NJ Biz News: As Cancer Grows - So Do Cancer Centers

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http://www.njbiz.com/weekly_article.asp ... aID2=74425

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Two hospitals in the Garden State have broken ground on new cancer centers, a familiar sight here and nationwide as patient demand mushrooms and competition among caregivers intensifies.

AtlantiCare broke ground last month on a $32.5 million cancer center in Egg Harbor Township to consolidate and expand the cancer treatments and services currently spread throughout the nonprofit organization. AtlantiCare Regional Medical Center, the main part of AtlantiCare’s system, is a 567-bed teaching hospital with campuses in Atlantic City and Pomona.

Hackensack University Medical Center, a not-for-profit health care provider based in Hackensack, also broke ground in April on a new cancer center that will bring all of the hospital’s cancer-related offerings under one roof. Hackensack University Medical Center is a 775-bed teaching and research hospital affiliated with the University of Medicine and Dentistry of New Jersey.

Hospitals in general offer a wide range of cancer treatments and services. They diagnose cancer, provide chemotherapy and radiation therapy, and track the progress of treatments. On the service side, hospitals promote prevention in the surrounding communities, give nutritional advice to patients and provide financial counseling.

Several factors are causing a surge in demand for treatment and services. “There’s an increased incidence of cancer in the nation and the New Jersey community,” says Terri Schieder, vice president for clinical development and integration at AtlantiCare. “There’s also increased survivorship. Patients are living longer with cancer so there’s a need for a lot more procedures and support services.”

And because cancer occurs more often in older than in younger people, the nation’s aging population is also driving demand, she says.

AtlantiCare’s new cancer center, scheduled to be completed in the summer of 2009, will be a one-stop site for all-inclusive cancer care, says Schieder. The facility will be designed in an aesthetically pleasing way, which means a lot of natural light and use of stone and wood in the walls, she says.

Teri Guidi, president and chief executive officer of Philadelphia-based Oncology Management Consulting Group, says older cancer centers may not be “as attractive as today’s American health care consumer expects them to be. Consumers of all things have become increasingly fussy.”

She says more people with cancer, and more people living longer with the disease, are causing hospitals and private-practice physicians to improve their cancer treatment and service offerings. But the cost is coming “perilously close to outstripping patients’ and insurers’ ability to pay for them,” says Guidi.

For example, a linear accelerator, the machine used to deliver tumor-shrinking radiation to patients, costs millions of dollars, she says. To make cancer centers economically feasible, hospitals must draw a good mix of patients with and wtihout insurance—who cannot be denied treatment—and negotiate favorable reimbursement deals with insurers, says Guidi.

Generating profits is important for hospitals because it gives them money needed to invest in new equipment and technologies, she says. “A linear accelerator has a shelf life of 10-to-12 years. You have to put some money away to replace it.”

AtlantiCare has two linear accelerators, one of which costs $2.8 million, says Jim Nolan, senior vice president of finance at AtlantiCare. The hospital’s cancer center is an affiliate of the Fox Chase Cancer Center.

Another costly piece of the cancer business puzzle is support services, which are generally not covered by insurers. Nolan says “some portion” of profits generated by chemotherapy and radiation therapy is used to fund such services. At AtlantiCare, they include social workers who help families deal with diagnoses and research coordinators who register patients for clinical trials that are testing experimental therapies.

Barbara Tofani, director of the Hunterdon Regional Cancer Center, says, “We definitely lose money on support services.” Hunterdon Regional Cancer Center, an affiliate of Fox Chase Cancer Center, is part of Flemington-based Hunterdon Healthcare.

Meanwhile, insurers are paying “less and less” for newer chemotherapy drugs because they are hesitant to reimburse for unproven therapies, which are often a patient’s last hope, says Tofani. Insurers also fail to take into account the expense of employing skilled workers, like oncology nurses who mix and administer complex and potentially harmful drug cocktails, she says.

Reimbursement for radiation therapy is sufficient now but in the coming years insurers will probably tighten their wallets in that area as well, she says.

Tofani says cancer centers are “extremely important” to hospital’s finances because of the “huge” revenue stream generated by a cancer diagnosis, but notes income is being squeezed by other centers.

The competition can be intense. In December 2006, New York City’s Memorial Sloan-Kettering Cancer Center, an internationally known facility, opened an outpatient site in Basking Ridge. The hospital probably built the new center in part because they were losing cancer patients in New Jersey to more convenient centers closer to their homes, says Tofani. “People can’t afford to stop working just because they were diagnosed with cancer,” she says.

But to lower costs and reduce redundancy in certain areas, some hospitals have teamed up to offer cancer treatments and services, says consultant Guidi. Examples include the West Michigan Cancer Center, a cooperative program run by Bronson Methodist Hospital and Borgess Medical Center, and The Harold Leever Regional Cancer Center, a joint venture between Saint Mary's Hospital and Waterbury Hospital in Connecticut.

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(NJBiz, Article By Thomas Gaudio, May 19, 2008)

Disclaimer:

The information contained in these articles may or may not be in agreement with my own opinions. They are not posted as medical advice of any kind.