Protons 101: That money / cost thing
You know, "Death Star of medicine" and yet ASTRO expands indications
To say that protons are controversial is a vast understatement:
“Proton-beam therapy is like the death star of American medical technology; nothing so big and complicated has ever been confronted by the system,” said Amitabh Chandra, a health economist at Harvard University’s John F. Kennedy School of Government. “It’s a metaphor for all the problems we have in American medicine.”
From an article entitled: “The Death Star of American Medicine”. Published back in 2012, it put protons front and center.
Gotta admit, that is catchy. As good as some of the pro-proton therapy ads you see marketing the “tremendous benefits” of protons. A headline that even in 2023 would stand out. In 11 years not much has changed - I’d say this is still largely reflective a segment of people who still really, really do not like protons.
The arguments against protons are common and actually apply to a lot of what we do in medicine - there is too often too little data demonstrating clear benefit via good prospective randomized studies. I’ve heard it said 90% of what we do in radiation oncology is not supported by prospective randomized data - alpha cradles, aquaplast masks image guidance, 4D CTs, IMRT in most sites - but here, with protons, the difference is cost - not just a bit more expensive, but rather multiple factors more expensive. Sure there are some side issues like range or LET uncertainty, but realistically it comes down to costs.
So today, we’ll look at costs a bit. It is a massive topic. And I’ll point out that the US landscape, as of today, is largely fixed in place until we get randomized data and I’ll explain why - and it comes back to our topic, money. Certainly some may not see that as enough, but I think it adds context so that when you see ASTRO expand indications - maybe that is less frustrating.
First ASTRO (our professional society) publishes general recommendations for the payment of proton therapy and year over year, these have slowly progressed and been broadened despite very little randomized prospective data demonstrating benefit. To date, the only prospective randomized data is the Esophageal data which we’ve reviewed previously here:
On the horizon are a number of trials - many out of Europe but they aren’t here today and opponents of protons really do not like indications coming before data - which is - if you had to say, is correct.
How did we get here?
A long time ago in a galaxy far far away, proton centers were built - they were and continue to be very expensive (from a medical perspective). They REQUIRED prostate cancer be treated to be viable financially. Passive scanning just has limited regions where it is easy to apply. Back then, you needed one cyclotron and the way in which there was ANY hope to commercialize the project was to build multiple rooms off that cyclotron and then treat a LOT of people many with lateral fields - this required the bulk of patients be men with prostate cancer.
Right there, we have an issue. If we needed something dramatically different / and stepwise better that was drastically more expensive, prostate cancer would not be in top 10 or 15 cancers where we need help. But it quickly dominated the space - even into 2010 representing around 65% of cases under beam or, in some places, more.
And along with this basic model, dominated by a disease that has multiple good options, came marketing - not necessarily from physicians but often from marketing teams that, from my perspective, waaay over stated benefits. It was and still is sold as a magical fix. I won’t include clear examples like touting massive overall survival benefits when randomized prospective trials argue no benefit - but they are out there and come from “leading” institutions. And with these “fancy tools”, that few else have, these institutions moved forward in what appeared to be an arms race for “prestige, perceived benefits, and potential revenue” (again quoting Forbes article) - while pushing the boundaries of what marketing campaigns in the US can legally claim.
And this massive push - with technology limited to just a few institutions created quite a bit of backlash and pushback - rightfully so. It is compounded by the fact that today - 30 years after the rollout of this clinical approach - the original cancer, required for any proton therapy proforma - prostate cancer still has no prospective randomized trial proving benefit. Heck it is worse than that - we haven’t even run the studies. Finally today, one is underway and by 2030 we’ll have some reasonable data. And I’m on record that I think the odds are strongly against protons proving any benefit looking forward - the era with the opportunity for protons to have any real chance to beat photons in a randomized controlled setting in prostate cancer, I think has passed.
I do think it should also be pointed out that prostate cancer in particular serves this purpose, not just for protons, but for all radiation oncology - it is a primary profit center within radiation - critical for infrastructure development. And in similar fashion, we moved to IMRT from 3DCRT without randomized data with large revenue incentives, IMRT was just more broadly available due to lower entry costs - and there, these shifts were accepted.
