About Us

Oncology Practices to Lose $250K Annually to Budget Sequester

– ZS Associates predicts long-term impact on
community oncology practices –

EVANSTON, Ill. – June 5, 2013 – The budget sequester that went into effect in March reduced Medicare reimbursement for oncology drugs from 6 percent (plus the average sales price) to 4 percent. This move will cost the average independent community oncology practice $250,000 each year, according to global sales and marketing firm ZS Associates.

"While this reduction in Medicare reimbursement appears small on the surface, its impact is quite substantial for patients and practitioners," said Ganesh Vedarajan, principal and leader of the oncology and specialty therapeutics practice at ZS Associates. "Some of these drugs may now be reimbursed at a rate less than the cost of the drug. The average community oncology practice is already struggling to stay afloat financially and the sequester compounds recent reimbursement pressures that have led many oncologists to question their practice’s long-term viability."

A 2012 benchmark report from the American Society of Clinical Oncology stated that 34 percent of oncology practices felt unsure of their ability to sustain their practice long-term or believed their current structure may be unsustainable after one year.

"The number of community oncology practices has steadily declined over the last few years," said Vedarajan. "Many oncologists would like to stay in the community setting because they like their independence and focus on patients, but some feel they have no choice. Many oncologists have either ceased to practice or joined large hospital systems."

Further, in the wake of the sequester, 21 percent of community oncologists surveyed by the Community Oncology Alliance reported staff reductions, 14 percent said they were in discussions with hospitals for either an acquisition or professional service agreement, and 49 percent reported sending their Medicare patients elsewhere for treatment. Even more oncologists reported they will take the actions above if the sequester remains intact through July.

"It is well established that community practices provide cost effective care for many oncology patients. This shift in care will not help control the cost of healthcare in the United States," said Howard Deutsch, associate principal at ZS Associates, who focuses on access and reimbursement issues in oncology and specialty therapeutics. "Allowing community cancer care to survive as an alternative to the hospital setting is extremely important for patients and providers. Based on our years of experience in oncology, we believe this should be an important consideration for policy makers."

About ZS Associates

ZS Associates is a global leader in sales and marketing consulting, outsourcing, technology and software. For almost 30 years, ZS has helped companies across a range of industries get the most out of their sales and marketing organizations. From 20 offices around the world, ZS experts use analytics and deep expertise to help companies make smart decisions quickly and cost effectively. ZS comprises multiple affiliated legal entities.

Greg Austin
Director, Marketing & Communication, ZS

Anahita Wadia Khan / Kyle Adams
Sikich Marketing & Public Relations