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Archive for Thursday, November 23, 1995

November 23, 1995

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A cancer center affiliated with a for-profit Los Angeles company has had a rough start.

Fierce health-care competition and a budget-busting construction project are blamed for mediocre financial performance of a privately managed cancer treatment center at Kansas University Medical Center.

"Those things have had an effect on what originally were the projections," Gaylon Lowery, executive director of the cancer center in Kansas City, Kan., said Wednesday.

Lowery said development of the public-private cancer center had "stalled."

Intense competition among cancer treatment facilities in the Kansas City area has kept the KUMC center's patient volume at 120 to 150 each day for the past year, he said.

Doubts about the wisdom of entering an exclusive contract with Salick Health Care of Los Angeles to provide cancer treatment services at KUMC for 35 years surfaced before Salick opened shop in April 1992.

Reasons to second-guess the deal now are:

  • The center generated $230,000 less revenue for KUMC than expected in the first two years of operation. KUMC officials say the center may make a profit this year.
  • Salick's pledge to construct a $10.5 million treatment facility by October wasn't met. Bids on the project were $3 million over budget. A new design is under review.

Les Bell, executive vice president of Salick, said speculation that the agreement was costing KUMC millions of dollars annually was unfounded.

"Those physicians and others truly familiar with the cancer center programs are supportive of what Salick is offering," he said.

Roger Lambson, the medical center's vice chancellor for business and administration, said people also had expressed concern about the Salick contract partly because of the dramatic changes in the health-care market.

For example, he said, growth of managed-care options in the metropolitan area had tightened the financial screws at cancer treatment facilities.

Lambson said the Salick deal wasn't formulated with the idea KUMC would reap huge profits.

In addition, he said, there was no evidence patient care had been compromised during the center's difficult start.

"We went into the arrangement with Salick Health Care to enhance our ability to deliver the highest quality patient care," he said. "I think you'll find that motivation has in fact been realized."

Lowery, head of the center since June, said Salick's management team would keep the profit motive from influencing patient care. Salick specializes in one-stop, outpatient cancer treatment.

"Patient care provided here is exceptional," he said. "In no way has the profit motive in any shape or form taken precedence over the primary focus of caring for cancer patients of the state of Kansas."

KU attorney Victoria Thomas, who helped negotiate the contract with Salick, said the relationship with the company was evolving.

"There are growing pains that have to be gone through," she said.

Thomas said there was no discussion about attempting to get out of the contract with Salick.

When the deal was approved by the Kansas Board of Regents in November 1991, then-KU Chancellor Gene Budig said affiliation with Salick was part of a five-year plan to convince the National Cancer Institute designate KUMC a comprehensive cancer center.

Under terms of the Salick-KUMC agreement, the company was to invest $15 million to $20 million in the project. The goal was to open satellite treatment centers throughout Kansas. So far, no satellite offices have opened.

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