My thoughts specifically on prostate cancer are discussed more at length here:
But today, with protons history of being a lightening rod, to have the install base and the equity in these facilities with nearly NO comparative prospective data is embarrassing. Today, it hurts proton therapy.
But this issue - protons and the whole money thing has so many complexities. Insurance payments in the US vary drastically from institution to institution and generally, the larger, more prestigious facilities get reimbursed factors more than small players. And protons gravitate towards these larger institutions. And even within Medicare, there are two tiers - one for everyone and 11 that simply get more - and again 6 of the 11 have protons. Across the broader market there are about 5000 radiation facilities and about 40 proton centers - so the concentration is clear - and it amplifies the cost / payment issues. Protons are far more costly to build and then are housed in big hospitals with favorable private insurance contract and then occasionally coupled with exemptions from Medicare.
Here is the list of PPS-Exempt facilities (facilities that are exempt from the prospective payment system - ie standard Medicare reimbursement rates): These are the 11 facilities that are NOT paid Medicare rates - they get paid more - often nearly 30%-40% more.
James Cancer Hospital added via: Omnibus Reconciliation Act of 1989 (P.L. 101-239)
Miami and H. Lee Moffit added via: Balanced Budget Act of 1997 (P.L. 105-33). Others added via: Social Security Amendments of 1983 (P.L. 98-21)
Are proton facilities really expensive? Yes. Relative to medical equipment or traditional facilities they are a number of factors more expensive than traditional radiation facilities. To give you an idea, I saw bids for a 2 and 3 room facility - it included the proton machine and the healthcare space for all the staff come in at ~$90M and ~$110M. Again really expensive especially if it is going to be used for prostate cancer and likely, at best, offer rather stepwise improvements over traditional approaches. But if you think it significantly spares long-term toxicity in say 5% of the radiation oncology treatment population (for example kids and then 3% of our patients), and you look beyond medicine at what we spend as a country on other items, I’d prefer to have a machine that benefits the community in cancer care more than a football practice / training facility or maybe reduce a NFL football stadium cost by 1/20th and put that towards the good of cancer care.
Practice / training facilities:
1. Colorado Buffaloes – $143 million (proposed)
2. Cincinnati Bearcats – $105 million (Richard E. Lindner Varsity Village)
3. USC Trojans – $70 million (John McKay Center)
(again these are training facilities - not the stadiums - we’re talking bout practice)
NLF stadiums:
1. SoFi Stadium $4.9 Billion
2. Allegiant Stadium $1.9 Billion
3. MetLife Stadium $1.7 Billion
4. Mercedes-Benz Stadium $1.5 Billion
5. AT&T Stadium $1.3 Billion
So costs get difficult - I don’t pretend to know the balance point, but from my perspective, we (as a community and as a nation) prioritize crazy stuff. So simply in the more recent years I have decided to focus more just on the medicine - what is the best treatment? Well, I say that:
Remember I am biased - I think we will show that modern proton therapy machines outperform IMRT in some cases - it might be 5% or 15% of cases - I am less clear on the percent but eventually I do believe this will be demonstrated in prospective randomized trials for a number of sites.
The OKC Experience:
There are pluses and minuses to every situation today in healthcare. In radiation oncology, specifically where capital expenses are so very high, it is incredibly unlikely that you can separate yourself completely and just do medicine and be in control of the balance sheet. I had that type of arrangement for about a decade but I believe today they are nearly gone.
So I say I disregard costs largely but that is with the following caveats - I’m pretty certain we are one of the single lowest cost providers of protons in the US. For non-covered treatments - we are typically below 50k - still very expensive but not crazy figures you will see online.
Here is a case example - with permission. A lady in her 30s - locally advanced breast cancer. Below are the comparative plans. Yes there are options outside of what we have at our facility (protons and tomo) like electrons for IMC and a cold wedge +/- breath hold - but even with surface guidance and some pretty good breath hold tools, this would not be an easy setup - and the cold triangle / overlap issue between tangents and the IMC is real - if you believe dosimetry. I did lots of breast cases on a Truebeam with breath hold and surface guidance and here I think the “real” option is compromise on coverage.
