N.C. series explains high cost of cancer drugs

About Andrew Van Dam

Andrew Van Dam of The Wall Street Journal previously worked at the AHCJ offices while earning his master’s degree at the Missouri School of Journalism.

As part of an ongoing series on the cost of health care in The Charlotte Observer and The News & Observer in Raleigh, N.C., Ames Alexander, Karen Garloch and Joseph Neff put together a two-part examination of why independent oncology practices are vanishing and what effect that trend is having on the cost of cancer care.

In the end, it seems to come down to one simple fact: The system strongly incentivizes hospital-based oncology practices by essentially allowing them to charge more than their independent competitors.

…when hospitals buy (independent) practices, prices go up. Patients are billed based on the hospital fee schedule.

Nationally, chemotherapy costs 24 percent more in a hospital-based outpatient setting than in a doctor’s office, according to a study by the consulting firm Avalere Health.

“The suggestion that when a (physician) group comes to us … we raise their prices, that’s not true,” said Carolinas HealthCare President Joe Piemont. “When the group comes to us, they charge our prices. … These are our negotiated rates with (private insurance companies).”

While there are many other factors involved, the basis for the differences is that hospitals can bill insurers at higher rates because they have more leverage when negotiating. Hospital representatives say the higher prices go, at least in part, toward charity care, as well as additional services not provided by an independent practice.

Reporters hoping to replicate the trio’s work would do best to start with their July AHCJ article explaining how the series had come together, as well as their latest “How we reported this story” sidebar, located partway down this page.

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