Abby Burns (00:13):
From Advisory Board, we are bringing you a Radio Advisory, your weekly download on how to untangle healthcare's most pressing challenges. I'm Abby Burns. Today, we're going to talk about the infusion market, the business around those provider-administered medications delivered at qualifying sites of care, like, for example, infusion centers. Now, I get that this might seem more niche than our typical Radio Advisory episode. I would argue it's actually not. The infusion market in the US alone is worth around $150 billion annually. That's six times bigger than the cell and gene therapy market was in 2025.

(00:48):
And any health system leader will tell you, cancer programs, which are some of the most important and lucrative services they might offer, really sink or swim with the infusion business. Of course, infusion also plays a critical role in supporting other service lines as well. On the whole, infusion is an area that's been pretty reliable and in fact, profitable for health systems, but now there is incredibly steep competition and proposed changes to drug policy that are putting pressure on this part of the business.

(01:15):
We think that non-pharmacy leaders need to be more aware that this stable margin-accretive service is actually under threat. So, to shed some light on what's happening across the infusion market and what that means for your business, I've invited Advisory Board Researcher, Chloe Bakst, back on Radio Advisory. Hey, Chloe, welcome back.

Chloe Bakst (01:34):
Hey, Abby. Great to be here.

Abby Burns (01:39):
Chloe, you've come on Radio Advisory many times before to help us demystify what is happening in the world of drugs, whether it's cell and gene therapies, GLP-1s, how payers are trying to rein in drug spending. Today, we're talking about infusion. To start us off, I'm hoping you can do for listeners what you have done for me many times before. And that is help us understand the infusion business in the context of the larger world of specialty drugs.

Chloe Bakst (02:07):
There are a few things I want to call out here. So, we have this big category of specialty drugs. And there are a few different ways that we can kind of slice and dice that. There are specialty drugs that are something that a patient would take themselves, a patient administered drug. And then there are those drugs that are provider administered, where you go to a doctor's office or you go to a cancer center. And there's a doctor there who's going to stick a needle in your arm and either give you an injection or an infusion. Those provider administered drugs, they fall under the medical benefit.

(02:36):
So, this is something that's not managed by a PBM. It's something that's managed by a health plan. Thinking about what that means in the Medicare part of the world, these infused or injectable drugs are falling in that Part B category, not Part D.

Abby Burns (02:49):
Okay, got it. And that would be in contrast with what you might find at, for example, the health system specialty pharmacy, which would be more in that Part D.

Chloe Bakst (02:57):
Yes, exactly.

Abby Burns (02:58):
What strategic role does infusion play for health systems? And the reason I ask is when I am talking with, especially health systems strategy leaders, I hear a lot about two things when it comes to drugs. One is the specialty pharmacy, especially when we're thinking about growth levers that you pull. And the second is, of course, 340B. I don't hear all that much about infusion and I'm wondering why not.

Chloe Bakst (03:23):
Yeah. I love that question. The reason I think infusion doesn't come up as much as specialty pharmacy is because the rhetoric around specialty pharmacy for the last several years has been this is a growth engine. This is a way that you can drive profits for your organization. That feels new, even though it's at this point pretty much a decade old strategy. Infusion is also a huge revenue and margin driver for organizations, but it's been under the radar in the sense that it's maybe always served that function. And so, it doesn't come up as this novel or new way to capitalize on drug spend.

Abby Burns (03:59):
That makes sense, because I know, for example, in the health system specialty pharmacy side, for a lot of systems there's a lot of running room to capture what would be new volumes or new revenue sources. And it sounds like on the infusion side, they're pretty much operating at capacity. Is that a fair assessment?

Chloe Bakst (04:15):
Yeah. Most infusion centers I speak with, their main concern is capacity management, managing growing volumes. It's a pretty big component. We have our Advisory Board Market Scenario Planner that looks at projections of volumes over the next five to 10 years. We can see that there's going to be a 20% volumes growth in chemotherapies by 2034 and a 16% volumes growth for non-chemotherapies, so for basically non-oncology infusions. So, we're seeing massive double-digit growth in both of these categories over the next 10 years. Volumes is not a concern in the sense of there's not enough of them. It's more so, how do we manage them?

