“Precision medicine is not the future of cancer care, it is the present.”

That is the perspective of the American Society of Clinical Oncology in response to a study involving 13,000 patients that shows a strong correlation between precision medicine and improved patient outcomes. Researchers at the University of California-San Diego School of Medicine found that tumor shrinkage rates were 30.6 percent for patients whose treatment was selected based on the tumor’s molecular characteristics, compared with 4.9 percent for other patients.

Precision medicine combines genetic testing and advanced molecular diagnostics to determine which medical treatments would be the most effective for each individual patient. By combining data from those tests with a patient’s medical history and condition, clinicians can develop an individually targeted treatment and—equally important—a plan to prevent a disease or medical condition from occurring in the first place.

This new frontier for medicine got a major boost from President Obama’s Precision Medicine Initiative announced in 2015, which gained bipartisan support in 2016 when Congress passed the 21st Century Cures Act. The law allocated $6 billion to a host of medical research initiatives, including precision medicine.

Significant interest of Americans in their genetic makeup is further fueling precision medicine. Millions are using 23andMe and rival Ancestry.com to track their health information and build a personal genetic profile. Most Americans buying such profiles are giving these fast-growing home genetic testing providers consent to use their data for research. In one public-private project, 23andMe collaborated with Pfizer and the National Institutes of Health to examine whether depression is hereditary.

In addition to improving health outcomes, precision medicine holds major promise in reducing the total cost of care. For example, consider the implications of being able to identify an effective cancer drug before treatment even starts, when drugs traditionally prove ineffective in 75 percent of cancer patients, according to the Personalized Medicine Coalition.

For America’s hospitals and health systems, the question is how precision medicine could change the economic and competitive landscape of healthcare, and the role of legacy providers.

Precision Medicine Goals

Precision medicine aims to better coordinate the work of researchers on diseases such as diabetes, Alzheimer’s, and cancer by providing a way to gather and share genetic and clinical data from millions of patients. Researchers and clinicians then can gain insight into a specific strain of cancer from an individual’s genetic profile and tailor treatment accordingly.  

Using cancer as an example, precision medicine is different from today’s more common treatment protocols that tend to use surgical, chemotherapy, or radiation therapy based on the tumor location. Without data to differentiate patients and identify who might have a specific genetic mutation or predisposition to a disease, patients are treated similarly, potentially leading to higher costs as different treatment options are tried.

“You might be presented with two equal options, and genomic data might be that tie breaker,” says Howard L. McLeod, PharmD, the founding Medical Director at the DeBartolo Family Personalized Medicine Institute of the Moffitt Cancer Center.

Moffitt’s precision medicine program is enrolling as many as 120 patients per week compared with just two per month not long after the program began in 2012.

“This is more than a passing trend,” says Daryl Pritchard, Science Policy Vice President for the Precision Medicine Coalition. “Many people believe this is the future of medicine. The scientific community has established personalized medicine as a successful approach to treating many diseases.”

Health insurers and other payers are watching closely to see whether these better outcomes can reduce costs at a time when it’s not uncommon for a patient to have a $2,000 deductible for a single dose of a new genomic cancer treatment. Cancer is expensive, and payers are already using value-based models such as bundled payment to keep costs in check while improving outcomes.

The Role of Community-Based Health Systems

Relatively few independent hospitals or community-based health systems have the financial resources or human capital to afford the expenses that go along with building the ability to predict, prevent, and treat disease using an individual’s DNA. A dedicated precision medicine institute can cost several million dollars to staff and equip, including a molecular lab and dedicated nurses, technicians, and geneticists. For example, costs can run to $2 million or more to build a virology and oncology molecular lab, not including the human capital of a geneticist or specialized pharmacists.

With the high costs, community health systems likely will have to rely on specialized centers for precision medicine as the economics of healthcare lead to value-based payment and away from fee-for-service medicine.

Moffitt works with community hospitals and physician practices that have the ability to take tissue samples and send them to reference labs, but that don’t have the time, resources, or clinical expertise to develop algorithms or make a more precise diagnosis.

“Community oncology sites say, ‘I could spend an hour of my time or can pay to spend 10 minutes of your time,’” says McLeod, a doctor of pharmacy internationally known for his research in how genetic makeup affects an oncology patient’s response to treatment. “Community oncology sites need some expert opinion.”

The Personalized Medicine Coalition estimates there are fewer than two dozen hospitals and health systems in the U.S. that have precision medicine capabilities. Its membership of clinical and research institutes is largely cancer centers and research hospitals like Moffitt and the Mayo Clinic. And when community hospitals are involved, they are well-capitalized systems like Intermountain Healthcare or Inova Health System.

Key Questions for Providers

The number of centers with the advanced diagnostic capabilities required to deliver precision medicine is likely to remain limited given the resources needed and the existing economics that require healthcare providers to keep costs down.

The future delivery system may require some form of diagnostic warehouses, where patient specimens and test results are gathered, organized, and used to determine customized treatment plans, which then could be delivered in a community setting.

With precision medicine gaining traction among researchers, providers, payers, and consumers, executives and boards should consider these key questions:

  • How aware is organizational leadership of precision medicine?
  • What are the community’s expectations for incorporation of genetic insights into treatment?
  • Given the organization’s current payment model, what would the implications be of a shift from traditional protocols to precision medicine for high-volume, high-cost diagnoses?
  • What are the implications of creating a sustainable competitive advantage in an era of precision medicine?
  • Should the organization develop its own precision medicine program or partner with a specialized center?
  • If a partner is needed, what form of partnership should be pursued?

The answers may not be clear or easy, but it is time to start thinking hard about these questions. The future of precision medicine has already arrived.

Your comments are welcome. I can be reached at mgrube@kaufmanhall.com.