Closure of Triangle cancer clinic triggers Duke, Rex fight for market share
By John Murawski, The News & Observer (Raleigh, N.C.) | |
McClatchy-Tribune Information Services |
The looming breakup of
Cancer Centers had until just weeks ago treated the majority of
The breakup of Cancer Centers was finally precipitated last month when a trio of its oncologists joined
Hospitals are increasingly assembling their own stables of doctors, who typically refer patients to other doctors within the hospital system, leaving non-affiliated physicians like Cancer Centers out of the referral loop.
"If it keeps going like this, it doesn't look good," said
Some doctors involved in the split say the result will be markedly higher treatment costs for patients as well as for insurers because hospitals charge higher fees than independent doctors for the same procedure. Hospitals can squeeze higher payments from insurance companies, and they charge additional fees because they have higher overhead.
"Patients are going to pay more for co-pays, and insurers are going to pay higher reimbursement rates," Reilly predicted.
Hospital officials say that over time, market control will drive down prices because the nation's health care system is moving away from a fee-for-service model. Instead, the federal government is mandating a system in which hospitals are paid for quality outcomes with financial penalties for unnecessary procedures, excessive infections and other inefficiencies.
The biggest prize
From a financial standpoint, the Cancer Centers breakup presented a golden opportunity to consolidate the Triangle's cancer services. Rex and Duke moved in quickly to court the soon-to-be free-agent oncologists and lock in the related revenue streams from doctors consultations, cat scans, lab work, X-rays, intensive care units and surgeries.
But perhaps the biggest prize is gaining ownership of the cancer practice's radiation machines. Called linear accelerators, they can cost about
Cancer Centers owns two of the machines -- one in
Rex has six machines in the Triangle; Duke has only one in
Once foes
Back in 2007, when Cancer Centers applied for the permit for the third accelerator, Rex and Duke lodged challenges trying to block state approval and seeking the equipment permit for themselves. The regulatory review was tied up in appeals for several years before approval was finalized for Cancer Centers in 2011.
A single new radiation machine in the Triangle posed a direct threat to Rex's business model, the nonprofit organization said in a 2009 filing.
"Rex is directly affected by its substantial risk of losing patients and patient revenue due to CCNC's proposed linear accelerator that unnecessarily duplicates Rex's existing linear accelerator services," the hospital wrote.
The sudden availability of three accelerators -- and the flow of patients to keep the machines fully scheduled -- is an opportunity that may not present itself again in the Triangle.
Rex commissioned an independent third-party valuation of Cancer Centers, appraising the medical practice at
The expansion to nine accelerators in
But Cancer Centers'
"They just kind-of said 'no thanks,' " Lefteris said. "We were told the number was too low by the physicians involved."
Expanded presence
"Duke has a minimal presence in
Duke and
"Welcoming the CCNC physicians to
Stokke said Duke's interest in Cancer Centers' assets is not related to
Reilly, the radiation oncologist, said he would become a Duke-employed doctor because the radiation doctors are tied to the radiation machines. Reilly said he expects Duke to continue accepting
"This allows Duke to get a big jump into the
Murawski: 919-829-8932
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