Debt puts Nevada Cancer Institute on heels
The Nevada Cancer Institute — trying to manage $100 million in debt — on Friday laid off half of its 300-member staff.
Researchers, doctors, nurses, administrative staff — no sector of the Summerlin institute was spared, according to the nonprofit institute’s co-founder Heather Murren.
But patients currently in treatment at the institute won’t be affected, according to Michael Yackira, chairman of the institute’s board of directors. And those signed up for clinical trials will still be able to get their oncology treatment, according to Hilarie Grey, a spokeswoman at the institute.
The layoffs had to be made by the board, according to Murren, who is also a member of the institute’s board of directors, “to ensure that we are able to preserve the essence of what we are — the state’s cancer institute.”
When the institute opened in 2005, the goal was to do cutting-edge research that would translate into life-saving treatments.
Murren said she believes “hundreds of lives,” and maybe more, have been saved because of the institute and its dedicated staff. That fact, she said, made it all the more difficult to let employees go.
“I’m proud of what we’ve accomplished,” she said.
A miserable economy that has hurt fundraising, fewer patient referrals than expected from local physicians, a worsening reimbursement environment that provides less money from government and private insurance entities for services rendered, and fewer federal grant dollars in the recession — all were cited by Murren and board Chairman Michael Yackira as reasons for the institute’s dire financial situation.
A disconsolate Dr. Mark Kirschbaum, the acting director of hematology and phase 1 clinical trials who was one of the staffers let go Friday, said there was yet another reason for the financial problems:
“They hired too many administrators under the last administration for the number of patients we had. And now our entire clinical trial staff was fired and we can’t help people who need it. Dr. Giuseppe Pizzorno, who hired me, and the board are trying to save the place.”
But Dr. John Ruckdeschel, the director and CEO of the institute who was fired by the board last week, said the number of administrators was correct.
“I actually thought it was under administered,” he said. “I was hiring for the growth I expected.”
Ruckdeschel, who says he was never told why he was fired, said that while he was surprised and saddened by the board’s Friday layoff action — “I had nothing to do with the planning for that” — he did know that the institute was having financial challenges that needed to be dealt with.
Murren said institute officials are in talks with banks that hold the notes on loans that include mortgages on institute buildings. The hope, she said, is that the talks will produce results that allow the institute to preserve its mission, but she added that a bankruptcy filing is possible.
“We’re looking at every possibility,” she said, noting that many organizations across the nation have used bankruptcy to stabilize their financial situations so they can move forward.
Last month, 30 support staffers at the institute were let go by the board, which said “the economic downturn has hurt our fundraising ability.”
Yackira said Friday’s huge reduction in staff would make it possible for the institute “to live to fight another day … to preserve the mission of the institute in a smaller footprint.”
Though the institute will lay off some employees connected to its clinic at University Medical Center, Murren said the clinic will remain open.
She said a team of financial experts has been hired to find the right direction for the institute to follow. Those experts stress that while the institute is in debt, it also has $236 million in assets.
partnerships sought
Murren conceded that the layoffs mean that her dream of developing one of the National Cancer Institute’s Centers of Excellence in Southern Nevada is now much further away.
“That saddens me,” she said.
The center of excellence designation, held by only 63 centers in the nation, would mean the institute would be able to use a greater variety of treatment regimens.
In a wide-ranging discussion Thursday with the Review-Journal’s editorial board, Murren and Yackira made it clear that they are seeking partnerships both locally and nationally to help the institute become financially sound. They would not say with whom the discussions have, or are, taking place.
The Review-Journal has learned that talks have taken place between the institute and the Cleveland Clinic, which now operates the Lou Ruvo Center for Brain Health near downtown. A Cleveland Clinic spokeswoman refused comment. While a source says talks have taken place, the source said that they have not progressed to “anywhere near a partnership.”
Local physicians contacted by the Review-Journal who have medical groups that could partner with the institute and help it attract more patients are concerned that the institute’s financial situation could be too desperate for an association to be beneficial to them. They requested anonymity because there is still the possibility of an association.
One practitioner, who requested anonymity because he has a relationship with the institute, said a key reason for the institute’s financial problems stems from institute officials often “bad mouthing” the quality of medical services in Southern Nevada.
“When you do that, you can’t expect to get many patient referrals from primary care doctors,” he said. “And if you don’t have the patients, you don’t have revenue.”
Nevada Cancer Institute has seen 15,000 patients since it opened in 2005.
Comprehensive Cancer Centers of Nevada have been doing most of the heavy lifting in cancer care in the Las Vegas Valley for more than 30 years. More than 60 percent of cancer patients, about 25,000 a year, receive their treatment at eight different locations,
Murren said Thursday that the institute may not have worked on local partnerships as “broadly and as assiduously” as possible and conceded that the number of referrals wasn’t as high as she would have liked. She said the new interim director, Dr. Phillip Manno, will work hard to forge such partnerships.
She said one of the things that made the board remove Ruckdeschel was his reluctance to work more on partnerships.
