By M. Alexander Otto, PA, MMS

Community oncologists across the United States are concerned about a recent lawsuit in Philadelphia between the Jefferson Health hospital system and the largest independent oncology and hematology practice in southeastern Pennsylvania, Alliance Cancer Specialists.

The outcome, some community oncologists say, could set a new precedent in how far large healthcare organizations will go to take their patients or drive them out of business.

The Case

On September 5, Alliance sued Jefferson Health after Jefferson cancelled the inpatient oncology/hematology privileges of five Alliance oncologists at three Jefferson Health-Northeast hospitals, primarily alleging that Jefferson was attempting to monopolize cancer care in the area.

Jefferson — one of the largest healthcare systems in the Philadelphia area that includes the NCI-designated Sidney Kimmel Cancer Center — made the move because it had entered into an exclusive agreement with its own medical group to provide inpatient and outpatient oncology/hematology services at the hospitals.

In its court filings, Jefferson said it entered into the exclusive agreement because doing so was in "the best interest of patients, as it would ensure better integration and availability of care and help ensure that Jefferson consistently provides high-quality medical care in accordance with evidence-based standards."

"Without having admitting

Tensions had been building between Alliance and Jefferson for years, ever since, according to Alliance, the community practice declined a buyout offer from Jefferson almost a decade ago.

But the revocation of privileges ultimately tipped the scales for Alliance, sparking the lawsuit.

"For us, that crossed a line," said Moshe Chasky, MD, one of the five Alliance oncologists and a plaintiff in the suit.

Chasky and his colleagues had provided care at the hospitals for years with about 10 to 15 patients admitted at any one time. The quality of their care is not in dispute. Chasky, for instance, routinely makes Philadelphia's Top Doc List.

Under the new arrangement, the five Alliance oncologists have to hand over care of their admitted patients to Jefferson oncologists or send their patients to another hospital farther away where they do have admitting privileges.

"Without having admitting privileges," community oncologists "can't look a patient in the eye and say, 'No matter what, I've got you,' " explained Nicolas Ferreyros, managing director of policy, advocacy, and communications at the Community Oncology Alliance, a DC-based lobbying group for independent oncologists.

"A doctor doesn't want to tell a patient that 'once you go in the hospital, I have to hand you off.' " It undermines their practice, Ferreyros said.

The situation has caught the attention of other community oncologists who are worried that hospitals canceling admitting privileges might become a new tactic in what they characterize as an ongoing effort to elbow-out independent practitioners and corner the oncology market.

Chasky said he is getting "calls every day from independent oncologists throughout the country" who "are very concerned. People are watching this for sure."

Alliance attorney Daniel Frier said that there is nothing unusual about hospitals entering into exclusive contracts with hospital-based practices.

But Frier said he's never heard of a hospital entering into an exclusive contract and then terminating the privileges of community oncologists.

"There's no direct precedent" for the move, he said.

Jefferson Health did not respond to requests for comment.

The Ruling

US District Court Judge Kai Scott, who ruled September 18 on Alliance's motion to block the contract and preserve its oncologists' admitting privileges, ultimately sided with Jefferson and allowed the contract to go forward.

Scott wrote that, "while the court understands the plaintiffs' concerns and desires to maintain the continuity of care for their own patients," the court "is not persuaded that either of the two threshold elements for a temporary restraining order or preliminary injunction are met" — first, that Jefferson's actions violate antitrust laws and second that the plaintiffs "will suffer immediate, irreparable harm" from having their admitting privileges rescinded.

Alliance argued that Jefferson's contract violated federal antitrust laws and would allow Jefferson to monopolize the local oncology market.

However, Judge Scott called Alliance's antitrust argument "lifeless" under the strict requirements for antitrust violations, explaining that, among other reasons, a monopoly is unlikely given that Jefferson competes with several high-profile oncology programs in the Philadelphia area, including the Fox Chase Cancer Center.

Scott also expressed doubt that the Jefferson's actions would cause irreparable harm to Alliance's business. Alliance employs more than thirty oncologists affiliated with over a dozen hospitals in the greater Philadelphia area and the inpatient services provided at Jefferson Health-Northeast did not represent a major part of its business.

Despite her ruling, Scott did voice skepticism about some of Jefferson's arguments.

"The court notes that the Jefferson defendants have briefly argued that Jefferson will be better able to ensure that its own patients receive fully integrated and coordinated care" under the exclusive provider agreement, but "it is unclear how the cooperation of ACS [Alliance Cancer Specialists] and JNE [Jefferson Health-Northeast] hospitalists really caused any problems for the coordinated care of" patients in the many years that they worked together.