Abby Burns (04:52):
Okay. So, health systems are already set up to capture these volume. There are more volumes coming down the pike, which is generally good. What about the profitability side of the equation?

Chloe Bakst (05:04):
Infusion has played a pretty key role in health system revenue for a long time. We have data back from 2017 that reports that infusion had something around a 35% contribution margin. And we know that that hasn't really changed. When I talk to oncology leaders today, they often tell me that infusion, and the delivery of cancer drugs, and growing numbers of non-oncology drugs, are what make the oncology service line profitable to the health system. And a big part of that, of course, comes down to 340B.

Abby Burns (05:37):
How so?

Chloe Bakst (05:38):
Well, 340B applies to all outpatient drugs. So, when we think about specialty pharmacy, yes, that's a big driver of growth and revenue, because it has access to 340B savings. The infusion side of the house does, too. And that's a big part of overarching 340B strategy, is can we make sure that we're getting 340B pricing on these infusion drugs that we're delivering in an HOPD setting.

Abby Burns (06:01):
Got it. Okay. I feel like we've gotten a pretty firm understanding of the infusion business, why it matters. Now what I want to know, Chloe, is why we're talking about this business today. I will tell listeners, you just wrapped a research study on trends in the infusion market. You immediately came to the Radio Advisory team and you said, "We need to talk about this." Why is that?

Chloe Bakst (06:23):
Infusion has long been this reliable source of margin, of revenue, of high volumes. And what we've seen in our research in the last few months is that there's a lot of pressures on infusion right now, that people might not be paying enough attention to, and then might be shocked by the impact on what that means for their bottom line.

Abby Burns (06:46):
Okay. That feels like a big deal. So, what are the threats that health systems in particular need to be watching and planning for?

Chloe Bakst (06:54):
Just to bottom line it, infusion is a service line that tends to make money because it has high volumes coming into the HOPD and that it has access to 340B pricing. The good news is those volumes aren't going away. The bad news or maybe not bad news, but more complicating news, is that where those infusions are going to take place will likely be changing, so that's the volume side of the equation. We think about the 340B side of the equation, there's also a lot of pressure there from changes to transparency requirements, putting pressure on managing the program. From Medicaid eligibility changes, as a result of the One Big Beautiful Bill Act having, impacts on DISH status and 340B eligibility.

(07:36):
And what all of that means is that if we're not paying attention to these things and we just let them happen to organizations, health systems might be surprised how quickly their infusion centers can go from a revenue driver to something that's deeply in the red.

Abby Burns (07:53):
Okay. So, it's important that we not only dig a little bit more into these threats, but talk about how should health system leaders be thinking about, be planning, be actively mitigating them. I want to start with site of care shift. And actually, at a first glance, it might kind of be a confusing place to start, because you said from the outset that this is predominantly an outpatient line of business. So, when we're talking about shift to outpatient, that might seem confusing. But here, I want to emphasize we're talking about moving from the HOPD, the hospital outpatient department, to other outpatient sites. So, talk to me about what's happening here and why.

Chloe Bakst (08:27):
So, right now, a little over half of infusions in the commercial market are delivered in the HOPD. And that's about the same in the Medicare space as well. The average reimbursement rates commercially for infusions in the HOPD are around 177% of the average sales price or hat we call ASP. This kind of standard measure for reimbursement in the provider administered drug space. Now, when we compare that to what's happening in the physician office, that's around 120% ASP. There's a significant difference in 177 and 120. And if we move toward other freestanding or home infusion, that number continues to go down.

(09:07):
So, there is an incentive for commercial payers and for government payers, where we see this echo, to move patients from the HOPD setting when it's safe, to lower cost sites of care, like the physician office, like an ambulatory setting, like home infusion. But when we think about the flip side of that, the reality is, for infusion providers, that does have a significant impact on the revenue that they can generate from that infusion delivery.

Abby Burns (09:35):
Right. This would be the direct hit to the profitability side of the equation?

Chloe Bakst (09:37):
Yes. Even if you're able to retain the volumes, which I have questions for you about.

Abby Burns (09:42):
Sure. Before we get there, I'm curious about the sort of readiness factor. We talk about side of care shift for a number of different service lines. I think most hospitals and health systems are underway for orthopedics. More and more we're receiving cardiovascular services. How would you assess health systems' readiness to shift the infusion business?

