A wave of change is occurring in the infusion market, creating new complexities, challenges, and opportunities for providers who administer infusion drugs, patients who need those drugs, and payers who manage drug benefits.
Infusion services represent a ~$120B+ market in the U.S. as of 2022, making up a sizeable and growing portion of medical drug spend.1 This is expected to grow by a CAGR of about 8-10% by 2026, driven by an expanding pipeline of infusible drugs as well as an increasing demand from an aging population among whom chronic conditions are more prevalent. As the use of infusible drugs increases, payers are increasingly implementing site-of-care strategies to shift these services to lower-cost settings, i.e., from hospital outpatient departments (HOPD) to ambulatory settings. When we surveyed the health system pharmacy leaders in our network, all indicated that payers in their markets have implemented infusion site-of-care programs.
This raises the question: How will the landscape for infusion services evolve and how can different stakeholders participate in this shift?
Shift in Sites of Care is Creating a More Complex Infusion Ecosystem
Like other categories of healthcare services, we are seeing infusion services increasingly migrate into ambulatory settings. According to analysis by Recon Strategy, up to ~26% of infusion care currently delivered in hospital outpatient department (HOPD) could be shifted to ambulatory settings.2 This transition is driven by various factors, including patient preferences, economic considerations, and payer policies and programs, as well as therapeutic and clinical advancements. The number and types of different infusion delivery models are proliferating. While this expansion benefits patient access, it also creates a complex system of care for patients and providers to navigate.
The hospital, including HOPD, has traditionally served as the primary location for many infusion services, particularly for more complex conditions such as oncology. Patients benefit from access to hospital facilities and emergency support, making it especially suitable for complex patients, medications that require special handling and preparation, or situations where adverse reactions may occur. However, because of this additional infrastructure, the cost to administer infusions in the HOPD is higher than in ambulatory settings. Drug rates for infusions administered in non-HOPD settings are typically 30-40% lower than in HOPD settings, where additional facility fees are also incurred.
As a result, we are seeing payers increasingly steer infusions to non-HOPD outpatient settings which include:
- Office-Based Infusion Centers (OIC): Outside of the hospital, OICs are the most common setting for infusions. This is when physicians offer infusion services to their patients within their own practice. This is common with certain types of specialties where infusions are a core part of the treatment, such as rheumatology. It offers patients the benefit of having both their medical and therapeutic care under one roof while being less expensive for payers.
- Ambulatory Infusion Centers (AICs): Over the last several years, there has been a rapid growth in AICs, which are free-standing clinics which focus exclusively on administering infusions. This growth has, in part, been driven by private capital investors who view the growing infusion market as an attractive investment opportunity. AICs appeal to patients due to their convenient locations and concierge-level experiences. Like OICs, they also offer a more economical option for payers. Consequently, there has been a significant increase in infusion spending at AICs.
- Home Infusions: During the COVID pandemic, home infusion programs grew significantly. Patients that were reticent or unable to receive treatment at the health system or at a provider, opted for treatment in the comfort of their homes. However, not all types of infusions are clinically suitable to be administered in the home setting. As a result, the home continues to be the setting primarily for lower complexity, high frequency infusions, e.g., antibiotics.
There are differences in payer coverage, clinical suitability, cost, and level of convenience across these various infusion settings. This creates a complex and dynamic environment for providers and payers, who must balance these variables while helping patients navigate their infusion and care journey.
Health Systems and Providers Are Redefining Their Infusion Strategy
In our survey of our health system partners, responding to infusion sites-of-care shifts and expanding their ambulatory infusion footprint were listed as two top strategic priorities. More than half have built or are considering building or partnering to build their own AICs. Each is weighing the benefits and risks to patients and their existing infusion operations against the realities of what is happening in their local markets (i.e., how aggressive are payers’ site-of-care programs; how intense is the competition for infusion; how much influence they have with local specialist physicians) as they craft their future infusion strategy. The same analysis by Recon Strategy shows that there is wide variation in how infusion site-of-care shift plays out across geographies depending on local dynamics. In some markets, integrated delivery systems with strong specialist alignment may have an edge in holding onto infusions even as site-of-care shifts while, in other markets, redirection may lead to more dispersion in infusionsites of care.2
In this dynamic, we are seeing the growth of several categories of innovators that are partnering or competing with health system infusion services, and sometimes both:
- Health System Infusion Enablement: Health system infusion enablers can help to fund, construct, and manage AICs under the health system brand. They can engage in profit-sharing arrangements with health systems and participate in 340B where applicable.
- Infusion Technology Providers: Providers that are building their own ambulatory infusion programs are finding the need for dedicated infusion technology. Today, there is no dedicated EMR system that spans the hospital, ambulatory, and home settings. Adding to that complexity is the fact that infusion billing requires billing across both the medical and pharmacy benefit. Ambulatory infusion billing and revenue cycle management was cited as one of the top capability gaps by health system pharmacy leaders.
Health systems are also contending with the reality that there are a growing number of entities vying for infusion services. They face strategic decisions in how they compete or partner with these emerging players:
- Independent Ambulatory Infusion Centers (AICs): Several of our healthcare system pharmacy partners noted the growing number of AICs in their backyard. While these AICs have traditionally competed with healthcare systems, they are also potential referral partners for healthcare systems, particularly in areas where the healthcare system does not have a presence. Strategically aligning with certain AICs may reduce the risk of losing patient relationships altogether as they independently seek alternative infusion sites of care.
- 340B Entity Infusion Enablement: We are also seeing other 340B providers, such as Federally Qualified Health Centers (FQHCs), begin to establish onsite infusionoperations with the support of enablement players. These providers often serve communities where there are no alternative care options. Many of their patients are covered under Medicaid or are uninsured and may find it difficult to access necessary infusion services. Establishing onsite infusion suites allows these providers to offer a more comprehensive set of healthcare services to their patients.
As health systems develop their ambulatory infusion strategy, they must evaluate: Is there an opportunity for partnering with these entities to optimize their portfolio of infusion assets and capital investments, while also directing patients to the most appropriate settings that supports access and quality?
A Dynamic Market Presents Opportunities for Innovators
The infusion market is undergoing transformation, introducing a variety of complexities, challenges, and opportunities for all stakeholders. Providers responsible for dispensing and administering infusion drugs find themselves navigating through several new variables, from shifts in care locations to evolving drug therapies. Patients relying on these drugs face the challenge of accessing them efficiently amidst changing landscapes. Payers, tasked with administering drug benefits, grapple with ensuring affordability and access while maintaining clinical quality.
This dynamic market creates opportunities for innovation. If you are innovating in this space, or if you’d like to discuss this topic with us further, we’d love to talk to you. Please email us at [email protected].
Sources:
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McKinsey analysis