Association between Chemotherapy Provider Competition and Access, Cost and Quality of Care for Medicare Beneficiaries with Cancer

The market structure of oncology care is undergoing dramatic consolidation, yet few studies have examined how changes in market structure impact oncology care for patients receiving physician-administered chemotherapy. Recent research has documented substantial vertical integration in recent years such that the proportion of oncology practices that are owned by hospitals increased from less than 30% to close to 60% between 2004 and 2015. We investigate how changes in market structure impact geographic access to care, Medicare spending on infused chemotherapy, and the quality of care patients receive.

Using a 20% sample of Medicare Fee-For-Service claims from 2008 to 2014, we identified a cohort of 142,770 patients receiving infused chemotherapy for cancer and 89,096 new users of chemotherapy. We assessed the relationship between decreases in competition and the following outcomes: the number of chemotherapy-administering physicians within 25, 50, and 75 miles of the patient’s zip code and the distance traveled to receive chemotherapy; Medicare expenditures for infused chemotherapy; and all-cause emergency room visits and chemotherapy-associated hospitalization.

Our primary measure of market competition used a modified Herfindahl-Hirschman Index (HHI), similar to the HHI developed by Kessler and McClellan, measured at the core-based statistical area (CBSA). Secondary analysis measured markets at the Hospital Referral Region (HRR). We defined firms based on the tax identifying number listed for the physician administering chemotherapy and their market share as the number of chemotherapy infusions administered by the firm.

We used generalized linear models with fixed effects at the market level to examine the relationship between area-level measures of provider competition and each outcome. We log-transformed the HHI which ensures that both small (i.e., a hospital acquiring a community oncologist) and large (i.e., hospitals merging) changes in HHI will be captured. All models adjust for patient level clinical and demographic factors.

We find that a one standard deviation increase in logged HHI (i.e., market becoming less competitive) increases the average distance traveled from 100 to 112 miles and decreases the average number of physicians administering chemotherapy within 75 miles from 346 to 312 physicians. When examining spending by Medicare, we find that spending decreases as markets become less competitive at the claim service-line level and the day level but not when considering total spending during six months following treatment initiation. Finally, we do not find any association between the impact of competition on the quality of care that patients receive. Results were consistent when varying the geographic market from the CBSA to the HRR.

For patients receiving chemotherapy, competition impacts geographic access to care. However, the association between competition and healthcare spending is not consistent and we do not observe an association between competition and quality of care. Health care administrators should consider how acquisitions and mergers may reduce access to care when assessing the potential consequences of consolidation. While hospitals may improve their financial performance under consolidated delivery systems, this research suggests that patients’ access to care may suffer under less competitive markets.