after the honeymoon was over, they weren't so keen on how things were going. I think we should be very clear that the continued interest of hospitals is going to be solely driven by the continued economic success of their cancer service's business line.
Let me paint a scenario for you. The government prevails in 340B pass through. Medicare gets a piece of that 340B discount. Commercial health plans jump over it and attempt to get their share of the 340B discount, and the current site of service kind of policies that virtually every national health plan is putting in place are successful, steering high margin patients away from hospitals. And boy, it sounds terrible to use that term, but let's say patients receiving chemotherapy, which is billed and collected at a very lucrative level by hospital based program, let's say those site of service programs are successful and the arbitrage that health plans have been subjected to by hospital based programs disappears overnight, I think all of a sudden hospitals are just not so interested in oncology anymore, in which case, oh, lots of things change. Lots of things change really, really fast.
Mike, if you're a provider, a community oncologist, and you're starting to see these trends in your area, in your networks, what are the questions these providers should be asking when they're talking to the health plans who are trying to acquire practices or large ACOs who are starting to have interest in oncology? Because they didn't for a long time, it was all primary care driven. What are some of the things that they need to be thinking about as they choose their next steps? I know that a lot of this is market driven and different markets of different issues to deal with, reimbursement models that have made their way into the market. What are the good questions? What does an oncologist need to be thinking about in assessing some of these options that are coming into play?
I think the first thing that oncology practices should recognize is that maybe for the first time in a really long time, the health plans, the ACOs, the potential new bosses, if you will, they understand that a good community oncology practice is worth their weight in gold. And again, I hate to keep making it about the money, but I think that if you're a practice, you should think about number one, how can I prove that I really am good. Number two, how can I analyze how I'm delivering care and what the opportunities are for me to be both the high quality, as well as appropriate cost? Notice I didn't say low cost, I mean appropriate cost provider. If I am a practice, I want to be recognized for being as good as I am, and I'm telling you that I think I feel very strongly that in the past, when hospitals acquired a practice, they were really only interested in what their case mix was, what their payer mix was and where they were located geographically. That is not what the future looks like.
I want to include in my network a really good, sophisticated, really collegial, really thoughtful practice that can partner with me in managing these really complicated patients because to be perfectly honest, I'm not smart enough to manage them myself. So I think actually, we could be head it towards an even more golden age, if you will, for community oncology practices that can execute. It could finally be that that quality is not simply arrived at by attestation, which has driven me crazy for the longest time. We're going to be able to actually put some meat on those bones. And you know why that's good? Because I'm a consumer. I'm a patient. I want to go to that best doctor. I don't care who's got the biggest billboards. I don't care who's got the most commercials during the Yankees game. I care about who really can document that they're given the best care. So we'll see, I hope, we will see the rise of consumerism and patient choice, and that choice is supported by data. That would be just wonderful.
It's a nice vision. And speaking as a patient, I really appreciate what that means for me and for oncologists. What about the hospital in all of this? How do they approach strategically this vision of a new normal?
Well, they can change. So the answer to that question is, let's see what City of Hope has to say because I think the leadership at City of Hope, sometimes I don't understand what they're doing and I don't know why they're doing what they're doing, but I have to tell you that makes me think I'm dumb, not them. I really look forward to hearing what they have to say about what the academic medical center, what the comprehensive cancer center of the future looks like. It could be a bunch of things, but one thing I don't think it's going to be giving adjuvant chemotherapy for breast cancer. That's what they're doing now. They are competing directly with the community doctors. And that's fine. I'm sure they do just an excellent job.
But I think it'd be almost impossible to prove that they do it better than most community oncology practices; but there are things that they definitely do better. I've been interested for a very, very long time in what exactly is a center of excellence? And excellent at what? So we have interesting data regarding things like complex surgical procedures, like Whipple procedures, and complex radiation oncology, like treatment of head and neck cancer. There is clearly a lane where honestly, academic medical centers or good quality medical centers, community medical centers, they belong in that lane. Now, here's the question. How do we get from here to there, right? How do we get from where we are now, competing for the same patients, to that future state of specialized care? And I'm not sure I know the answer to that question, but City of Hope is going to help us understand it the first week of March. So I'm looking forward to it.
I think hospitals have some thinking to do as they figure out next steps for a lot of reasons. I'm going to ask a tough question, the crystal ball question—but as we think through the potential impact that these vertical integration and well, just integration generally can have on the delivery of cancer care on the patient experience, the change in the value proposition, I think, of how the model, how the care is delivered and perceived and paid for—it makes me wonder where do you see us in 2030, AMCCBS 2032? What do you think may some successes? What do you think we'll be talking about? And I realize what, from this can, can carry us into the future? What will oncology look like?
That's is, as you know, a hard question. I think that a couple of things are very likely. One is we talked a bit about from the perspective of the health plan and paying for care. I think we're going to have a dramatic, dramatic improvement in how we use technology to actually manage individual patients. We've had this love affair with personalized medicine, precision medicine, whatever you want to call it for many years now, and it has historically had a definition around, let's just say, the genetic code. That is just too simplistic a view of personalized medicine. Even though attempts at this have maybe not succeeded so wonderfully, we will see a universe in which real world evidence, experience, a rapid learning system that involves learning from every patient we take care of will allow us to truly personalize care based on all kinds of clinical elements, mutational status, pharmacogenomics and pharmacokinetics, social determinants of health.
All those things will start to kind of consolidate into a truly personalized approach for patients. And I think the first thing we'll see, I'm pretty sure, is kind of integration of sort of the genomic information into the rest of the clinical database. So you could say to me, "Mike, we're already doing that,” and I would say, "Yeah, right." Right now, we've got a bunch of single mutations which predict either a high likelihood or low likelihood of response to a particular therapeutic agent, but it largely exists outside of pretty much everything else. And yet, we know that that linear single gene model, it's wrong. And so I would expect that'll be the first thing we see, but then we'll actually see all kinds of other stuff that comes into the equation for helping us manage individual patients. And it should be available at point of care.
I used to tease some of my colleagues that I want to see a world in which I'm entering this clinical information into the EMR and I'm seeing on my computer screen, various appropriate therapeutic options, their likelihood of a success and their likelihood of toxicity or failure. We should have that. We can have that. We've already got that in the rest of the internet. We need to have it in medicine. Second thing is we are going to be paid differently. I think we will see the elimination of fee for service. We will see the elimination of buy and bill. We will have episode based reimbursement. We may even see capitation in the sense of population management because I think our science, our actuarial science will advance to allow for case mix discrepancies that were magnified, if you will, during our experience with the oncology care model.
The third thing is I think we will clearly see a much closer association between whoever the boss is and the oncology practices and the quality of care they're delivering and the way they're paid. So we will truly come to some accountable care model, which I think all of us should be happy about. Now, I think some of the full folks listening to this, maybe our community oncologists, will think I finally have gone off the deep end and lost my mind, but I think we should not be scared of this. We shouldn't be threatened by the potential for organizational realignment. We shouldn't be sanguine in the way we're delivering care now because everybody's got room to improve.
And when you think about your patients and what their expectations are, when you think about the incredible pace with which science has progressed...When I was in practice, I never gave a patient a PD-L1 drug, and I didn't leave practice that long ago. That's unbelievable, right? Now, you give PD-L1 drugs to almost every cancer as best I can tell. So, the things are changing very, very fast and they're going to change further, and we should not be scared or intimidated by that. We should embrace it. We're going to be better at what we do, and our patients are going to benefit from it. And that's the most important thing.
That's a perfect vision and I think a great note to end on. So thank you, Mike, for your time and for discussing your upcoming panel in the summit, and the world of oncology today.