It also "does not seem to necessarily serve the community to quickly sever the artery between the services that ACS provides and the services that JNE provides," Scott wrote.

Scott said she would consider another motion from Alliance if the practice makes stronger arguments illustrating antitrust violations and demonstrating irreparable harm.

Currently, Chasky and Frier are considering their next steps in the case. The oncologists said they can appeal the judge's decision or file a new complaint.

Meanwhile, Chasky and his four colleagues requested and were granted internal medicine privileges at Jefferson Health-Northeast but given the considerable overlap between oncology and internal medicine, the line between what they can and cannot do remains unclear.

"It's a mess," he said.

A Familiar Story

Large healthcare entities have increasingly worked to push out or swallow up smaller, independent practices for years.

"What Dr Chasky and his practice are going through is a little bit more of an aggressive version of what's going on in the rest of the country," said Michael Diaz, MD, a community oncologist at Florida Cancer Specialists, the largest independent medical oncology/hematology group in the United States. "The larger institutional hospitals try to make it a closed system so they can keep everything in-house and refer to their own physicians."

The incentive, Diaz said, is the financial windfall that Section 340B of the 1992 Public Health Service Act generates for hospital-based oncology services at nonprofit hospitals, such as the Jefferson Health-Northeast facilities.

The 340B program allows nonprofit hospitals to buy primarily outpatient oncology drugs at steep discounts, sometimes 50% or more, and be reimbursed at full price.

When launched in 1992, the program was meant to help a handful of safety-net hospitals cover the cost of charity care, and now approximately more than half of US hospitals participate in the program, particularly after requirements were loosened by the Affordable Care Act. But there's little transparency on how the money is spent.

Critics say the incentives have created a feeding frenzy among 340B hospitals to either acquire outpatient oncology practices or take their business because of the particularly high margins on oncology drugs. There are similar incentives for hospital-based infusion centers.

In its lawsuit, Alliance alleged such incentives are what motivated Jefferson's recent actions.

"It's all about the money at the end of the day," said Christian Thomas, MD, a community oncologist with New England Cancer Specialists in Scarborough, Maine, who, like Diaz, said he's seen the dynamic play out repeatedly in his career.

The American Hospital Association has been a vigorous defender of 340B in the courts and elsewhere, but the Association's communications staff had little to say when approached about the Jefferson-Alliance situation, except that they do not comment on "specific hospital circumstance."

Reverberations Around the Country

Many community oncologists are keeping close tabs on the Jefferson-Alliance situation.

"Our group has been watching Jefferson closely because our [local] hospital is following the same playbook, but they have not yet gone after our privileges," said Scott Herbert, MD, a community oncologist with the independent Nexus Health system in Sante Fe, New Mexico.

Herbert was referring to what has happened since he and his colleagues declined to renew an exclusive provider agreement early this year with St. Vincent Regional Medical Center, a nonprofit hospital in Sante Fe. The agreement allowed the hospital to take advantage of the 340B program because Nexus oncologists acted on its behalf.

St. Vincent's owner, Christus Health, did not respond to inquiries.

Nexus let the contract lapse because its oncologists wanted to provide services at a second, newer hospital in Santa Fe where some of their patients had begun seeking treatment.

The nonprofit hospital in Sante Fe is now building its own oncology practice. Similar to Chasky's experience in Philadelphia, Herbert said his group has seen referrals from the hospital dry up and existing patients rechanneled to the hospital's oncologists.

"We found over 109 patients in January and February that were referred to one of our docs that got rerouted to one of their docs," he said.

Herbert has sent cease-and-desist letters, but "after we saw what Jefferson did, my group said, 'You better back off of the hospital or it's going to take our privileges.' "

The Jefferson situation "is sending a message," he said. "Frankly, we've been terrified" at the thought of losing privileges there. "It's the busiest hospital in our area."

The Future of Community Oncology

Despite the challenges, Ferreyros at the Community Oncology Alliance remains optimistic about the future of independent oncology.

Under the competitive pressures, a lot of independent oncology practices have folded in recent years, but the ones that remain are strong. Payers are also increasingly noticing that community oncology practices are less expensive than hospital-based practices for comparable care, he said.

Relationships with hospitals aren't always adversarial, either. "A lot of practices have collaborative agreements with local hospitals" that work out well, Ferreyros said, adding that sometimes hospitals even hand over oncology care to local independents after finding that starting and maintaining an oncology service is harder than they imagined.

"The last two decades have been difficult," but the remaining community oncology practices "are going strong," he said, and "we've never seen more engagement on our issues," particularly around the issue of cost savings.