Ensuring Access to Care: Using Tax-Exempt and Taxable Bond Funding for Consolidation of Outpatient Specialties
Introduction
There is a crisis in the United States: many radiation oncology programs are struggling to remain open, keep their equipment up-to-date, and support physicians and health care teams amid changing reimbursement. Independent community cancer centers must evolve beyond traditional operational models to remain viable in today's dynamic health care landscape. Declining reimbursement and rising operational costs have forced many small cancer centers to choose between closure or sale to a large consolidator.
Seeking to develop a new option that would ensure long-term market viability, access to care, and physician engagement, Radiation Business Solutions (RBS) created a not-for-profit entity funded through the bond market to recapitalize cancer center assets and relationships in Alaska. This presentation describes the transformative journey of converting these four for-profit independent cancer centers into a consolidated not-for-profit entity.
Objective
Driven by a clear purpose, mission, and vision, this transition aimed to enhance patient care, expand access, and foster community engagement. This alternative model provided a unique opportunity to align financial and service goals with broader philanthropic objectives.
The process involved comprehensive strategic planning, stakeholder engagement, and meticulous execution, along with legal restructuring, financial reorganization, and service integration.
Creating a compelling rationale for the institutional bondholders was essential for securing the capital used to acquire membership interests in the four centers. A key part of the "why" was reinforcing bondholder confidence in long-term success, largely due to the continued contractual engagement of the same physician partners and management team who had practiced at and operated these cancer centers for the past 15 years. Effective marketing, branding, and messaging were crucial in communicating the transition to patients, staff, and the broader community.
The nonprofit designation is nuanced and involves mechanisms such as tax-exempt bond funding and benefactor donations. This presentation will outline the pathways of establishing a nonprofit organization, including:
- How to file for nonprofit designation with the Internal Revenue Service (IRS)
- Applying safe harbor guidance relative to board and governance structures
- Structuring transactions and managing operational practices to maintain IRS nonprofit status
- Developing bylaws and internal policies that guide fundraising objectives
- Setting strategic goals for charitable activities that enable the organization to serve and give back to its community
Results
The new structure functions under an independent, unified governance model with streamlined operations and a cohesive mission. During the first year, the primary goals of the consolidated nonprofit organization were continuity and stability. The carefully designed transaction structure aligned incentives and objectives between physicians, board members, and bondholders to achieve consistent financial and clinical performance across the four cancer centers.
In the second year, the organization is achieving significant incremental opportunities in the market, including enhanced partnerships and expanded services. Reported outcomes have demonstrated increased patient volume, shared resources and expenditures, a collaboration with other not-for-profit community organizations, temporary staffing support models, improved patient satisfaction, operational efficiency, and community impact.
Conclusions
This presentation offers valuable insights for oncology executives seeking to establish long-term, sustainable access to oncology care within their communities. The model was developed to ensure continued care access through a unified platform to support providers in treatment planning, conducting research, and impacting local families.
The structure enhances the ability to purchase equipment, increases solidarity in payor negotiations, provides a resource for provider recruitment, and promotes macro-level clinical research not possible in solo practices. The tax-exempt status allows for more awareness programs and early detection, as well as improvements to the quality and accessibility of cutting-edge oncology care.
A restructured, recapitalized oncology ecosystem—leveraging a nonprofit designation and long-term bondholder funding—offers a roadmap for successful implementation and illustrates the transformative potential of a nonprofit model in oncology care.
