As the Economy Turns, Cancer Centers Employ Watchful Waiting

Just as cancer touches most people in some way, so has the downward spiral of the economy. But for some cancer centers, the recession has not yet been a detriment to providing continuing quality cancer care. Over the next few months, OT will be looking at how various sectors of the cancer community are being affected by the current recession and its overall effect on cancer research and patient care. In this first of a series, the leaders of five comprehensive cancer centers of varying size, structure, and geographic locale—City of Hope, Johns Hopkins, M. D. Anderson, Ohio State, and Roswell Park—discussed how their respective institutions were faring in the new economic reality. The experience of the five centers is not necessarily representative of how other institutions are doing, but as anecdotal snapshots they are instructive in showing some of the similarities shared by this subset of centers. All of those interviewed earlier this month said their centers were not being adversely affected at this time, but they all seemed to be taking a prudent, wait-and-see approach perhaps best summarized by Ohio State's Michael A. Caligiuri, MD, when he said, “We are hoping for the best but expecting the worst.” OSUCCC and James Hospital Dr. Caligiuri, Director of OSU's Comprehensive Cancer Center and CEO of the James Cancer Hospital and Solove Research Institute, noted “cancer is recession resistant and the number of new patients continues to go up.” He said that relative to the location of some other cancer centers, Columbus, Ohio, is not a city in economic decline and continues to grow both in terms of population and economy. He added that the hybrid, freestanding James Hospital was the only Centers for Medicare and Medicaid Services prospective payment system (PPS)-exempt cancer hospital owned by a university that sits in the midst of a university and matrix comprehensive cancer center. “We've been seeing an increase in patients, with about 6,000 new patients this year, and so far there's only been a two to three percent increase in the number of uninsured patients, and we don't refuse anyone [in Ohio] free care.” The university medical center is currently involved in a $1.4 billion expansion program with three-quarters of it cancer related, he said. “We currently have 180 beds, but the new James Hospital, expected to be completed by 2014, will have 288 beds. This project has been a lifeline for our city and county.Figure: MICHAEL A. CALIGIURI, MD, of Ohio State University Comprehensive Cancer Center: “Cancer is recession resistant and the number of new patients continues to go up…. We've been seeing an increase in patients, with about 6,000 new patients this year, and so far there's only been a two to three percent increase in the number of uninsured patients, and we don't refuse anyone free care.”“The cancer center and hospital are still recruiting for clinical and research positions. We've been adding about 20 new faculty members a year for the past 10 years, and at this time we're supporting faculty without grants with bridge funding from cash reserves.” He said some “circuit breakers” have been put in place to implement enhanced efficiency and some cost-cutting and revenue-generating measures, and that although there has definitely been a pause in philanthropy, donors are still very committed to giving more when times get better. “Both the medical center and cancer center run their programs on revenues from operations and philanthropy and rely less [than some other institutions] on the university's multi-billion dollar endowment. So far we've been hitting our financial goals at the cancer center.” Dr. Caligiuri noted that the impact of the last four years of flat NCI funding for cancer research has been devastating, causing less discovery and a lot of “eager people with outstanding ideas” from pursuing projects. But he, as all who were interviewed, sees hope with President Obama's Recovery and Reinvestment Act of 2009 economic stimulus plan that could provide about $1 billion for cancer research. And although many OSU fund-raising events are taking a more modest approach this year, he said he is very excited about the late-August “Pelotonia” 180-mile bicycling event that is sponsored by Columbus-based NetJets and expected to raise $40 million dollars over five years to support cancer research. Roswell Park Cancer Institute “I am concerned about the duration of this economic downturn,” said Donald L. “Skip” Trump, President and CEO of Roswell Park Cancer Institute, “but at this time there hasn't been any measured or marked downturn to our programs as a result of the economy.” The 112-bed independent freestanding center mostly serves the eight counties constituting western New York State, and has actually been seeing an increase of about 6% in new and established patients with about 7,000 new patients each year, he said.Figure: DONALD L. “SKIP” TRUMP, MD, of Roswell Park Cancer Institute: “We have some fiscal challenges, and we don't know how long it will be until more patients become unemployed or their COBRA runs out, but we've been increasing our efficiencies and still don't know what our final budget will be from the state or the outcome of the federal financial stimulus package.”The research program also increased close to 10% from 2007 to 2008, according to Dr. Trump. And during the past decade the Institute's staff increased about 1,000 to 3,200 employees. RPCI recently expanded an ambulatory site in neighboring Amherst, NY, and completed construction of some additional stories of a research building. Dr. Trump said that the Institute revised its strategic plan about a year and a half ago to focus on recruiting more targeted physicians for programs to expand patient care in a region that has an increasingly older population. RPCI also has a special relationship with Ontario's Ministry of Health just across the border in Canada. The ministry allows Canadians to be treated at the Buffalo center for highly specialized cancer care