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Hospitals just lost their chemotherapy profit margins overnight.
CMS dropped a bombshell this February: site-neutral payments now apply to drug administration services.
Translation? That chemotherapy infusion that hospitals billed at premium rates? Now it’s reimbursed at the same rate whether given in a hospital outpatient department or a physician’s office.
The numbers are staggering:
• Hip replacements: $3,500 less in hospital settings
• Chemotherapy administration: thousands less per treatment
• Immunotherapy infusions: massive margin compression
Here’s what’s really happening:
For years, hospitals acquired physician practices and converted them to hospital outpatient departments. Same service, same location, double the Medicare payment.
Patients paid higher copays. Medicare spent billions extra. Hospitals pocketed the difference.
CMS finally said enough.
But here’s the twist most people miss:
This isn’t just about cost-cutting. It’s about access.
When Medicare pays the same rate regardless of setting, suddenly those community infusion centers become viable again. That imaging center down the street? It can compete.
Patients win with:
✓ Lower out-of-pocket costs
✓ More convenient locations
✓ Shorter wait times
✓ Less exposure to hospital-acquired infections
Hospitals are scrambling. Some are already:
• Partnering with independent infusion centers
• Redesigning outpatient strategies
• Focusing on truly complex cases requiring hospital resources
The smart ones see opportunity. They’re asking: What services truly need our four walls? Where can we add real value beyond facility fees?
MedPAC signals this is just the beginning. More site-neutral expansions are coming.
The era of geographic arbitrage in healthcare pricing is ending.
And honestly? It’s about time.
The question isn’t whether your organization will adapt. It’s how quickly you’ll embrace this new reality where value, not venue, determines payment.
♻️ Repost if site-neutral payments will reshape your local healthcare landscape
👉 Follow me, Jonathan Govette, for daily, real-time updates on healthcare technology and business news. LinkedIn Profile: https://www.linkedin.com/in/jonathangovette/
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Author:
CEO/Co-Founder @ Oatmeal Health | AI Lung Cancer Screening | Almost Became a Doctor | Engineer | Follow to Share What I’ve Learned Along the Way
I help patients get the care they need earlier, preventing late-stage cancer.
That’s been the throughline across three companies and almost 20 years in healthcare. At ReferralMD, we fixed broken referral networks so patients didn’t fall through the cracks. At Oatmeal Health, it’s lung cancer: building the diagnostic and screening infrastructure so the 85% of cases caught too late get caught early instead.
Today as CEO of Oatmeal Health, I lead a team embedding AI into radiology workflows to turn routine lung CT scans into reimbursable cancer risk assessments. We partner with FQHCs to reach underserved communities, and with health systems and payers to make early detection economically sustainable. Think HeartFlow or Cleerly, but for lungs.
Between companies, I advised at Techstars and Plug and Play, mentoring founders building in digital health. That experience shaped how I think about what separates companies that ship from companies that stall: distribution, reimbursement, and clinical trust, not just technology.
I’m a CancerX alumnus, a 3x healthcare founder, and someone who believes the biggest problems in cancer aren’t scientific. They’re operational.
We’re hiring mission-driven builders at Oatmeal Health. If you want to work on something that matters, reach out.
When I’m not working, I’m traveling, mentoring, and keeping up with one very energetic husky. 🐾
Substack – The Oatmeal Bite:
Millions of patients get less care because of who they are, where they live, or how they look. I’m fighting to change that. CEO @OatmealHealth, a startup built for the underserved. The Oatmeal Bite: intel for clinicians, investors, and advocates.
Jonathan Govette
CEO of Oatmeal Health
Substack:
https://oatmealhealthjonathangovette.substack.com/
