There’s no substitute for experience.
And when it comes to extremely technical, highly specialized, very expensive propositions like launching a radiation therapy program, the more experience the better. That is a large part of the value proposition Alliance Oncology (AO) brings to the table when entering into joint ventures with hospitals and physicians across the nation.
“We’re not a management services company … we’re a partnership company,” stated Greg Spurlock, president of Alliance Oncology.
Spurlock joined the company in April 2011 when AO acquired U.S. Radiosurgery, where Spurlock previously served as chief administrative officer and chief operating officer. Today, as president of AO, he oversees a growing team that is singularly focused on planning, developing and operating radiation oncology departments and radiosurgery facilities in partnership with providers. Nashville-based Alliance Oncology is a division of Alliance Healthcare Services (NASDAQ: AIQ), which is headquartered in Newport Beach, California.
Spurlock noted it is an ongoing struggle for administrators and providers … whether from small rural hospitals or large academic medical centers … to offer state-of-the-art services without exhausting a capital budget that typically has more demands than available resources. “Every hospital in America has a capital list that is probably tenfold the dollars available,” he said. One cancer center, he added, could quickly eat up the budget meant for numerous projects spread across multiple departments.
A joint venture with Alliance Oncology, Spurlock said, relieves some of that pressure. “Hospitals are worried about their debt-to-equity ratio,” he pointed out. “When we do a joint venture, we can put the capital cost into the joint venture so the hospitals benefit from off-books capital.”
Furthermore, he continued, hospital partners are not required to provide guarantees for the building or equipment, which includes such advanced technologies as Intensity Modulated Radiation Therapy (IMRT), Image Guided Radiation Therapy (IGRT) and Stereotactic Radiosurgery (SRS).
AO enters into joint ventures for both the establishment of new centers and upgrades to existing facilities, depending on the specific need in any given market. Spurlock also noted the partnerships are geographically diverse ranging from joint ventures in community hospitals in the Southeast to affiliations with urban facilities from Boston to San Diego, including several prestigious academic medical centers.
Typically, the market partner does provide some starting capital, billing and collection functions, and the specialists required to staff the new department or facility. Spurlock added radiation oncologists are allowed by law to participate as a partner in these types of joint ventures, as well.
Alliance Oncology provides the rest of the necessary expertise from planning and building through daily operational management and marketing. Spurlock noted AO’s national buying power allows for savings on equipment and construction that would be difficult for an individual hospital to achieve on its own.
“We work for the hospital in all operational aspects. We’re the full service clinical provider,” he said. Spurlock added AO has the benefit of tapping into the expertise of its sister organization, the Radiosurgical Research Institute. “As an organization, we have created a proprietary clinical benchmarking program the centers participate in. We track a multitude of clinical information and data points to create a best-in-class experience for patients and physicians,” he explained.
Spurlock noted the company has received the highest award for patient satisfaction for seven years running by Avatar Solutions, a third party provider of patient satisfaction surveys. The honor is based on key survey items gauging patient expectation about quality of care, reliability, and willingness to recommend services to others.
Another important element of operations, Spurlock added, is marketing the center. “Part of the problem today is hospitals won’t take any program and market it year-round. They can’t. They have too many service lines,” he said. As part of the joint venture, however, AO takes on that function and applies best practices to drive market share on an ongoing basis. He added consumers don’t care about a cancer center until they need it so it’s essential to keep the marketing message out front all year long.
As of early 2015, Alliance Oncology had 31 radiation therapy centers in 17 states with more than half being dedicated radiosurgery facilities. “We grew significantly last year, and we plan to continue a significant growth strategy (in 2015),” Spurlock said.
Unfortunately, growth stems from need. While the incidence rate in some cancers is down slightly, the expectation is a 20 percent increase in cancer diagnoses in the next 10 years, driven in part by an aging population. On the plus side, Spurlock pointed out, the number of cancer survivors is also anticipated to grow significantly. The latest data from the American Cancer Society projects more than a 30 percent increase in cancer survivors during that same timeframe … growing from 14.5 million survivors today to 18.9 million by 2024.
“Treating cancer more accurately, faster and with smarter technology is allowing more people to survive longer,” Spurlock said. “The space is going to continue to grow so we feel like we are in a great position to help a lot of people and make a difference.”
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