Chloe Bakst (10:01):
To be honest, a lot of this is already happening. So, there's a range in how we're seeing health systems be impacted by site of care requirements. Some have been dealing with this for decades. I can't come out here and say site of care requirements for infusion, that's brand new. I mean, it's not. It's been happening for quite some time. But what is new in this space and what I feel like adds a level of urgency in the last couple of years, are the fact that, one, we're seeing this start to hit drugs, like oncology and chemotherapies, which were previously on the no-go list. We would never see those on site of care.

(10:33):
And the other factor that we're seeing is it's not just payers anymore. We're starting to see employers get more engaged in steering their members and their employees towards specific sites, either in partnerships with vendors that have their own infusion provider network or with TPAs or things like that.

Abby Burns (10:50):
This is really interesting to me, because I think a question that we continue to get at Advisory Board is when are employers going to say, "Enough's enough, I'm not taking the 9% increase next year. I'm going to stand up for myself and put a line in the sand." And it sounds like this is a place where employers are starting to exert some of that agency.

Chloe Bakst (11:07):
Yeah. And it's very new. Late 2025 was when I started to hear about this, and so it's something that we're going to keep watching. And I think, to me, the most interesting element of employers getting into the game here is that folks who have felt a sense of site of care shifts are happening, but I'm not feeling them, so I don't need to worry about that. Need to start to realize that the volumes that you're seeing inside your infusion center, might be giving you a sense of false security. And the reality is that there might be patient leakage happening that you're just not seeing yet.

Abby Burns (11:40):
Chloe, I want to talk about where this leakage is going. We're talking about a shift out of HOPD to other sites of care. But I'm wondering, and this gets to the competition piece we mentioned earlier, who owns those other sites of care?

Chloe Bakst (11:53):
Yeah. So, this is where things start to get pretty interesting. Private equity has been investing in infusion and we're starting to see the impact of that really hit the market. There are some private equity backed infusion centers that have doubled in size in the last two years. And we're starting to see a real explosion in the number of ambulatory and home infusion providers, as they recognize that if payers are shifting patients out of the HOPD, they got to go somewhere. What if we make them come to us?

Abby Burns (12:24):
I'll be honest, when I think about the places that private equity is coming in and competing for especially physician group assets, my mind goes to specialty care, but almost goes more to the medical office side of the business.

Chloe Bakst (12:37):
Well, there is a world in which those two things are linked. A lot of what private equity can bring to the table to these medical office groups is the fact they can help them set up infusion. If we think about areas like GI, for example, where there's a lot of infusion products available, that could be one of the carrots that private equity offers. I'll also add that what you just said really resonates I think with my conversations with infusion leaders from just a couple of years ago. When I was doing this research in 2023, 2024, and we talked about private equity backed infusion, it wasn't something that the health system leaders I was speaking with really cared about or felt threatened by.

(13:14):
It was something that they were like, "Oh, yeah, I think that's happening, but it hasn't hit my region yet." 2025, when I was having these conversations, that story had changed. And I talked to a lot of leaders who said, "They've popped up in my area. They're really focused on winning patients and they offer a level of amenity that is simply not within my wheelhouse to offer." I heard things from they get free DoorDash deliveries for lunch or they offer you a pedicure while you're getting your infusion.

Abby Burns (13:42):
This does not seem like a place where health systems are particularly well poised to compete on the consumer experience.

Chloe Bakst (13:48):
Yes. To your point, I don't think the health systems are the place to be going to for your manicures, but I think that there is an opportunity for health systems to think critically about the level of patient amenity and convenience that they do offer. For example, things like weekend hours or evening hours, better parking. These are common challenges that infusion patients face and can make a meaningful difference in retaining patients.

Abby Burns (14:15):
Okay. So, when we think about patient leakage, one of the places that these infusion volumes are going is to PE-backed standalone infusion centers. What are the other sites of care that we should have our eyes on?

Chloe Bakst (14:27):
Well, I do want to give credit where credit is due. Health systems have been working very hard to retain those patients within their own system. And a big part of that is having ambulatory and physician-based infusion options. Now, I want to be clear that that doesn't always mean building new sites. So, of course, it could, if footprint is a key part of why you're losing patients. It could mean billing certain payers as physician, even if you're administering the drug within the HOPD. It just comes down to new contract negotiations.

