In The Kansas City Area, 'The Big C' Is Big Business
The 40-mile stretch of highway between Olathe, Kansas, and Liberty, Missouri, is a key artery in the region’s health care system, bookended by community hospitals and passing a few more medical centers along the way.
Yet this part of Interstate 35 is quickly becoming something more: a cancer corridor, dotted with expanding oncology programs and bordering even more in the urban core of Kansas City, Missouri, and in the suburbs on both sides of the state line.
The region has, in fact, experienced bumper-to-bumper developments in its cancer care marketplace during a remarkable four-year run – punctuated by three major announcements within days of one another in late January and early February. The 48-month span also included the University of Kansas Cancer Center’s (KUCC) much ballyhooed recognition, in July 2012, as a federally designated center through the National Cancer Institute (NCI). (See the timeline below for a full history of events.)
“There is definitely a lot of activity going on Kansas City,” says John Myers, regional vice president for oncology at HCA Midwest Health. “There is no doubt about it.”
Global cancer trends are clearly playing out locally. Cancer rates are showing no signs of abating anytime soon, and Dr. Roy Jensen, director of the KU Cancer Center, warns that the U.S. has the “makings of a very significant health care crisis” as the spike coincides with the expected wave of retirements among practicing caregivers.
Somewhat less clear is the role that money and potential profits play in the business-of-cancer calculus in the Kansas City region. Local health officials acknowledge that cancer care is part of a highly competitive marketplace but tend to avoid talking about how oncology services contribute to their bottom lines.
Peggy Schmitt, president and CEO of North Kansas City Hospital, offers a typical response when asked about the financial implications of that institution’s partnership with the KU Cancer Center.
“We are a financially strong hospital,” she says, “but as to getting into specifics and pulling pieces and parts, that is really beyond the scope that I am here to talk about.”
Government reports and academic research over the years, however, have raised alarms over cancer’s ever growing business side. Of particular concern to watchdogs have been one-sided advertising messages, potential conflicts of interest in radiology and the huge profits to be made from oncology drugs.
Rena Conti, an assistant professor of health policy at the University of Chicago, has zeroed in on the little-known “340B” program, named after a provision in the federal 1992 Public Health Service Act. Critics like Conti contend hospitals are exploiting a program meant to help them access affordable drugs for the poor to generate enormous profits.
“This is a cash cow,” she says.
The American Cancer Society (ACS) says that nearly half of all males and nearly a third of all females in the U.S. will develop cancer. The International Agency for Research in Cancer projects there will be 21.4 million cancer cases worldwide in 2030, or nearly double the number in 2008.
Of the nearly 600,000 people the ACS estimates will die in the United States this year from cancer, about 3 percent – or 18,340 – are expected to be Missouri or Kansas residents. Both states closely track the nation as a whole in the incidence of specific cancers, according to the U.S. Centers for Disease Control and Prevention.
As is the case nationwide, breast cancer is the most common type of cancer among women and prostate cancer among men in both states. Lung/bronchus and colon/rectum cancers are the second and third most common, mirroring their prevalence nationwide.
One of the ironies of modern medicine, says Robert Town, a professor of health care management at the University of Pennsylvania, is that improvements in cardiovascular care are helping drive cancer rates.
“If it’s not a heart attack or heart failure” that kills you, he says, “it’s probably going to be cancer.”
That’s because aging is a risk factor for many kinds of cancers.
Local oncology officials say the sheer pervasiveness of the disease is a major reason for the rapid-fire buildup of treatment facilities in and around the region.
Jensen notes that the 6,200 new cases KU Cancer Center saw last year far exceeds the number at any other program in the region. Yet, he says, that represents only about a quarter of the new diagnoses annually in its service area, which encompasses all of Kansas and 10 counties in western Missouri.
“Unfortunately, right now, there is enough business to go around,” says Becca Bell, executive director of oncology services Shawnee Mission Health.
Health care providers say they’re responding to residents’ desire to have cancer treatment options close to home – even if that sets up a situation, as has occurred with Liberty and North Kansas City hospitals, where two programs that are minutes away from each other on the interstate are both boosting their capacities.
