Cancer Hospitals Partner with Community Hospitals: Competition or Metastasis?

What does it mean that a small southeastern Massachusetts hospital chain just announced its affiliation with MD Anderson Cancer Center (of Texas?)  What are the likely implications for the cost of health care?

The “name brand” cancer centers (Dana FarberMemorial Sloan Kettering,  MD Anderson,   Fred Hutchinson Center ) have been advertising like crazy – and many of their ads emphasize how important it is to get care in the right place first.   These cancer centers are generally far more expensive than care in the general community, and patients going to the major cancer centers are likely to be sicker, and more likely to participate in clinical trials. 

In Massachusetts and elsewhere, the recognized cancer centers are increasingly reaching out into the community, and those oncologists at facilities without a relationship with one of the centers worry that they will lose patients.  That’s exactly what’s happened in southeastern Massachusetts, where Dana Farber has established a relationship with St Anne’s Hospital, the major competitor to Southcoast. It's reasonable to worry that when the major cancer centers reach their tendrils into  community hospitals the cost could go up substantially. 

Southcoast will pay a fee to MD Anderson – which will increase the resource cost it takes to deliver care.   It’s unlikely many Massachusetts cancer patients will be transferred to Houston – so MD Anderson can’t recoup any investment it makes through profit margin from patient referrals.  The cost of the affiliation will not immediately be passed through to insurance companies, which have already negotiated contracts with Southcoast. 

This affiliation could increase the value of oncology care in Massachusetts if MD Anderson helps Southcoast physicians develop and implement processes that standardize the care of oncology patients and increase use of evidence-based, cost –effective care.    MD Anderson has to protect its “brand,” so it is likely to perform some meaningful oversight.  MD Anderson could improve care by offering algorithms, workflows, IT software, training, and distance consultation even patients don’t travel to Texas and MD Anderson physicians don’t make the trek to Fall River, Massachusetts.  

Here’s the other way this deal could help control costs. If there is a single ‘name brand’ cancer center, there is no competition which generally yields higher costs.  If Southcoast is able to make a better case to keep its patients in the community hospital setting instead of traveling to Boston, this increases choice and competition, which can lead to lower prices.