LAD at 1500 cGy drops from 18.03% to 0.00%. Mean LAD region dose drops from 1167 cGy to 174 cGy. Mean heart falls from 1263 cGy to 133 cGy. Ipsilateral lung is cut in half and 500 cGy falls from 97.51% to 27.58%. Contralateral lung is 84.39% at 500 cGy falling to 0.03%. With decades to live, certainly some of this dose matters.
Note: I do think a Truebeam breath hold plan would be better than the tomo plan shown. But it wouldn’t touch the proton plan. And as I said, e fields, match lines, breath hold, bolus, no bolus - even with most surface guidance systems - not easy.
Insurance initially has said no - I feel pretty strongly this is a valid indication - if the RADCOMP trial comes back negative including all the secondary cardiac specific metrics, I’ll most certainly reassess. Heart, LAD, and lung doses are a fraction of any other approach with superb coverage. No balancing of coverage vs. OAR dosing - just cover what you need to and stop the beam. Skin or rib toxicity increased? Perhaps. And the RADCOMP should show us that, but today the evidence for major cardiac events due to radiation to the heart, in my opinion, is far stronger / more clinically impactful - and for me, this is one of the breast cases where I believe protons will demonstrate value in reducing toxicity.
If denied, her out of pocket expense at the OKC Proton facility is ~$8300.
I still think that is ridiculous (that insurance could / would avoid payment and force it on her) and we are fighting like stink to have insurance pick up the tab but, as a physician, I’m proud that we have a created a charitable foundation, partnered with outside local charities, cut our own pricing and have one of the lowest per room capital costs for proton therapy in the US. And we ran comparatives, had peer to peer reviews, turned it over to outside specialist teams who do appeals for radiation oncology as we fight for approval in this case - simply we have spent a ton of time. No doubt IMRT would be more “profitable” as a business model. But I really do think in specific cases, we have better paths if we include protons into our list of options.
So it is within this context, I worry about costs less.
And I think that speaks to complexity of the issue. What are the “costs” - what are people being paid for the service? In the US, you simply can’t say protons are more expensive than IMRT - generally yes, but for a specific case, no. For about 2 1/2 years, I was in the ownership group. As I like to say - I owned one grain of salt in the salt shaker. During that time, one of our best contracts paid IMRT rates for some large university hospitals - both down the street and nationally - a blended IMRT university rate paid better than many “proton” contracts.
We met with insurer after insurer and asked to simply be paid IMRT hospital rates. Despite what I thought were good conversations, we got essentially no movement forward with this simple request. It was better to keep rates at >100k per course of treatment and then deny.. deny.. deny. Yes, US healthcare is that ridiculous.
And then step back and look at oncology in general. Look to ASCO 2023 - where trials with drugs at $100k per year are given year after year roll off the factory line into large presentations and into once “prestigious” journals - one after another. Sometimes with real benefit - but more often demonstrating soft questionable metrics like progression free survival on imaging benefits or “proven better” than clearly inferior “standard” treatment arms. Costs are largely a matter of perspective - unfortunately.
ASTRO Proton Beam Model Policy Expands:
This year, this policy has been updated. It expands indications and by doing so, it raised a lot of eyebrows. In general it serves to expand indications that ASTRO recommends insurance carriers cover proton therapy. The main two changes are in category two where both prostate and breast cancer are now specifically listed - it requires evidence development as it has for years - but now they are listed specifically. This was not the case in 2014. I’ve included links to both versions so you can compare the two versions if you like: (2014, 2023).
The issue with the expansion of indications is it is not supported by a progression of any randomized data supporting either of these indications. Both do now currently have large national trials underway and perhaps this attempts to support trial enrollment into the RADCOMP and COMPARE trials but it does appear broader than that. And there is criticism of "proton registry” trials questioning a lack of clear publication of this data - right or wrong.
And so I think many see this as an incorrect step - data should lead and the policy then should follow. I honestly think that is the more reasonable idealistic answer. Again, I have a bit different perspective. I have personally seen cases like above, where I appreciate ASTRO leading towards protons as an option that should be supported and these types of policies do have some impact on insurance denials, but arguments against this shift are valid. Two wrongs (widening the policy to address insurance denials) doesn’t make it right. I can’t argue with that logic.