“She’s entitled to her opinion,” Ruckdeschel said Friday.
Murren said it is possible that the institute will move its operations into one building and rent out the other two to research groups who could benefit from the labs and cutting edge scientific equipment owned by the institute.
She envisions that it could expand into the kind of a research park that is found in an area of North Carolina around Raleigh-Durham that is referred to as the Research Triangle.
The Triangle name was cemented in the public consciousness in the 1950s with the creation of Research Triangle Park, home to numerous high-tech companies and enterprises. Although the name is now used to refer to the geographic region, The Triangle originally referred to the universities — North Carolina, North Carolina State and Duke — whose research facilities and the educated work force they provide have historically served as a major attraction for businesses in the region.
donations sink
In 2008, the Nevada Cancer Institute made headlines when 50 staffers were laid off. The reason given then was that in 2007 the institute had generated a little more than $50 million in philanthropic gifts, grants and government support, down from $66 million in 2006.
Philanthropic gifts to the institute peaked in 2006 at $58.1 million and have declined since.
Though philanthropic donations continue to decrease, Murren does not hold that diminishing revenue stream largely responsible for the current financial crisis at the institute, saying Nevadans have been generous and that fundraising cannot be a primary revenue stream for a mature organization.
Chances are good that the amount of philanthropy directed toward the cancer institute will diminish even more quickly now that the Lincy Foundation, Kirk Kerkorian’s charitable foundation, announced last month that it is going to give all its assets to UCLA to create the Dream Fund. In 2008 alone, the foundation founded by the former majority stockholder of what is now MGM Resorts International, gave $14.9 million to the cancer institute.
Murren said financial advisers hired by the institute are now trying to come up with a realistic yearly dollar amount that they can expect to receive in philanthropic gifts.
The institute has received more than $240 million in charitable donations since it was founded and granted tax exempt status in 2002.
Murren, along with her husband and institute co-founder Jim Murren, chairman and CEO of MGM Resorts International, has been a fundraiser unlike any other in the history of Nevada, hosting one event after another featuring top celebrities. Eva Longoria, Larry King and former Van Halen rocker Sammy Hagar have graced fundraisers.
The Chronicle of Philanthropy has lauded the institute’s fundraising efforts.
Heather Murren’s fundraising campaign in 2002, three years before the institute opened, pointed out Nevada had the fourth-highest cancer death rate among states for women and the 28th-highest for men. She noted that people were leaving the state for treatment.
troubled times lamented
Dr. Nicholas Vogelzang, one of the world’s foremost researchers on prostate cancer and the first director of the institute, said he is saddened by what is happening there. Now with Comprehensive Cancer Centers, he said he would like to see the Nevada Cancer Institute incorporated into the University of Nevada School of Medicine.
“They need a good partnership,” he said.
David Ward, a former deputy director of the institute and then the only Nevadan to be a member of the prestigious National Academy of Sciences, said he worries that the layoff action could scare off grants to the institute from government agencies.
While at the Nevada Cancer Institute, Ward and his wife, Patricia, did a study that many scientists think will lead to a precise tool to detect epithelial ovarian cancer before physical symptoms are present.
Ward, now a key administrator and researcher with a cancer institute in Hawaii, said granting agencies want stability.
“If they get worried that a medical center might not be there, they’ll give the money to places like Harvard or Yale, places that they know will be around for another hundred years,” he said.
Up to now, state and federal officials have looked at the institute with favor.
Not only have state legislators provided $20 million dollars in funding, they also made the institution the state’s official cancer institute before even one patient had been seen.
The institute, long a favorite of Senate Majority Leader Harry Reid, D-Nev., received $40 million from the federal government.
hospital dreams quashed
For years, there was talk that the institute would build a hospital dedicated to the treatment of cancer.
Cutting-edge surgical treatments for cancer, Ruckdeschel noted in 2009, would have been good for both patients and the institute. He expected that a ground breaking for a hospital would then begin in the near future.
Surgeries bring in an enormous revenue stream to medical centers. Now the institute relies largely on philanthropy, referrals for drug and radiation oncology, and grants.
When he talked about his plans for the hospital, Ruckdeschel was giving the Review-Journal a tour of the then new $50 million Ralph & Betty Engelstad Cancer Research Building that was partially built with a $20 million gift from the Engelstad Family Foundation. The institute took out a loan to pay for the rest of the building, which is part of its financial problem today.
Asked then how he could come up with the funding for staffing and a new building during tough economic times, Ruckdeschel said he would know in a couple of months.
In 2009 Congress approved a provision by Rep. Shelley Berkley, D-Nev., that would transfer ownership of 24 acres at Alta Drive and Hualapai Way from the Bureau of Land Management to the Nevada Cancer Institute. That land, Ruckdeschel said, would be used for the hospital.
Given what has now happened at the institute, does Ruckdeschel think an institute hospital will ever be built?
“No,” he said.
Contact reporter Paul Harasim at pharasim@reviewjournal.com or 702-387-2908.
