Oncologists Grapple with Improving Profitability and Productivity

Well-known playwright and novelist Oscar Wilde once noted that, “Life imitates art far more often than art imitates life.” But what happens when life imitates life?

Consider the results of the Third Annual Benchmarking Survey by Onmark, a leading national group purchasing organization for community-based medical practices, and a McKesson Specialty company. The survey found that the number of patients community oncologists see has increased for the second straight year, while at the same time, the profit generated by each oncologist decreased. Doing more and being rewarded less? Does that sound like primary care?

“If you talk to office-based oncologists in the United States, most of them will tell you they are working much harder, and they’re feeling more and more like internal medicine and family practitioners every day,” says John Akscin, vice president of government relations for McKesson Specialty.

Changing environment

Akscin points to the Medicare Modernization Act of 2003 as legislation which essentially changed the business model for private practice physicians who do a lot of work with Medicare patients. And, he adds, cancer is a disease that seems to target the elderly.

“2007 is what I like to call the year of reality,” says Akscin. “All the incentives that the government built into [the Medicare Modernization Act of 2003] evaporated in 2007. [Physicians] truly had to learn how to practice more efficiently so that they can keep their business models afloat.”

According to the survey, the number of new patient visits to each oncologist increased 29 percent between 2005 and 2007, while existing patient visits increased by 47 percent. Conversely, the average profit per oncologist per patient has steadily declined, from $987 in 2005 to $654 in 2006, to just $89 in 2007.

Working smarter, not harder

Akscin talks in terms of migrated thinking, which he says focuses on using technology to improve efficiencies. That includes the use of electronic medical records, the adoption of which by physicians has hovered just around 15 percent. Much of that, says Akscin, is due to the start-up costs associated with the technology, which reaches beyond hardware and software to implementation costs as well. Part of it, however, is in the approach.

“We kept asking doctors what they wanted in an EMR, and every time we did, their answers changed,” says Akscin. “We took a different approach and gave them what we thought they needed to get started, and then we built on that once the physicians became more comfortable with the technology.”

Akscin also believes that oncology practices need to continue to make greater use of non-physician providers, such as nurse practitioners or physician assistants. “It’s been a tough adoption curve,” he says, “because medical oncologists like to manage things very closely.” Onmark’s survey reflects as much, showing a small decrease in the use of non-physician providers in 2007. However, the survey results also demonstrated an increase in physician productivity among practices using non-physician providers in 2007.

Getting lean

Three years ago, ThedaCare, a Wisconsin-based health network, began using a process developed by Simpler Healthcare, a management consulting firm, that is based on the principles of Lean Management, also known as the Toyota Production System. At the hub of the process is the development of a value stream map—an in-depth organizational assessment of what adds value for patients and what doesn’t.

“The first time you go through this, it’s a very shocking experience for physicians, especially when the patient (who is included in the assessment) tells them that the only time they feel value is added is when they’re in face-to-face time with the physician or the nurse,” explains Kim Barnas, vice president of ThedaCare. “It’s a huge eye-opener.”

It’s also a unique challenge in oncology and radiation therapy, where redundancy is built into the system. “You want to be sure you’re not delivering the wrong level of radiation to a patient, so there are several levels of redundant activity,” says Barnas. “How do we make sure we have that safe redundancy, but still indentify where we can improve?”

The results achieved by the health network’s radiation oncology department were just as eye-opening as the initial assessments. During 2008, the department improved productivity by 30 percent, increased gross revenue by 24 percent, and reduced the time from patient referral to treatment by 44 percent—all compared to 2007 figures.

The key to success, says Barnas, is focusing on creating value to the community and the customer. When that happens, everything else follows in positive fashion. “Our patients are happier because they’re getting better service; we have better access,” Barnas says. “Our employees are happier because we’re showing a greater respect for people and they’re rewarded for their work in meaningful ways. And our revenue is increasing as productivity is increasing. It’s a win-win.”

Ed Rabinowitz is a veteran healthcare writer and reporter. He welcomes comments at edwardr@frontiernet.net.