(14:57):
All of that will require really careful assessment and planning. I think a key challenge to call out here is that not every ambulatory site will have access to 340B pricing discounts. That doesn't mean it's not worth having that ambulatory site, but you have to really carefully assess the cost benefit of keeping that patient, even though you lose 340B, versus losing the patient altogether. And I will add that we have a tactic playbook with a lot of different strategies in how to do this, as part of our top trends in infusion webinar that will be happening later in March.

Abby Burns (16:54):
So, one of the big headwinds facing the infusion business is this site of care shift, which is both from payer steerage, increasingly employer steerage, new competitors coming in to take volumes away from incumbent providers. The other big headwind that we named at the start of this conversation is policy. Give me a top line. What is happening in the policy environment right now that is relevant for the infusion business?

Chloe Bakst (17:18):
2026 will bring two major changes. The first is that CMS is putting a survey in the field of drug acquisition costs for 340B and non-340B providers in Medicare. This is the first step toward potential cuts to 340B providers under Medicare for drug acquisition costs. So, you'd essentially be getting cuts to your drug reimbursement in Medicare, as early as 2027.

Abby Burns (17:47):
Okay. Before we move on to 2027, I think there's another big policy shift in 2026 that's relevant here, right?

Chloe Bakst (17:53):
Yes. So, site neutral payments are going into effect for a certain segment of infusions in Medicare, in 2026, but it's not going to have this huge dramatic impact, as much as that sounds scary. What we know is that in 2025, Medicare spent about $1.13 billion on drug administration payments across all HOPDs. And there's a segment of that spend that was going to accepted off-campus physician-based departments that were billing as HOPD. Now, starting in 2026, those departments that were part of that accepted clause will now have to bill as physician based. CMS has said that that will save them $220 million.

Abby Burns (18:38):
So, it's a pretty small slice of the pie, if we think about that $220 million change that's out of the 1.13 billion. And that's going to be distributed across providers across the country.

Chloe Bakst (18:50):
It's not an extraordinary slice of the pie, but we don't necessarily know what the distribution will look like. There are some organizations who are going to feel this dramatically if they're delivering a lot of their infusions in these accepted sites. And there are some who I've talked with who have said, you don't have any infusions happening in that side of care. This is not going to impact us at all.

Abby Burns (19:09):
Which is why it's so important to do organization-specific scenario planning?

Chloe Bakst (19:13):
Yeah.

Abby Burns (19:15):
Okay. So, we've got 2026. What's happening in 2027?

Chloe Bakst (19:19):
That's the year we'll potentially see dramatic cuts to Medicare reimbursement for 340B providers, specific to drugs.

Abby Burns (19:28):
Specific to all drugs or specific to infusion drugs?

Chloe Bakst (19:31):
Specific to Part B drugs, so that's infusion drugs. I feel like I have to plug our policy scenario calculator tool that Advisory Board has here, because we have put in mild, moderate to severe scenarios of what those cuts could look like into that tool, so folks can go in and assess the impact to their organization. I'll also add that we've seen similar cuts. These cuts were put into place in 2018. They were eventually overturned by the Supreme Court, but health systems have done this before. So, I'm saying the sky is tumbling down, but the sky's tumbled down before and we're all still standing, is kind of the bottom line there.

Abby Burns (20:09):
Okay. So, we've got the earth moving under our feet. We've got the sky tumbling down. Should our hearts be trembling for 2028?

Chloe Bakst (20:16):
Yes. And unfortunately, not with love as it was for Carole King. This is the year where we start to see things like the One Big Beautiful Bill Act and the Inflation Reduction Act to get real for infusion. So, what I mean by that, kind of taking this one at a time, is as Medicaid eligibility changes go into effect in 2027, we'd start to see ripple effects on hospitals' DISH statuses in 2028, which could impact their 340B eligibility. We've seen data that around 12% of 340B DISH hospitals could lose their DISH status as a result of these changes.

Abby Burns (20:53):
Chloe, can we double-click on that 12%?