But why wouldn’t someone in southern Johnson County want to bypass the new cancer center that Olathe Medical Center plans to build, drive right on past the Shawnee Mission Cancer Center and just go a little farther north to access the expertise of physicians at an NCI-designated center like the KU Cancer Center in Kansas City, Kan.?
One reason, says Dr. Tim Pluard, director of the Saint Luke’s Cancer Institute, is that some cancer treatments require daily visits. Such patients don’t need the stress of a commute to add to the anxiety that comes with dealing with the disease.
Saint Luke’s has a clinical affiliation agreement with Liberty Hospital to provide oncology service. And one reason Liberty pursued the relationship, says CEO David Feess, is because feedback from community residents made it clear they wanted access to clinical trials offered by a larger system like Saint Luke’s.
“It came from many people in the community just simply asking, ‘Can you provide these type of services to our community, so we as patients and our families, do not have to travel either somewhere else in the city or to places outside even of the Kansas City area?’” Feess says.
Through clinical trials, patients have access to promising experimental drugs that have yet to make it all the way through the U.S. Food and Drug Administration’s approval process. These trials oftentimes represent last-ditch chances for patients who have not responded to conventional treatments.
Clinical trials are, in fact, a huge selling point for cancer care executives.
Myers, the regional vice president at HCA, says his company’s access to clinical trials – and its relationship with pharmaceutical companies developing novel drugs – is a big reason HCA is a market leader in Kansas City.
HCA’s provision of clinical trials comes through an organization known as Sarah Cannon, a research group that operates as a subsidiary of HCA Health Midwest’s corporate parent. In the past three years, Myers says, Sarah Cannon has been involved with 80 percent of the new cancer drugs that have come to market.
“There is no greater partner than that for Kansas City,” he says.
In fact, instead of market oversaturation, local health care officials says that competition among cancer centers has forced everyone to up their game to win business or to offer unique selling points, such as the gynecological oncology specialists that Shawnee Mission Cancer Center recently brought on board to complement Shawnee Mission Health’s women’s services program.
“When you talk to people in the oncology world in Kansas City, people refer to it as competition a lot, and I think in a business setting that is true, because we do compete for business,” says Bell, the cancer director at Shawnee Mission. “I think that it comes down to what place fits your needs. Chemo is chemo. It does not matter where you go. It is just the patient experience that is going to be different.”
Click through to explore cancer treatment centers in the Kansas City metro:
Show me the money
As cancer rates continue to rise, the cost of its treatment shows no signs of abating either.
- The cost of treating cancer in the United States will increase by 27 percent in this decade, up to nearly $160 billion in 2020, according to a study published four years ago in the Journal of the National Cancer Institute.
- The median monthly treatment costs of cancer drugs have increased by 100 times in the past four decades, to about $10,000, according to a study by Memorial Sloan Kettering Cancer Center.
- Cancer-related diagnoses in Kansas accounted for three of the 10 most costly treatments in 2013, totaling $65.4 million, according to figures from a unique insurance database maintained by the state.
Unclear is the extent to which these health-care dollars fall to providers’ bottom lines, and whether the expansion of cancer programs represents an effort to maintain market share in this highly profitable service line.
Among local executives, the most detailed explanation of cancer finances comes from Bell, who says that radiation is the most consistent revenue source and that chemotherapy’s fluctuating costs are the most challenging to manage.
Other health executives bemoan the inefficiency of a health care system that fosters a technological arms race among providers. Yet others note that there are a lot of people to treat.
Liberty Hospital CEO Feess, for one, says he’d be happy to break even on cancer care.
Many outside health experts, however, have concluded that business motives play a larger part in cancer care than the medical establishment is willing to acknowledge.
For example, a study funded by the National Institutes of Health and published last year found that, in competing for business, cancer center advertisements relied primarily on emotional appeals.
“Given the inherently frightening nature of cancer, it may be impossible for cancer centers to advertise without affecting viewers’ emotion to some degree,” the study, which appeared in the Annals of Internal Medicine, concluded. “However clinical advertisements that use emotional appeal uncoupled with information about indications, benefits, risks or alternatives may lead patients to pursue care that is either unnecessary or unsupported by scientific evidence.”
