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Archive for Wednesday, August 1, 2001

Menninger deal collapses

August 1, 2001

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— The Menninger Clinic will stay in Topeka for now after failing to reach an agreement with the Baylor College of Medicine, clinic officials announced Tuesday.

The announcement revives the possibility that the famed psychiatric clinic could affiliate with Kansas University Medical Center in Kansas City, Kan.

Dr. Walt Menninger, the clinic's chief executive officer, said during a news conference that Menninger officials could not come to terms with the Baylor College of Medicine, based in Houston, and the Methodist Health Care system in Texas. He would not specify what the problems were with the arrangement.

He said Menninger will remain in Topeka until at least the summer of 2002, but that he would continue to look for an affiliation with a major medical school.

"We're going to need to be tied in with a medical school, and that can't be done in Topeka," he said.

Before Menninger made its announcement to move last September, Gov. Bill Graves had planned to ask the Legislature to increase KU Medical Center's budget by between $3 million and $5 million a year.

The package would have paired the clinic with the Kansas University Medical Center to create a brain research center near the school's Kansas City campus, plus construction of a new psychiatric clinic in the Kansas City area.

But Menninger said the proposed alliance with Baylor offered significant advantages, including a larger metropolitan area. Baylor also had committed to raise at least $200 million in endowment funds.

KU Chancellor Robert Hemenway said Tuesday that the university respected Menninger and had enjoyed collaborations with them in the past.

"It's too early to tell what may happen," he said. "I am sorry for Menninger's that their plans have apparently fallen through. I know they hoped it would work out."

Walt Menninger continued to indicate doubts about a deal involving the KU Medical Center. He said Menninger wanted to join with a medical center with a national reputation, continuing, "KU is not in the top 50."

But he added: "At this point, we're not drawing any parameters that exclude anybody."

Prior to Menninger's announcement in 2000, Graves and other Kansans had been working on a $100 million package of incentives to keep Menninger in Kansas.

Most of the money would have come from private sources, but it would have included about $3 million in economic development grants from the Department of Commerce and Housing and the state's purchase of land that makes up Menninger's campus.

Graves said he would be happy to renew discussions with Menninger officials but added that circumstances are different now. For example, he noted that the state is facing a tough budget year.

"It would be a new discussion starting from scratch, but Menninger continues to be a very valuable asset to this state, principally the health care they provide to people with mental health problems," Graves said. "Anything we can do to work with Menninger's, we're going to be happy to do so."

Walt Menninger said the clinic will continue to wind down services and cut its staff to decrease losses. Last year, when it announced plans to move to Texas, Walt Menninger told employees the clinic would close in six to eight years if it stayed in Topeka.

"We all thought we had a marvelous opportunity, and it slipped through our fingers," he said Tuesday. "We've got to sort of regroup and figure out how we go forward from here."

All parties described the ending of negotiations as amicable. Officials at Baylor and the Methodist system said they would continue research and treatment for brain and behavior disorders.

"We were attracted to Menninger because of its exceptional reputation," said Peter Butler, chief executive officer for the Methodist system. "We have great respect for the institution and the many special people who are a part of it."

Walt Menninger said his clinic had been approached by other organizations about a new affiliation, but he wouldn't give any details.

"We're trying to put together a process, and I don't want to get anybody on the spot about that at this point," he said.

The clinic planned to leave its 242-acre campus in northwest Topeka because of financial problems.

Menninger earlier said the major source of the clinic's financial problems was the increase of managed health care plans. Those plans managed health care costs by limiting hospitalization, he said.

After last year's announcement, hundreds of Menninger employees were laid off and several programs were closed.

Menninger had 900 employees on its Topeka campus and another 200 in the Kansas City area. The Kansas City operations were closed, and the Topeka campus' work force dropped to about 450 employees. Plans are to reduce it to between 300 and 320 employees.

Walt Menninger and Ian Aitken, the clinic's president and chief operating officer, acknowledged Tuesday that the clinic still is losing money.

"We hope to get to a budget for the ongoing period that allows us to be closer to profitability, though I don't know that I want to say that we'll actually make it in the first year," Aitken said.

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