Healthcare Industry Consolidation And What This Means For Community Oncology Practices

At the 2023 CPC+CBEx conference, Todd Schonherz, CEO of American Oncology Network, spoke in a session titled "Healthcare Industry Consolidation: The Impact on Cancer Care and Strategic Partnerships" on industry consolidation and the different strategies community oncology practices can use to their advantage.

Transcript:

Todd Schonherz: Hi I’m Todd Schonherz, Chief Executive Officer for American Oncology Network.

From the perspective of the American Oncology Network, what do you see as the positive impacts on oncology care as a result of industry consolidation and what are the negative impacts?

Todd Schonherz: I think first and foremost, that we can’t ignore the fact that there are significant headwinds facing community oncology and if these headwinds continue without a life line for these practices, the alternative for the patients could frankly be catastrophic. I think a closing of a number of cancer centers, it could be patients having to travel long distances to receive their care, the lower cost that is associated with community oncology potentially goes away etc. so the need for community oncology clearly is there, organizations such as the American Oncology Network it’s a real focus in mission, it is ultimately to ensure their survivability of community oncology and not only for these practices to survive, but we want to make sure that the practices thrive and we are there to serve for the long term to serve the patients in their communities, close to where patients work and live every day.

How has healthcare industry consolidation affected the way the American Oncology Network provides oncology care?

Todd Schonherz: Clearly because of all the challenges that consolidation is something that we can’t ignore and it’s not going away. We believe that keeping the patients in the community is the most cost-effective and patient friendly approach and frankly if the organization such as US Oncology are not there, the alternative of patients having to now be treated in much more costly settings such as the hospital, less patient friendly, become the reality for these folks and so consolidation of community oncology practices you know through working with organizations such as American Oncology Network we think are incredibly important to ensure the access for our patients and the survivability of these cancer centers.

What are your thoughts on the future for industry consolidation in oncology care? Will the trend of consolidation continue or will things evolve in a different direction?

Todd Schonherz: I think with the continued headwinds we are seeing and the challenges facing community oncology practices, clearly, practices are going to be looking for a life line and looking for options that are out there today. It is going to become increasingly challenging I think for oncology groups to survive on their own. If you look at the make-up of community oncology today, ones that are not associated with the large aggregators are fairly small practices typically 3 to 5 person groups. The ability to continue to be there for the long term in light of reimbursement reform, staffing cost inflations, the pair challenges associated with this, I think it’s only going to become more and more difficult for these smaller practices and community oncologies to survive on their own and we think that organizations like American Oncology Network will be that lifeline to support those practices versus the alternative of having to turn to a less physician friendly model such as a hospital employment solution.

What advice do you have for independent oncology practices to survive in this new world?

Todd Schonherz: I think first and foremost you need to take inventory of where you are today and possibly have a direction of where you want to ultimately be and I think for most oncology practices, their focus wants to be to take care of their patients long-term, and not wrestle with some of the administrative burden, that’s unfortunately faces these groups each and every day and I think the advice for groups is that while, you need to look at the upside of sort of joining organizations such as American Oncology Network for the advantages of (1) Bring the advantages of size and scale to be able to push back against some of these threats. (2) I think access for your patients is going to be incredibly important to ensure those patients will have access for the long-term and not have to shift that care into the more expensive setting, I think sustainability of your practice will be important because of services that organizations like American Oncology will bring, such as access to new service lines like specialty pharmacy, clinical lab, an amount of pathology services, next generation sequencing, clinical research, are all areas that I think organizations such as AOM bring to community oncology practices to allow them to survive for the long term.

Any final thoughts?

Todd Schonherz: I think clearly the shift in the market dynamics continue, we continue to see the changes, I think there’s a lot of pressure facing community oncology, I think the trends towards increased Medicare advantage in the role of primary care organizations are playing, we are seeing that obviously through the aggregation of primary care groups for very large entities. Whether it’s Village MD, Onemedical, Oak Street Health, etc. are really going to put continued pressure on community oncology practices to make sure that they’re part of the solution and not part of the problem and I think ultimately they’re going to need to look for that lifeline, that option to be able to ensure that they can work collaboratively with those organizations and most importantly be there to be able to support their patients for the long term.