Cardinal Health does not expect Inflation Reduction Act drug pricing changes, including a potential shift of Part B drugs into the negotiation process, to meaningfully affect the economics of its physician management services organizations, CEO Jason Hollar said during a September appearance at Morgan Stanley’s Global Healthcare Conference.
Drug spending makes up only about a third of total revenue at Cardinal’s urology- and GI-focused MSOs, with patient office visits and procedures accounting for the rest, Mr. Hollar said.
That mix would “mute” any hit to MSO economics even if the administration changes how community physicians are compensated under IRA rules, though Mr. Hollar said he does not expect that outcome, citing what he called sufficient “off-ramps” for the administration to treat independent physicians differently than hospitals.
“We fully expect and have seen very clear, consistent examples of our economics maintaining” through past pricing changes, Mr. Hollar said, adding that Cardinal’s contracts entitle it to compensation for its services regardless of how drug pricing shifts. He said Cardinal continues to advocate that community-based specialty care, including care delivered at ASCs, remains the lowest-cost site of care in the industry.
Mr. Hollar drew a similar distinction on 340B, saying any fallout from changes to that program would land mainly on hospitals and health systems that dispense drugs, not on Cardinal’s own economics. He said patients who lose access at one site typically get care somewhere else, “care finds a way of getting delivered,” and that Cardinal’s broad customer base means volume it loses in one setting, it tends to pick up in another.
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