Chemotherapy Less Costly in Physician Office Than in Hospital


A new study finds that chemotherapy for privately insured patients is less expensive in a physician’s office than in an outpatient department at a hospital.

The same analysis, however, found that radiation therapy was more expensive in physician offices when it lasted 3 months or more. Radiation of 1 or 2 months’ duration was less costly when it was delivered in offices.

"Our study documents that chemotherapy treatment in an oncologist’s office costs less than in a hospital regardless of the length of treatment," said Eric Hammelman, a study author, in a statement. "At a time when the health care community is focused on managing costs, these findings show the importance of where care is delivered, and raise important questions about how best to manage cancer treatment," said Mr. Hammelman, who is also a vice president at Avalere Health.

The Community Oncology Alliance (COA), in partnership with the National Association of Managed Care Physicians (NAMCP) Medical Directors Institute, commissioned Avalere to do the study. Avalere analyzed data from three commercial managed care plans and a large self-funded employer. In total, the study analyzed 26,168 episodes of care for 22,204 patients.

Overall, chemotherapy that was delivered in an outpatient hospital setting cost 24% more, on average, than did chemotherapy given in a physician’s office. This was true regardless of the duration of therapy, according to the study, which controlled for age, sex, and prior history of cancer. The study did not control for other factors that might have influenced cost, such as mortality, morbidity, or type of chemotherapeutic used.

The total cost included the amount paid by the insurer and the patient’s copay or coinsurance. On an unadjusted basis, the average cost per episode for office-based therapy was $19,640, compared with $26,300 for hospital-based therapy, a difference of 34%. After applying the risk adjustment model, the difference was less, but the hospital-based therapy still cost 24% more ($35,000 compared with $28,200 for office-based care).

Older patients were more likely to be managed in an office, compared with younger patients. The majority of episodes analyzed (about 80%) were in physician offices. Overall, 11 cancers accounted for more than 90% of the episodes. In decreasing order, they were lung, prostate, genitourinary system, breast, Hodgkin’s/lymphoma, colon, digestive system, leukemia, ovarian, multiple myeloma, and rectal cancers.

Costs varied widely for those cancers, as did the differences between office and hospital treatment. The biggest gap was for genitourinary cancers; the adjusted per-episode cost was $19,592 in the hospital, compared with $8,960 in the office, a 118% difference.

Avalere offered some theories on why hospital costs were so much higher overall for chemotherapy. It found that 14 of every 100 hospital-based episodes had a hospitalization during the episode, compared with 11 of every 100 office-based episodes. There was also variation in hospital and physician office billing practices, said the authors.

For radiation therapy, about half of episodes were delivered in hospital outpatient settings. Older patients were more likely to receive office-based radiation. Again, 11 cancers accounted for the majority of treatment episodes. Breast, prostate, and lung cancers accounted for 57% of the episodes.

Overall, the unadjusted cost was $16,300 for office-based therapy, compared with $16,000 for hospital-based treatment. Treatment duration of less than 1 or 2 months was 7%-17% more expensive in the hospital, but longer episodes were 4% less expensive when they were hospital managed.

After adjustment, office-based therapy overall was $25,100, compared with $23,800 for hospital-based radiation. Again, shorter episodes were more expensive when hospital managed, but longer episodes were less expensive with hospital-based rather than office-based care.

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