Healthcare providers are feeling the burden of rising costs
Financial management is a top concern of surveyed hospital CEOs, according to the 2022 American College of Healthcare Executives’ annual survey. Similarly, oncology practices face significant financial strain, which has resulted in over 1700 community oncology practice closures, hospital acquisitions, and corporate mergers from January 2008 through April 2020.
One way to alleviate this burden is through utilizing opportunities to recognize cost savings. For example, hospitals may be able to leverage cost savings to reallocate funds for other important projects not funded by Medicare or commercial payers. In addition, this may lead to better management of hospital budgets to optimize care and a positive budget impact on drug spend for hospital inpatients.
The Healthcare Industry Is Feeling the Effects of the Shift to Value-Based Care
In recent years, there has been a significant transition in focus from fee-for-service to value-based care. The goal of a value-based care system is to encourage clinicians to provide quality and efficient care, as well as improved outcomes, at a lower cost.
There have been several actions in the marketplace to recognize this shift to value-based care. For example, the Centers for Medicare & Medicaid Services (CMS) has created value-based care programs that reward providers with incentives for lowering costs and improving the quality of care they provide to Medicare beneficiaries. An example of this type of market reform was the development of a voluntary pilot program called the Oncology Care Model (OCM), which was designed to assess the effects of improved care coordination, greater access to practitioners, and appropriate clinical care on both health outcomes and the cost of care for patients receiving chemotherapy. CMS also recently launched in July 2023 the Enhancing Oncology Model (EOM), which builds on experiences from the OCM program and feedback from the oncology community to further advance the journey in value-based care in oncology.
This shift from fee-for-service to value-based care is playing a significant role in how practices and providers are viewing the cost of care.
In light of these market trends, 87% of community oncologists surveyed are thinking differently about drug choices as a result of value-based care.
In order to manage appropriate utilization and take more risk, it will be crucial to assess the expense side of the equation as well.
As the industry shifts to value-based reimbursement models, healthcare systems will continue to realize the need for solutions that advance health initiatives and support quality care objectives in the future.
Unlocking the potential of biosimilars
Given the growing costs of cancer care, delivering value while maintaining efficacy and safety is a pivotal issue in today’s healthcare environment. Biosimilars may help address this issue by providing additional treatment options at a potentially lower cost, while providing highly similar safety and efficacy to their reference biologic. They may potentially better position providers for emerging value-based care initiatives from payers and employers through availability of lower-cost treatment options, resulting in reduced drug spending. In addition, biosimilars may help meet established cost targets and position for future risk-sharing for value-based care model practices.
Volume-based Care(FEE-FOR-SERVICE)
Value-based Care(POPULATION HEALTH MANAGEMENT)
NO/LOW PROVIDER RISK
Shared/full risk
Biosimilars May Prove Fundamental to the Future of Oncology Care as We Shift to Value-Based Care as a Solution to Contain Cost
By potentially reducing costs and helping decrease financial risk in an emerging value-based environment, biosimilars may be able to unlock resources that can be reinvested in improving patient care
Biosimilars offer additional treatment options at potentially lower costs, which could create savings and efficiencies for the healthcare system
Demonstrating the ability to lower costs for high-volume, costly therapies may prove beneficial with practice discussions with payers
Healthcare providers are feeling the pressure and burden of rising costs
Total spending on US cancer care is projected to rise 34% from 2015 to 2030, and financial management is a top concern of surveyed hospital CEOs. Over 1700 community oncology clinics and/or practices have either closed, been acquired by hospitals, undergone corporate mergers, or reported that they were struggling financially from January 2008 through April 2020.
“The transition [to performance-based reimbursement] will be neither linear nor swift, and we are entering a prolonged period during which providers will work under multiple payment modules with varying exposure to risk.”
Increasing numbers of healthcare providers are now working in accountable care organizations (ACOs) and “narrow networks.” This shift from fee-for-service to value-based care is leading providers to rethink their business models. Additionally, the Centers for Medicare & Medicaid Services (CMS) and large commercial payers are incentivizing providers to engage in 2-sided higher-risk ACO models.
Biosimilars have the potential to be a lower-cost treatment option
EXAMPLE CONSIDERATIONS
Volume-based Care (FEE-FOR-SERVICE)
Net Cost Recovery
Lower Acquisition Cost
Patient Point-of-service Focus
NO/LOW PROVIDER RISK
87%
OF COMMUNITY ONCOLOGISTS SURVEYED ARE THINKING DIFFERENTLY ABOUT DRUG CHOICES IN LIGHT OF VALUE-BASED CARE
Value-based Care
(POPULATION HEALTH MANAGEMENT)
Improved Quality
Lower Total Cost of Care
SHARED/FULL RISK
VALUE-BASED CARE MODELS
The EOM builds upon experience gained from the OCM and aims to improve care quality, health equity, and health outcomes as well as achieve savings.
Biosimilars may help bridge the transition from volume-based to value-based care
POTENTIAL COST SAVINGS WITH BIOSIMILARS
Potential Financial Flexibility
Reduced drug spending on biologics may lead to the potential for cost saving
Savings may provide reallocation of funds for other important projects not funded by Medicare or commercial payers
Increases cost efficiency through improved access
Potential to Reduce Provider Risk in an Emerging Value-based Care Environment
Better positions providers for emerging value-based care initiatives from payers and employers
Helps meet cost targets and position for future risk-sharing for value-based care model practices
Reduces the cost of biologics and may provide improved access through lower drug costs