Proton Therapy Center Bonds - Not A Pretty Picture - Forbes 2021
But if you are concerned that with these new model policies (that mean very little - a marginal push in some cases) that proton centers will rapidly expand across the country, I’d encourage you to breath. They will not. That is my assumption and here is my rationale. As often is the case, follow the money.
The title above “Proton Therapy Center Bonds - Not a Pretty Picture” is a Forbes article published in October of 2021 that paints a, my term, terrible picture for the bond holdings on many US proton facilities. If you are reading this article and interested in the financial picture, take about 10 mins and read through the lists of bonds that were under pressure or in bankruptcy just 18 months ago.
Why does this matter?
For years, nearly all of the US proton facilities were funded by bond raises - i.e. they would raise capital for the project from outside the institution. Basically, there was no risk to the institution - they got the proton facility and other people in the US financial industry put up the funding. The bond holders were expecting payment of 7%-8% return on their investment and for a few decades it was really “cool” to own a big expensive medical facility in financial circles. So money managers had no trouble raising the funds. People were able to invest in a cancer treatment facility, got good “expected” returns, and participated in the ownership of something “super fancy”. And the facilities, as we reviewed above, gained “prestige, perceived benefits, and potential revenue” - assuming they could pay the note on the debt.
But today, as this article demonstrates quite clearly, those days are over - at least for many. First interest rates in the broader market are far higher so 3% or 4% premium today. This pressures interest rates on these loans higher. And just like with buying a home - higher interest rates directly impacts the bond payments making a massive debt payment even larger.
And secondly, as the article points out - all across the country - these deals are failing. Many of the centers can’t make payments and so the bond holders (the often outside of medicine investors) are not only not seeing the 7%-8% return, but their capital is at risk - many of the bonds listed last traded at 70 or 60 cents on the dollar according to the article and quick CUSIP searches.
As an example, using the Forbes publicly available numbers for the Oklahoma Proton Center, the center went into bankruptcy with $163M of debt and was sold for $29M - that is quite a haircut for the initial investors and the initial companies supporting the venture. It is good to use this context then look up the list at the other facilities in this single article from now 2 years ago which references 8 other deals - look at the date of the bond vs. the date of the opening of the center. If the date of the center is much earlier than the bond, then the center has already been restructured once in all likelihood.
Take Seattle for instance - I have zero inside information on the financing structure, but the original company Procure is now defunct. The bond referenced of 42.65M was issued in 2019 but the center opened in 2013. The center filed Chapter 11 in November of 2018 - it is basically a mirror facility of the OKC facility and Forbes lists original build costs of 126M here in OKC. I presume the vast reduction in debt is via that Chapter 11 process.
If the people loose money on the financing of these machines, it will have a far greater negative impact on growth than anything ASTRO can provide. In fact, one might wonder whether the expansion in the ASTRO model policy is specifically aimed, at least in part, at helping some of these major projects be re-structured. If they are going to be restructured, you need a broad patient base for the proforma. Simply, the financing arm that has served as the model now appears to have large cracks.
My back of the envelope calculations:
I haven’t seen a financial statement in years - so these are ballpark estimates that I have landed on via a number of sources - mainly from the internet and pairing that with national Medicare payment numbers and I get something like:
1 gantry / room can support 20M-25M in debt. If you have great insurance contracts and don’t treat pediatric patients or you are a PPS excluded entity - maybe you can push that figure toward 40M - but that might mean running 20hrs a day - crazy scenarios. A four room facility in my estimation can maybe carry 100M - perhaps towards 150M if I’m generous. A more “comfortable” number that radiation oncology management might be accustomed to would likely be even lower, in a 15M per room debt service arrangement.
And then apply that estimate to some examples. If you consider the bids I saw 5 years ago or so, each ultimately fail. Consider Emory - 5 rooms but at $368,447,000 according to Forbes. I wish I had a different answer, but that math doesn’t seem to work - not even close as they carry over 70M per room.