not available at home, and that constitutes “an important part of our business,” said Dr. Trump. The Institute's relationship with New York State as a public-benefit corporation permits it more autonomy in its governance than when it had formerly been part of the Department of Health. That change became official in 1998 and allowed Roswell Park to engage in fund raising for the first time. “One of our biggest challenges has been coming off of state support, which explains our relatively small endowment, and like others we've seen a decrease in the value of our endowment and funds of about 20 to 25 percent,” he said. “We have some fiscal challenges, and we don't know how long it will be until more patients become unemployed or their COBRA runs out, but we've been increasing our efficiencies and still don't know what our final budget will be from the state or the outcome of the federal financial stimulus package.” Johns Hopkins Kimmel Center “From my perspective we're doing pretty well,” said William Nelson, MD, PhD, Director of the 64-bed Sidney Kimmel Comprehensive Center at Johns Hopkins. “People are still developing cancer and seeking help for their disease and our numbers are up, with more than 6,100 new patients and 28,000 medical oncology visits last year. We're quite full most of the time and our biggest challenge are facility limitations.” He said that as part of the university hospital, the center has seen a decrease in elective or discretionary care in other medical specialties while cancer care increases, and that the university's otolaryngology group was experiencing an increase in cochlear implants as smaller medical institutions shut down and care started shifting to larger tertiary care facilities.Figure: WILLIAM NELSON, MD, PHD, of Sidney Kimmel Comprehensive Cancer Center at Johns Hopkins: “There have been some changes in philanthropy. People who make these kinds of commitments make them for personal reasons and keep making them, although some making structured gifts in installments are asking to pay a little less now or to delay the payment, and promising to follow through and make it up later. Endowed professorships made in perpetuity are also losing value and our overall endowment fell by about 20 percent, but our focus here is more on research grants, so we are less dependent on the endowment.”He wondered if this pattern of care would also extend to oncology, and said that although he has yet to see shortfalls in insurance, he was watching for that when more people lost jobs or COBRA. Dr. Nelson said 70% of Hopkins's patient catchment's area was Maryland and neighboring states, and although uncompensated care was supported by the state, he was concerned about when out-of-pocket expenses would become a hardship, such as for a family who wanted to remain in Baltimore while a patient with a prolonged hospital stay was being treated for something like acute leukemia. “There have been some changes in philanthropy. People who make these kinds of commitments make them for personal reasons and keep making them, although some making structured gifts in installments are asking to pay a little less now or to delay the payment, and promising to follow through and make it up later. “Endowed professorships made in perpetuity are also losing value and Hopkins's overall endowment fell by about 20 percent, but our focus here is more on research grants, so we are less dependent on the endowment.” He said the university announced a hiring freeze and 5% salary cut for administrators but that affected only the School of Medicine and not the hospital, and that the one-year moratorium for new capital projects was not an issue for the cancer center since there aren't any plans for any new buildings or capital renovations this year. “We're still recruiting faculty for mission-critical programs, but we're thinking very carefully about every faculty member hired and how much care they can deliver,” he said, adding that searches for key positions [such as for a new breast cancer leader to replace Nancy E. Davidson, MD, who left to head the University of Pittsburgh Cancer Institute] are moving ahead, and that Hopkins has implemented an incentive plan for faculty that rewards clinical and research activities. University of Texas M. D. Anderson Cancer Center Of all the centers surveyed, the University of Texas M. D. Anderson Cancer Center was perhaps the most proactive regarding keeping its 18,000 employees informed about the effects of the changing economy. In early January, President John Mendelsohn, MD, and senior leadership including Provost and Executive Vice President Raymond DuBois, MD, PhD, sent out the first of what have become monthly e-mails to staff explaining what could be done to increase revenue and reduce spending. “As the nation and world address the significant economic downturn, M. D. Anderson remains in a solid financial situation,” the e-mail began. “While we are strong today, we must be prudent about our spending, and acknowledge that even small changes in patient volume, payor mix, and reimbursement for services, as well as further declines in the market value of our investments, could have a significant negative impact on us. “Monitoring and safeguarding our resources is everyone's responsibility. Just as in preparing for a hurricane, we cannot wait until after a storm to respond. We must take significant steps now to ensure our fiscal strength for the duration of the recession. This means we must continue to generate new revenue and find ways to reduce our operating expenses.” The communication went on to enumerate a plan to achieve this goal, noting that the changes were not “draconian measures” but mostly “standard processes in well-run academic medical institutions. They will be standard operating procedures here now.” The reference to preparing for a hurricane was not a metaphoric but rather a literal one in the Houston area.Figure: RAYMOND DUBOIS, MD, PhD, of M. D. Anderson Cancer Center, said the center is still getting significant philanthropy, but many donors have shifted