'Consolidation Inevitable' in Oncology Practice

ORLANDO—"Even with 1.2 million new cancer cases diagnosed each year, 4.5 million cancer patients, and cancer the costliest disease, there are still more oncologists out there than we need," said Harold Wodinsky, vice president of managed care and network development for EquiMed, Inc., a national multispecialty physician practice management firm.

With oncologists scrambling for position in this new marketplace, "consolidation is inevitable," he said at a conference organized by International Business Communications. "I predict that there will be only three or four major physician practice management players in the oncology market by the year 2000."

In fact, such consolidation of providers is becoming more widespread, with numerous types of networks and alliances currently in operation.

Mr. Wodinsky cited both publicly traded and private equity affiliations (in which the physician has a financial stake in the network) as well as a long list of nonequity networks such as IPAs (independent practice associations), PPOs (preferred provider organizations), HMOs (health maintenance organizations), PHOs (physician hospital organizations), MSOs (managed services organizations), and something he referred to as OWAs ("other weird arrangements").

It is increasingly common to see an individual, group, or university or comprehensive cancer center sponsor a network of providers, Mr. Wodinsky said.

Group affiliation models include solo subspecialty oncology groups consisting solely of either medical oncologists or radiation oncologists; multisubspecialty oncology groups that can include both medical and radiation oncologists; and multispecialty primary care, internal medicine, and other physician groups that include oncologists in their network.

Advice for Networks

Mr. Wodinsky cited a number of factors essential to the success of an oncology alliance. First, he advised, make an effort to work through ego issues. Expect problems with differing reimbursement methodologies in the same network, such as both fee-for-service and capitation, and try to align them. It's also critical, he said, to bind participants together with "glue" such as stock shares.

Make an effort to involve physicians in running the network, to avoid creating a "bureaucratic monster," and find reasons to persuade providers to join. "Trust is incredibly important," he said. "Networks and providers have a fiduciary responsibility to each other."

On the other side of the contracting table, the oncologists receive certain benefits from networks they join (see below). Optimally, they'll have access to financial, clinical, and operational systems; managed care contracting expertise; physician profiling data; corporate services such as marketing, strategic planning, insurance and employee benefits, and practice consulting; and capital for expansion or purchasing new technologies.

Potential Benefits to the Oncologist of Joining a Network

Access to financial, clinical, and operational systems, and managed care contracting expertise

Alliances can also offer participating providers ancillary services such as labs and diagnostic imaging, home care and alternative site treatment, hospice care, psychological services, pharmacy benefit management, stem cell technology, and disease management programs.

Not so optimally, Mr. Wodinsky added, oncologists may also have to contend with unwanted intrusion into their offices and practices.

With so many types of alliances available, Mr. Wodinsky said, the important thing is to study the situation and choose one of them, "or someone else will choose for you. In the next few years, the only thing that won't remain constant is the status quo."