DOI: 10.1097/01.COT.0000315013.09003.48

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Issn Print: 0276-2234

Publication Date: 2001/12/01


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Move to Service-Line Business Model May be Financial Boom for US Oncology Physicians

Charles Bankhead

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Excerpt

Oncologists affiliated with US Oncologycould see their net income jump by as much as $50,000 a year as a result of the company's decision to abandon its physician practice management operational model in favor of a focus on pharmaceutical services, outpatient cancer centers, and clinical research. So said company officials during a teleconference announcing the transition.
A change to a service-line business model will restore responsibility for day-to-day management of oncology practices to the affiliated physicians. The reduction or elimination of management fees paid to US Oncology should more than offset the cost of assuming those responsibilities and buying back practice assets, company officials said.
“Transition to the service-line model is probably going to result in about a $50,000 per annum improvement in compensation per physician,” said the company's CEO, Dale Ross. “All the costs associated with operating the practices today are already being passed down to the physicians, such as operating expenses, purchasing expenses, and financing expenses. The net to physicians should be roughly $50,000 per doctor.”
Transition to the new business model will be optional for oncologists already in the company's network, but US Oncology expects most of its 850 affiliated physicians in 27 states to make the transition to the service-line model.
“Physician leaders we have talked to around the country clearly recognize the value of the new model,” Mr. Ross said. “I think they are excited about it, and I think that as they understand more about it, they will continue to be excited. The service-line model will give them some renewed control over their practices. That control includes some areas that, quite frankly, we have struggled with over the years, simple things like benefit packages, health insurance, and retirement plans.
“[Affiliated oncologists] are really not giving up anything of significant value; yet they are resuming control over their practices, which I think many of them will feel very positive about,” he added.
While regaining control of their practices' day-to-day operations, oncologists can purchase services offered by US Oncology at competitive market rates that will be less than the management fees paid under the practice management model, said US Oncology Executive Vice President Joseph Bailes, MD. From the perspective of the cancer patient, the transition is not expected to have any impact on cancer care.
“Our cancer centers are state of the art and will remain so,” said Dr. Bailes, a member of OT's Editorial Board. “Patients should not notice any difference. We will continue operating cancer centers, and patients will continue to get the same high level of care they have received in the past.
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