Tag Archives: Proton Therapy Coverage

For Cancer Centers, Proton Therapy’s Promise Is Undercut by Lagging Demand

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In March 29, Georgetown University Hospital opened a proton-therapy cancer unit that is expected to treat about 300 patients a year at premium prices using what its proponents promote as the most advanced radiology for attacking certain tumors.

At the facility’s heart is a 15-ton particle accelerator that bombards malignancies with beams of magnet-controlled protons designed to stop at tumors rather than shoot through them like standard X-ray waves, mostly sparing healthy tissue.

With the addition, Georgetown joined a medical arms race in which hospitals and private investors, sometimes as partners, are pumping vast sums of money into technology whose effectiveness, in many cases, has not yet been shown to justify its cost.

Although most of the proton centers in the United States are profitable, the industry is littered with financial failure: Nearly a third of the existing centers lose money, have defaulted on debt or have had to overhaul their finances.

For Georgetown officials, it was still a bet worth making.

“Every major cancer center that has a full service radiation oncology department should consider having protons,” said Dr. Anatoly Dritschilo, the chief of the hospital’s radiation medicine department.

Many have. There are 27 proton therapy centers now operating in the United States. Nearly as many are being built or planned. Georgetown’s, which vies for patients with a struggling unit in Baltimore, will soon compete with another in Washington and one in Northern Virginia.

But about 30 years after the Food and Drug Administration first approved proton therapy for limited uses, doctors often hesitate to prescribe it and insurers often will not cover it.

That means there simply may not be enough business to go around.

“The biggest problem these guys have is extra capacity,” said Dr. Peter Johnstone, the chief executive at Indiana University’s proton center before it closed in 2014, in need of an upgrade but lacking the potential patients to pay for it. “They don’t have enough patients to fill the rooms.”

At Indiana, he added, “we began to see that simply having a proton center didn’t mean people would come.”

Proton therapy was initially used to treat tumors in delicate areas where surgery was not an option — near the eye, for example — and in children, and it remains the best choice in such cases.

But its pinpoint precision has not been shown to be more effective against breast, prostate and other common cancers. One recent study of lung-cancer patients found no significant difference in outcomes between people receiving proton therapy and those getting a focused kind of traditional radiation, which is much less expensive. Other studies are still underway.

“Commercial insurers are just not reimbursing” for proton therapy except for pediatric cancers or tumors near sensitive organs, substantially limiting the potential treatment pool, said Brandon Henry, a medical device analyst for RBC Capital Markets.

Medicare covers proton therapy more readily than private insurers, but relying solely on Medicare patients does not allow backers of some treatment centers to recoup their investments, much less turn a profit, analysts said.

For a glimpse of what can go wrong, consider the Maryland Proton Treatment Center in Baltimore, which is affiliated with the University of Maryland Medical Center.

Opened two years ago with a “Survivor”-themed party and lofty financial goals, the unit is already undergoing a restructuring that is inflicting large losses on its outside investors, including wealthy families from Texas.

Before the Baltimore center opened, those behind it saw their market stretching from Philadelphia to Northern Virginia and encompassing 20,000 potential patients a year. Officials predicted the unit would treat “north” of its current rate of about 85 patients a day, said Jason Pappas, the acting chief executive.

How far north?

“Upper Canada,” said Mr. Pappas, declining to provide hard numbers. He said the center would break even by the end of the year.

The patient shortage might not be a good sign for projects in the pipeline, but it is encouraging for those who take a dim view of proton therapy’s rise.

“Something that gets you the same clinical outcomes at a higher price is called inefficient,” said Dr. Ezekiel Emanuel, a health policy professor at the University of Pennsylvania, which operates one proton center and is developing another. “If investors have tried to make money off the inefficiency, I don’t think we should be upset that they’re losing money on it.”

The proton therapy boom effectively began in 2001, when Massachusetts General Hospital in Boston opened a proton unit, raising the profile of what was a little-used technology. By 2009, developers were flocking to the field, lured by the belief that insurers would cover treatment bills that run to $48,000 and more.

The treatment held particular promise for prostate cancer patients, given the potential side effects, including incontinence and impotence, associated with traditional radiation.

But a 2013 Yale study found little difference in those conditions among patients getting proton therapy versus those getting traditional radiation. Within a year, several insurers stopped covering the therapy for prostate cancer or were reconsidering it.

Indiana University’s center was the first to close. Before long, others were in dire financial straits.

California Protons in San Diego, which was once associated with the Scripps Health hospital network, filed for bankruptcy protection last year. An abandoned proton project in Dallas is in bankruptcy as well.

In Virginia, the Hampton University Proton Therapy Institute has lost money for at least five straight years, financial statements show. In Knoxville, Tenn., the Provision CARES Proton Therapy Center lost $1.7 million last year on revenue of $23 million, $5 million short its target.