Chloe Bakst (20:55):
Yes. And I think it's important that we do, because within that 12%, 70% of those organizations could potentially still qualify for 340B as a sole community hospital or a rural referral center, just not as a DISH hospital. But when we think about what that means for infusion, sole community hospitals and rural referral centers do not get access to 340B savings on orphan drugs.

Abby Burns (21:20):
So, they could still be 340B covered entities, but not for every class of drugs?

Chloe Bakst (21:26):
Right. And orphan drugs overlap significantly with a lot of oncology chemotherapies, other types of infusions that would have significant impact on infusion center revenues. That's the One Big Beautiful Bill Act.

Abby Burns (21:41):
Okay. So, that's on the 340B side. What about on the Inflation Reduction Act side?

Chloe Bakst (21:46):
That's where we're talking about Medicare drug price negotiations. 2026 was the first year we saw Medicare negotiated maximum fair prices go into effect in the market, but that was just for Part D or these kind of pharmacy benefit patient administered drugs. 2028 is the first year where we'll have five drugs that do predominantly get delivered in infusion centers under part B, have Medicare negotiated prices. And that will impact the way that infusion centers are reimbursed for those drugs.

Abby Burns (22:17):
In other words, in 2028, drug negotiations could impact the profitability of your infusion business.

Chloe Bakst (22:22):
Yes.

Abby Burns (22:23):
So, Chloe, if we take these next three years as a whole, we've painted a lot of policy headwinds on top of these site of care shifts. What kind of outlook should we have for this book of business?

Chloe Bakst (22:34):
This may sound counterintuitive, given I just walked through so many different headwinds. But I actually think that infusion is in a pretty strong place, because infusion leaders have been paying attention to these shifts and have been actively trying to create strategies to manage them. One of my goals for coming onto this podcast was that I wanted to speak to non-infusion leaders at health systems to get their ears perked up and interested in this line of business. They can go back to oncology, pharmacy, infusion and say, "Okay, what's our strategy and how can I support it?"

(23:07):
What we're seeing from health systems is a lot of investment in a strong ambulatory strategy. And a big piece of that is going back to the basics and making sure you have your operations working. You have peak scheduling to manage all those different volumes, to manage new sites of care, and where it makes sense to send what patients, and when, to manage shifting drug pipeline. And as we're in this sort of earth-shaking year, where we're just watching these big signals happen in the policy space, that you're taking the time as a system to come together, and build the infrastructure needed to manage those headwinds as the years move forward and the pressures become more realized.

Abby Burns (23:47):
I mentioned earlier that you just wrapped up a research study on this work. What can we expect coming out of that study?

Chloe Bakst (23:54):
Well, if you want to learn more about what we've been watching in the infusion space, and how health systems have been managing, and strategizing around the headwinds I've talked through, we have a webinar next week. We'll put a link in the show notes so that folks can come and listen. We also have a lot of resources on infusion, on advisory.com. And we can make sure to link those in the show notes. And if anybody is curious or has questions on how they can continue to hone their infusion strategy, I am happy to get on the phone and chat.

Abby Burns (24:26):
Well, Chloe, thank you for coming on Radio Advisory.

Chloe Bakst (24:29):
Thank you for having me.

Abby Burns (24:34):
Here's what I'm walking away with from today's conversation. Infusion volumes are high and so high that they might be masking some deeper threats to patient leakage. Payers and employers are leaning in more on steering patients away from hospital outpatient department, which is where most health systems earn their infusion revenue. At the same time, more competitors are sweeping in to try and capture those volumes, meaning health systems have to work to both retain and attract patients, all while facing policy changes that are going to put downward pressure on their revenue. This is an area our teams are continuing to watch. And remember, as always, we're here to help.

(25:33):
New episodes drop every Tuesday. If you like Radio Advisory, please share it with your networks, subscribe wherever you get your podcasts and leave a rating and a review.

(25:42):
Radio Advisory is a production of Advisory Board. This episode was produced by me, Abby Burns, as well as Rae Woods, Chloe Bakst, and Atticus Raasch. The episode was edited by Katy Anderson, with technical support provided by Dan Tayag, Chris Phelps, and Joe Shrum. Additional support was provided by Leanne Elston and Erin Collins. Special thanks to Lindsay Paul. We'll see you next week.