In recent years, health systems have turned to development of high-dollar cancer treatment centers to build brand identity as first-rate research facilities and to capture a larger portion of a lucrative market. But the realities of a payer system in transition are forcing health systems to rethink that strategy and could force a move to collaborative efforts with competitors. Insurers are starting to question the effectiveness of the treatment given the associated high cost.

A recent example of this shift in strategy is seen in San Diego where two competing health systems have decided to collaborate on a new proton therapy center rather than compete against each other. Initially, Scripps Health, the second-largest system in the San Diego market, planned the $185 million Scripps Proton Therapy Center in Mira Mesa and competitor UC San Diego planned a $205 million center in La Jolla. UC San Diego later scaled back its plans to a $30 million center.

By the time the Scripps facility opened in February 2014, UC San Diego had shelved its plans for a proton therapy center and the two organizations announced a partnership that would allow UC San Diego's physicians to treat their patients at the new center.

Health systems see the lucrative cancer treatment as a way to increase patient volume because the technology is still so rare. There are only 14 centers in operation nationally and 12 more are being developed. The only other proton therapy center in all of California is in Loma Linda in San Bernardino County at Loma Linda University Medical Center.

So why did they change course. It may have had something to do with one of the largest payers in the market changing its policy on what it will pay for when it comes to early-stage prostate cancer. In August 2013, Blue Shield of California said it will no longer cover proton-beam therapy for early-stage prostate cancer because evidence shows that treatment has about the same clinical outcomes as other forms of radiation therapy, which are much cheaper. Other insurers have the same policies, including Aetna, according to the Wall Street Journal, although Medicare still covers it.

In other markets, however, health systems appear to be determined to compete at all costs. In Oklahoma City, the largest health system, Integris Health, is partnered with proton therapy center company ProCure on a $120 million center that opened in 2009. Competitor OU Medicine has purchased a Mevion proton therapy system and installed it in a center that will open in the summer of 2014.

While some have hinted that there were talks of collaboration, ultimately OU chose to pursue its own course. The result is that Oklahoma City will be one of the few markets in the country to have two proton therapy treatment centers. Washington, D.C. and West Palm Beach also have two centers in the planning stages. In Washington, D.C., MedStar Health and Johns Hopkins Medicine are both planning to build their own proton therapy centers, each costing about $153 million.

While some health systems maintain that there are plenty of cancer patients to make two centers sustainable in a market, the strategy of competition comes with a risk. Insurers, in front of a backdrop of mounting pressure to contain costs, are reevaluating what they will pay for as some research shows the effectiveness of proton therapy may not warrant the cost.

If more insurers go the route of Blue Shield of California, systems such as Integris and OU Medicine, or MedStar and Johns Hopkins, may find themselves saddled with huge investments in technology that has a shrinking number of payers willing to foot the bill. If the market plays out that way, there may be only one path for health systems to choose in the future collaboration.

Follow Jenny Kerr on Twitter @ JennyKerrDRG

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