Centers in Somerset, N.J., and Oklahoma City run by privately held ProCure have defaulted on their debts, according to the investment firm Loop Capital. A center associated with Seattle Cancer Care Alliance, a hospital consortium, in Washington State lost $19 million in the 2015 fiscal year before restructuring its debt, documents show. A center near Chicago lost tens of millions of dollars before its own restructuring as part of a 2013 sale to hospitals now affiliated with Northwestern Medicine, according to regulatory documents.

Scott Warwick, executive director of the National Association for Proton Therapy, a trade group, blames “over-exuberant expectations” for the problems.

“I think maybe that’s what went on with some of the centers,” he said. “They thought the technology would grow faster than it has.”

The industry is using advertising and marketing to urge patients and lawmakers to press insurers to pay for proton therapy. Oklahoma recently passed a law requiring that insurers evaluate the treatment on an equal basis with other therapies. Virginia has considered similar legislation. At the National Proton Conference in Orlando last year, a full day was devoted to winning over insurers. The Alliance for Proton Therapy Access, another industry group, has software for generating letters to the editor demanding coverage.

Until the insurance outlook changes, those developing new proton centers have scaled back their ambitions. Georgetown’s unit, for example, cost $40 million and has a single treatment room. The one in Baltimore cost $200 million and has five.

Following the Georgetown model, with one or two treatment rooms, should allow centers in major metropolitan areas to make money, said Prakash Ramani, a senior vice president at Loop Capital, which is involved with projects in Alabama, Florida and elsewhere.

Not all the new units are small. In some cases, hospitals are joining forces to make the finances work. In New York, Memorial Sloan Kettering, Mount Sinai Health System and Montefiore Health System have teamed up on a $300 million unit with an 80-ton particle accelerator and four treatment rooms that is set to open in East Harlem next year.

Officials, counting on the New York area’s vast population and referrals from three major health systems, expect the center to treat 1,400 people a year. They will soon learn whether their project fares better than the Indiana proton center did.

“What places need now are patients,” Dr. Johnstone, that center’s former chief, said, “a huge supply of patients.”

 

 

As Proton Centers Struggle, A Sign Of A Health Care Bubble?

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The Maryland Proton Treatment Center chose “Survivor” as the theme for its grand opening in 2016, invoking the reality-TV show’s tropical sets with its own Tiki torches, palm trees and thatched booths piled with pineapples and bananas.

It was the perfect motif for a facility dedicated to fighting cancer. Jeff Probst, host of CBS’ “Survivor,” greeted guests via video from a Fiji beach.

But behind the scenes, the $200 million center’s own survival was less than certain. Insurers were hesitating to cover procedures at the Baltimore facility, affiliated with the University of Maryland Medical Center. The private investors who developed the machine had badly overestimated the number of patients it could attract. Bankers would soon be owed repayment of a $170 million loan.

Only two years after it opened, the center is enduring a painful restructuring with investors poised for huge losses. It has never made money, although it has ample cash to finance operations, said Jason Pappas, its acting CEO since November. Last year it lost more than $1 million, he said.

Volume projections were “north” of the current rate of about 85 patients per day, Pappas said. How far north? “Upper Canada,” he said.

For years, health systems rushed enthusiastically into expensive medical technologies such as proton beam centers, robotic surgery devices and laser scalpels — potential cash cows in the one economic sector that was reliably growing. Developers got easy financing to purchase the latest multimillion-dollar machine, confident of generous reimbursement.

There are now 27 proton beam units in the U.S., up from about half a dozen a decade ago. More than 20 more are either under construction or in development.

But now that employers, insurers and government seem determined to curb growth in health care spending and to combat overcharges and wasteful procedures, such bets are less of a sure thing.

The problem is that the rollicking business of new medical machines often ignored or outpaced the science: Little research has shown that proton beam therapy reduces side effects or improves survival for common cancers compared with much cheaper, traditional treatment.

If the dot-com bubble and the housing bubble marked previous decades, something of a medical-equipment bubble may be showing itself now. And proton beam machines could become the first casualty.

“The biggest problem these guys have is extra capacity. They don’t have enough patients to fill the rooms” at many proton centers, said Dr. Peter Johnstone, who was CEO of a proton facility at Indiana University before it closed in 2014 and has published research on the industry. At that operation, he said, “we began to see that simply having a proton center didn’t mean people would come.”

Sometimes occupying as much space as a Walmart store and costing enough money to build a dozen elementary schools, the facilities zap cancer with beams of subatomic proton particles instead of conventional radiation. The treatment, which can cost $48,000 or more, affects surrounding tissue less than traditional radiation does because its beams stop at a tumor rather than passing through. But evidence is sparse that this matters.

And so, except in cases of childhood cancer or tumors near sensitive organs such as eyes, commercial insurers have largely balked at paying for proton therapy.

“Something that gets you the same clinical outcomes at a higher price is called inefficient,” said Dr. Ezekiel Emanuel, a health policy professor at the University of Pennsylvania and a longtime critic of the proton-center boom. “If investors have tried to make money off the inefficiency, I don’t think we should be upset that they’re losing money on it.”

