The Maryland Proton Treatment Center selected “Survivor” because the theme for its grand opening in 2016, invoking the reality-TV present’s tropical units with its personal Tiki torches, palm timber and thatched cubicles piled with pineapples and bananas.
It was the proper motif for a facility devoted to combating most cancers. Jeff Probst, host of CBS’ “Survivor,” greeted company by way of video from a Fiji seashore.
But behind the scenes, the $200 million middle’s personal survival was lower than sure. Insurers had been hesitating to cowl procedures on the Baltimore facility, affiliated with the University of Maryland Medical Center. The personal buyers who developed the machine had badly overestimated the variety of sufferers it might appeal to. Bankers would quickly be owed compensation of a $170 million mortgage.
Only two years after it opened, the middle is enduring a painful restructuring with buyers poised for large losses. It has by no means made cash, though it has ample money to finance operations, stated Jason Pappas, its performing CEO since November. Last 12 months it misplaced greater than $1 million, he stated.
Volume projections had been “north” of the present fee of about 85 sufferers per day, Pappas stated. How far north? “Upper Canada,” he stated.
For years, well being techniques rushed enthusiastically into costly medical applied sciences comparable to proton beam facilities, robotic surgical procedure units and laser scalpels — potential money cows within the one financial sector that was reliably rising. Developers bought straightforward financing to buy the most recent multimillion-dollar machine, assured of beneficiant reimbursement.
There at the moment are 27 proton beam models within the U.S., up from about half a dozen a decade in the past. More than 20 extra are both underneath development or in improvement.
But now that employers, insurers and authorities appear decided to curb development in well being care spending and to fight overcharges and wasteful procedures, such bets are much less of a certain factor.
The drawback is that the rollicking enterprise of latest medical machines typically ignored or outpaced the science: Little analysis has proven that proton beam remedy reduces unintended effects or improves survival for widespread cancers in contrast with less expensive, conventional therapy.
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If the dot-com bubble and the housing bubble marked earlier a long time, one thing of a medical-equipment bubble could also be exhibiting itself now. And proton beam machines might grow to be the primary casualty.
“The biggest problem these guys have is extra capacity. They don’t have enough patients to fill the rooms” at many proton facilities, stated Dr. Peter Johnstone, who was CEO of a proton facility at Indiana University earlier than it closed in 2014 and has printed analysis on the trade. At that operation, he stated, “we began to see that simply having a proton center didn’t mean people would come.”
Sometimes occupying as a lot area as a Walmart retailer and costing sufficient cash to construct a dozen elementary faculties, the services zap most cancers with beams of subatomic proton particles as a substitute of typical radiation. The therapy, which may price $48,000 or extra, impacts surrounding tissue lower than conventional radiation does as a result of its beams cease at a tumor somewhat than passing by. But proof is sparse that this issues.
And so, besides in instances of childhood most cancers or tumors close to delicate organs comparable to eyes, business insurers have largely balked at paying for proton remedy.
“Something that gets you the same clinical outcomes at a higher price is called inefficient,” stated Dr. Ezekiel Emanuel, a well being coverage professor on the University of Pennsylvania and a longtime critic of the proton-center increase. “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 latest services beginning in 2009 counted on insurers approving proton remedy not only for kids, but in addition for widespread grownup tumors, particularly prostate most cancers. In many instances, nonprofit well being techniques comparable to Maryland’s partnered with for-profit buyers in search of excessive returns.
Companies marketed proton machines underneath the idea that promoting, medical doctors and insurers would guarantee regular enterprise involving sufferers with all kinds of cancers. But the dollars haven’t flowed in as anticipated.
Indiana University’s middle grew to become the primary proton-therapy facility to shut following the funding increase, in 2014. An deserted proton challenge in Dallas is in chapter courtroom.
California Protons, previously related to Scripps Health in San Diego, landed in chapter final 12 months.
Numerous others, together with Maryland’s, have missed monetary targets or are hemorrhaging cash, in line with trade analysts, monetary paperwork and interviews with executives.