And patient mix is tough and runs into ethical issues of value. Consider pediatrics - probably the most “valuable” clinical indication. Although it might pay 120k - we’ll just walk through numbers - if that takes your clinic 1 hour to treat that case - and you give 30 treatments - that is 4k per hour - includes anesthesia rooms / coordination and lots of staff time. Meanwhile, down the hall, Medicare offers about $1200 per fraction for prostate and it is quite easy to treat 4 per hour. That math looks to likely require payments of 150k to perhaps 200k or so per treatment course for the peds case especially in single room centers that don’t do high volume of treatments (so they can’t be done that efficiently). And yet, the treatment of kids is far more valuable to our society if the decrease in dose translates to less toxicity. But, at the same time, it pushes the carriable debt load to a lower and lower number. To push number far higher, you need super long treatment days and either a larger private pay insurance mix with good rates and good authorization process or a PPS Medicare exempt status - or both - oh and avoid the RO-APM.
Another example: Look at the Alabama facility: 81M in debt and it appears to be a single room - single proton therapy machine. I don’t see other linacs in the descriptions online that I find. This is likely 3x my estimate. It is the only facility in Alabama and therefore likely to treat some kids which will push the carriable debt down as we discussed. They are not a PPS-exempt entity and math says this should not be viable without massive outside support. It opened in March 2020 and by the October 2021 Forbes article - it was reported to be technical default - per the article.
Much of the current information is more buried and I didn’t go digging. Maybe I’m on the low side of the ballpark and maybe the debt carry rate per gantry can be a bit higher, but not for long - payment pressures in all of medicine are real and we are not going to see massive expansion of dollars into radiation oncology - that simply will not happen long-term. So I believe the brakes are being applied by market forces. I have NOT had ANY financing discussions in over 3-4 years with any vendors so I might be wrong, but this is how I read the landscape today. And if I read it that way, I’m certain that people who live and breath by the spreadsheet evaluation of these deals have done a lot of work since that Forbes article came out now 18 months ago.
So today, new centers will likely have more charitable giving involved or even one or two are more cash up front approaches - both can push the debt numbers down significantly - sometimes to zero. Not sure people can have too many problems with either of those approaches. It puts the machine more directly into the users hands for responsibility of payment. And like them or not, protons are coming. There are currently 11 randomized controlled trials in sites from glioma, head and neck cancer, breast, esophageal, rectal and prostate cancer on the horizon - over 5200 patients - just in Europe today alone.
So there it is - a money discussion of sorts on protons. Hopefully it gives some insight into the complexity of the issue and gives some numbers to reference. I personally wish the medicine and the financial picture was much more removed from physicians in the US but such is not the case.
In summary:
I’m proud of the work I’ve been part of in Oklahoma that I believe serves to lower the costs of protons. I have learned a ton in these 4 years. Although we are in an urban setting, there was and is a need for radiation oncology infrastructure to serve this part of the US - this is an under served region. I have no doubt that we added value on some level restructuring this thing and keeping it alive and active.
Is it perfect? Nope, far from it and protons continue to have massive headwinds moving forward. Clearly the main obstacle is a lack of data demonstrating clear consistent benefit and I truly believe our specialty would be better off if we addressed large institutions advertising non-consensus benefits. I think, with care, one can still represent opportunity but not grossly overstate benefits - there is a difference and crossing that line is bad for the industry and our specialty.
But I do believe, especially with the help of Europe and other regions, that we are closer today than at any point in the past. And then if that happens ironically, we’ll have a whole new slew of issues as we struggle with a limited resource demonstrated to be superior - and that is a completely different ethical discussion.
REFERENCES:
Dollars and Sense of Prospective Payment System–Exempt Status in the Era of Alternative Payment Models
https://ascopubs.org/doi/full/10.1200/OP.21.00241
Forbes article on the US proton bond issues:
https://www.forbes.com/sites/investor/2021/10/08/proton-therapy-center-bondsnot-a-pretty-picture/?sh=2ef84c3f2d41
Seattle cancer treatment center files for bankruptcy
https://www.bizjournals.com/seattle/news/2018/11/26/seattle-cancer-treatment-center-files-for.html
The Death Star Of American Medicine (most of article has been taken off-line it seems)
https://www.forbes.com/sites/matthewherper/2012/03/26/the-death-star-of-american-medicine/?sh=2d2a1ace503b