Investors backing a surge of new facilities starting in 2009 counted on insurers approving proton therapy not just for children, but also for common adult tumors, especially prostate cancer. In many cases, nonprofit health systems such as Maryland’s partnered with for-profit investors seeking high returns.

Companies marketed proton machines under the assumption that advertising, doctors and insurers would ensure steady business involving patients with a wide variety of cancers. But the dollars haven’t flowed in as expected.

Indiana University’s center became the first proton-therapy facility to close following the investment boom, in 2014. An abandoned proton project in Dallas is in bankruptcy court.

California Protons, formerly associated with Scripps Health in San Diego, landed in bankruptcy last year.

A number of others, including Maryland’s, have missed financial targets or are hemorrhaging money, according to industry analysts, financial documents and interviews with executives.

  • The Hampton University Proton Therapy Institute in Virginia has lost money for at least five years in a row, recording an operating loss of $3 million in its most recent fiscal year, financial statements show.
  • The Provision CARES Proton Therapy Center in Knoxville, Tenn., lost $1.7 million last year on revenue of $23 million — $5 million below its revenue target. The center is meeting its debt obligations, said Tom Welch, its president.
  • Centers operated by privately held ProCure in Somerset, N.J., and Oklahoma City have defaulted on debt, according to Loop Capital, an investment bank working on deals for new proton facilities.
  • A facility associated with the Seattle Cancer Care Alliance, a consortium of hospitals, lost $19 million in fiscal 2015 before restructuring its debt, documents show. Patient volume is growing but executives “continue to be disappointed in the slower-than-expected acceptance of proton therapy treatment” by insurers, said Annika Andrews, CEO of SCCA Proton Therapy.
  • A center near Chicago lost tens of millions of dollars before restructuring its finances in a 2013 sale to hospitals now affiliated with Northwestern Medicine, documents filed with state regulators show. The facility is “meeting our budget expectations,” said a Northwestern spokesman.

Representatives from ProCure and the facilities in San Diego and Hampton did not respond to repeated requests for interviews.

“In any industry that’s really an emerging industry, you often have people who enter the business with over-exuberant expectations,” said Scott Warwick, executive director of the National Association for Proton Therapy. “I think maybe that’s what went on with some of the centers. They thought the technology would grow faster than it has.”

In the absence of evidence showing protons produce better outcomes for prostate, lung or breast cancer, “commercial insurers are just not reimbursing” for these more common tumors, said Brandon Henry, a medical device analyst for RBC Capital Markets.

The most expensive type of traditional, cancer-fighting radiation — intensity modulated radiation therapy — costs around $20,000 per treatment, while others cost far less. The government’s Medicare program for seniors covers proton treatment more often than private insurers but is insufficient by itself to recoup the massive investment, analysts said.

The rebellion by private insurers “is very, very good” and may signal the health system “is finally figuring out how to say no to low-value procedures,” said Amitabh Chandra, a Harvard health policy professor who has called proton facilities unaffordable “Death Stars.”

Proton centers are fighting back, enlisting patients, legislators and nonprofits to push for reimbursement. Oklahoma has passed and Virginia has considered legislation to effectively require insurers to cover proton therapy in more cases.

An entire day at the 2017 National Proton Conference in Orlando was dedicated to tips on getting paid, including a session titled “Strategies for Engaging Health Insurance on Proton Therapy Coverage.”

Proton facilities tell patients the therapy is appropriate for many kinds of cancer, never mentioning the cost and guiding them through complicated appeals to reverse coverage denials. The Alliance for Proton Therapy Access, an industry group, has online software for generating letters to the editor demanding coverage.

In hopes of navigating a difficult market, many new centers are smaller — with one or two treatment rooms — and not as expensive as the previous generation of units, which typically have four or five rooms, like the Baltimore facility, and cost $200 million or more.

Location is also critical. Treatment requires near-daily visits for more than a month, which may explain why larger centers such as Maryland’s never attracted the out-of-town business they needed.

To make the finances work, hospitals are combining forces. The first proton beam center in New York City is under construction, a joint project of Memorial Sloan Kettering, Mount Sinai and Montefiore Health System.

Smaller facilities, which can cost less than $50 million, should be able to keep their rooms full in many major metro areas, said Prakash Ramani, a senior vice president at Loop Capital, which is helping develop such projects in Alabama, Florida and elsewhere.

Maryland’s center hopes to break even by year’s end, executives said. That will involve refinancing, converting to nonprofit, inflicting losses on investors and issuing municipal bonds.

But plans call for four centers soon to be open in the D.C. area.

“It’s a real arms race,” said Johnstone, the former proton-center CEO, who has co-authored papers on proton-therapy economics. He is now vice chair of radiation oncology at Moffitt Cancer Center in Tampa, which doesn’t have a proton center. “What places need now are patients — a huge supply of patients.”