The Hampton University Proton Therapy Institute in Virginia has misplaced cash for not less than 5 years in a row, recording an working lack of $three million in its most up-to-date fiscal 12 months, monetary statements present. The Provision CARES Proton Therapy Center in Knoxville, Tenn., misplaced $1.7 million final 12 months on income of $23 million — $5 million under its income goal. The middle is assembly its debt obligations, stated Tom Welch, its president. Centers operated by privately held ProCure in Somerset, N.J., and Oklahoma City have defaulted on debt, in line with Loop Capital, an funding financial institution engaged on offers for brand spanking new proton services. A facility related to the Seattle Cancer Care Alliance, a consortium of hospitals, misplaced $19 million in fiscal 2015 earlier than restructuring its debt, paperwork present. Patient quantity is rising however executives “continue to be disappointed in the slower-than-expected acceptance of proton therapy treatment” by insurers, stated Annika Andrews, CEO of SCCA Proton Therapy. A middle close to Chicago misplaced tens of hundreds of thousands of dollars earlier than restructuring its funds in a 2013 sale to hospitals now affiliated with Northwestern Medicine, paperwork filed with state regulators present. The facility is “meeting our budget expectations,” stated a Northwestern spokesman.
Representatives from ProCure and the services in San Diego and Hampton didn’t reply 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,” stated Scott Warwick, government 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 proof exhibiting protons produce higher outcomes for prostate, lung or breast most cancers, “commercial insurers are just not reimbursing” for these extra widespread tumors, stated Brandon Henry, a medical gadget analyst for RBC Capital Markets.
The most costly sort of conventional, cancer-fighting radiation — depth modulated radiation remedy — prices round $20,000 per therapy, whereas others price far much less. The authorities’s Medicare program for seniors covers proton therapy extra typically than personal insurers however is inadequate by itself to recoup the huge funding, analysts stated.
The riot by personal insurers “is very, very good” and should sign the well being system “is finally figuring out how to say no to low-value procedures,” stated Amitabh Chandra, a Harvard well being coverage professor who has referred to as proton services unaffordable “Death Stars.”
Proton facilities are combating again, enlisting sufferers, legislators and nonprofits to push for reimbursement. Oklahoma has passed and Virginia has thought of laws to successfully require insurers to cowl proton remedy in additional instances.
An total day on the 2017 National Proton Conference in Orlando was devoted to recommendations on getting paid, together with a session titled “Strategies for Engaging Health Insurance on Proton Therapy Coverage.”
Proton services inform sufferers the remedy is acceptable for a lot of sorts of most cancers, by no means mentioning the fee and guiding them by sophisticated appeals to reverse protection denials. The Alliance for Proton Therapy Access, an trade group, has online software for producing letters to the editor demanding protection.
In hopes of navigating a tough market, many new facilities are smaller — with one or two therapy rooms — and never as costly because the earlier technology of models, which generally have 4 or 5 rooms, just like the Baltimore facility, and value $200 million or extra.
Location can be essential. Treatment requires near-daily visits for greater than a month, which can clarify why bigger facilities comparable to Maryland’s by no means attracted the out-of-town enterprise they wanted.
To make the funds work, hospitals are combining forces. The first proton beam middle in New York City is underneath development, a joint challenge of Memorial Sloan Kettering, Mount Sinai and Montefiore Health System.
Smaller services, which may price lower than $50 million, ought to have the ability to preserve their rooms full in lots of main metro areas, stated Prakash Ramani, a senior vp at Loop Capital, which helps develop such initiatives in Alabama, Florida and elsewhere.
Maryland’s middle hopes to interrupt even by 12 months’s finish, executives stated. That will contain refinancing, changing to nonprofit, inflicting losses on buyers and issuing municipal bonds.
But plans name for 4 facilities quickly to be open within the D.C. space.
“It’s a real arms race,” stated Johnstone, the previous 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 middle. “What places need now are patients — a huge supply of patients.”