giving from cash to estate planning. He noted that the development office had looked back in time from the major depressions to now and determined that giving has stayed up very well, since even during difficult economic times contributions for cancer research and treatment are still considered important by donors.Dr. DuBois, who is also the current (until the middle of April) President of the American Association for Cancer Research, said that Hurricane Ike had a profound effect on the center when it hit last August. “We couldn't see any patients in our own clinic for several days, costing us $20 million to $30 million in lost revenue, and we inherited 300 to 400 mostly indigent patients from the University of Texas Medical Branch at Galveston, which was shut down for several months.” He said the ongoing communication to staff was an effort to be as transparent as possible, and a major effort was being made to avoid any layoffs. The hurricane-related losses were independent of the global economic crisis, which diminished the center's endowment by more than 25%. Dr. DuBois said that M. D. Anderson is still getting significant philanthropy, but many donors have shifted giving from cash to estate planning. He added that the center's development office looked back in time from the major depressions to now and determined that giving has stayed up very well since even during difficult economic times, contributions for cancer research and treatment are still considered important by donors. The number of cancer patients continues to grow annually, by about 5%, with the center seeing some 90,000 patients a year, 30,000 of whom are new patients. Of the total number of patients, one-third come from Houston, one-third from the rest of Texas, and one-third from elsewhere, and the recession will probably realize a decreased number of patients traveling long distances for treatment. “Since 9/11 we've had a decrease in our international patient pool, but so far it hasn't contracted much more since October,” Dr. DuBois said. “We currently have more than 500 beds, and although we're delaying some long-term capital projects, we'll be adding another 400 beds after completion of four or five ‘shovel-in-the-ground’ projects that are already under way. “We have an obligation to treat in-state patients, and as the demand for our services continues to increase, our wait time is now two to four weeks.” As with other academic medical centers, research funding has plateaued over the past several years, and M. D. Anderson is awaiting word about the federal stimulus package, as well as future distribution of the $3 billion to fund cancer research, prevention, early detection, and control programs over 10 years through the Cancer Prevention and Research Institute of Texas created by Proposition 15 (OT, 8/25/08). Dr. DuBois said he was extremely gratified to see the dedication of the center's staff toward realizing M. D. Anderson's clinical and research mission. “Everyone's making a real effort to pull together and get through these times by taking care of patients and finding better treatments and cures for the future. But then this is relatively simple compared to going through the diagnosis of cancer and rough treatments.” City of Hope Michael A. Friedman, MD, President and CEO of City of Hope, said his institution “was doing reasonably well, but in this time no one takes any comfort since we don't know what will happen.”Figure: MICHAEL A. FRIEDMAN, MD, of City of Hope: “If you look at California, every new hospital that's opened has been smaller than the one it replaced. We have the funding for our construction, we made the commitment, and we're moving ahead, and given where current construction costs are now, if can we can complete these projects we have every reason to do so.”“We haven't instituted any layoffs and are prudently looking forward and increasing our efficiency. “We're actively engaged in building some 250,000 square feet of renovated space on campus. It's an investment of roughly $200 million, and if we maintain discipline and the projects proceed on time and on budget, we will continue to go forward.” Located outside of Los Angeles in Duarte, California, City of Hope's 185-bed cancer center has seen a 3% increase in new inpatients and a 2% increase in outpatient visits during the last several months, but a decrease in reimbursement as the state's public assistance medical program is meeting its budget requirements more slowly than before, according to Dr. Friedman, who noted that the center's portfolio was only impacted about 15% to 20% since much of its endowment was invested in liquid funds rather than securities. “If you look at California, every new hospital that's opened has been smaller than the one it replaced. We have the funding for our construction, we made the commitment, and we're moving ahead, and given where current construction costs are now, if we can complete these projects we have every reason to do so. “The big question is what will happen with federal programs. We have not instituted a firm hiring freeze, but we're much more thoughtful about what we want to add to the institution at this time, and we're continuing in a thoughtful controlled way to add staff, although we're insecure about what the future holds.” Dr. Friedman said he expected the donor environment to be worse, but so far gifts from individuals have been better than expected, with industry largesse down. “We're having an internal competition between a number of our programs to see which ones are more ready for institutional support at this time. “City of Hope prides itself on taking care of patients in crisis and need, and on the compassion with which our staff treats patients and their loved ones, and they are continuing to be nurturing and caring despite their own personal situations during this time,” he said. “In this moment of insecurity, the importance of making thoughtful, effective choices has never been so high, and the opportunity costs have never been so great.”

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