Other studies have uncovered a huge difference between what providers pay for oncology drugs – based on steep discounts offered to high-volume centers – and the bills they present to payers.
Mireille Jacobson, an associate professor of economics and public policy at the University of California-Irvine who has studied the costs of oncology drugs, says federal investigators were warning Medicare more than a decade ago that the program was vastly overpaying doctors who were administering outpatient chemotherapy drugs.
The reason: The payment method based reimbursements on the average wholesale price, which ended up being much like the sticker price on a vehicle. Medicare was paying based on the sticker price when physicians were buying the drugs at a steep discount.
Congress clamped down in 2003, but Jacobson says a new Medicare payment system that set reimbursements for oncology drugs at average national sales prices plus 6 percent still allows for a lot of profit.
“If you talk to people at most hospitals,” she says, “the infusion center is kind of a revenue center for them, even still with this new payment system.”
Conti, of the University of Chicago, says a similar dynamic is at work in the 340B program.
Meant to ensure that poor patients have access to high-cost drugs, the broadly worded statute has allowed outpatient settings to charge insurers, including Medicare, list prices even after they’ve bought them at a steep discount, she says.
Conti cites research suggesting that a single oncologist can generate about $1 million in profits for a hospital by obtaining drugs at 340B-discounted prices and using them to treat well-insured patients.
That urge to maximize profits through 340B, she says, is reshaping cancer marketplaces throughout the United States. She suspects the same forces are driving much of the activity in the Kansas City region.
Typically, the domino effect begins when one institution in the marketplace figures out the profit potential from 304B and starts adding outpatient providers and advertising aggressively to increase patient volume, she says.
“And you can imagine that other providers who are excluded from that arrangement panic, right?” she says, leading them to seek their own strategic alliances.
Additionally, the Government Accountability Office (GAO) has found evidence that physician practices that own their own radiation equipment, known as self-referring groups, tend to recommend this type of treatment more often than other practices that don’t have a financial interest in doing so.
In a July 2013 report, the GAO focused on Medicare providers using prostate cancer–related intensity-modulated radiation therapy (IMRT). The report says that providers that began self-referring in 2008 or 2009 referred 54 percent of their patients who were diagnosed with prostate cancer in 2009 for IMRT, compared with 37 percent diagnosed in 2007.
Those kind of conflict-laden business relationships soured Lenexa resident Mike Mulcahy, 64, on his urologist after the physician diagnosed Mulcahy with prostate cancer in 2012.
Mulcahy felt like his own well-being took a backseat to the physician’s financial self-interest when the urologist suggested surgery as the best option and made only passing reference to a new approach known as proton therapy. The urologist’s practice owned expensive surgical equipment, in addition to an IMRT machine, Mulcahy says.
Mulcahy had researched proton therapy, which was available in Oklahoma City, and was convinced that was the best approach because of its efficacy and because it promised fewer long-term side effects.
His insurance covered the proton therapy, and today Mulcahy says his condition is “great” after he completed the regimen nearly three years ago.
As someone who did his homework on the various options available to beat his prostate cancer, Mulcahy is convinced that proton therapy is a leap forward for patients.
For all the strides in treatment, though, cancer experts say prevention remains the key to putting the brakes on the advance of the disease. And if that means the business of cancer becomes a smaller business, then so be it.
Decreasing tobacco use, promoting vaccination against the human papillomavirus and reducing obesity are critical prevention strategies, says Jensen, the KU Cancer Center director.
Society, he says, does not have to accept that cancer will continue an inexorable march.
“We should not be just sitting around saying, ‘Well, that is just how it is, and we’ll have to deal with it.’”
Mike Sherry is a reporter for KCPT television in Kansas City, Mo., a partner in the Heartland Health Monitor team.
This story is a part of KCPT’s Cancer in KC series, produced in conjunction with the PBS documentary Cancer: The Emperor of All Maladies, a three-part, six-hour major television event from filmmaker Ken Burns, airing March 30-April 1. The series examines cancer’s impact in the metro with medical experts, cancer researchers and survivors. We want to learn more about how cancer affects our community. How has cancer impacted your life? Share your story.