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 soundcontracts with their new partners, Lee E. Mortenson, DPA, saidat the 1995 Oncology Symposium of the Association of CommunityCancer Centers (ACCC).

Oncologists can bond with other physician groups, hospitals, oruniversity programs. Or they can choose to associate with oneof the carve-out organizations that are managing physician practicesacross the country, said Dr. Mortenson, ACCC executive director.

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

Currently, carve-out organizations are maintaining relationshipswith 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, andother services to offer an integrated oncology practice, he said.

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

But this method doesn't guarantee the anticipated return. Physiciansneed 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 coststhat include hospital costs, outpatient costs, radiation oncology,and medical oncology.

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