Cancer center poses quandary for hospitals

By Beverly Creamer
Advertiser Staff Writer

One of the biggest prizes ever dangled before the state — a new cancer research center — promises cutting-edge medical care for Hawai'i's people and an economic boon whose effect could rival that of agriculture. But key questions remain for the local hospitals considered essential to the project's success.

"It's a huge step forward," said Dr. Carl-Wilhelm Vogel, director of the UH's Cancer Research Center of Hawai'i. Advertiser library photo

But against a backdrop of losses that topped $92 million last year, with some operations still in the red, Hawai'i's hospitals worry about losing control over patients; about how collaborative relationships under a new cancer center would work; and how they can maintain a competitive edge in the multimillion-dollar business of cancer care.

The $150 million project is expected to reshape the medical landscape in Hawai'i, and even though 21 healthcare groups have signed an agreement to collaborate on the cancer center, negotiations aimed at protecting the bottom line of each are under way in boardrooms statewide.

U.S. Sen. Dan Inouye, D-Hawai'i, is calling the cancer center "a very high priority for me," and the University of Hawai'i Foundation has launched a campaign to bring in the $90 million necessary for a new center, and $60 million more to refurbish the existing medical school as a biomedical research facility.

"It's a huge step forward," said Dr. Carl-Wilhelm Vogel, director of the UH's Cancer Research Center of Hawai'i. "All cancer patients in the state will benefit. It signals that a comprehensive cancer center in the state is what everyone thinks is good."

Vogel said a new Comprehensive Cancer Research Center based in Kaka'ako next to the John A. Burns School of Medicine now under construction, would be the "mother ship" for the new partnership, and instead of competition, institutions would work cooperatively.

"We could have alliances with every hospital," Vogel said. "The idea is not to concentrate all the treatment at one site. We would do the paperwork and they would treat patients at their sites, on our protocols."

Without the clinical component as part of a new cancer research center, Vogel said the advanced research necessary to gain "comprehensive" status under the National Cancer Institute won't be possible. The premier designation is considered essential because it is the key to increased financial support as well as the Phase 1 and Phase 2 clinical trials that offer the latest treatments and experimental drugs.

The hope is to have the new cancer research center open within five years.

But concerns continue as hospitals crunch numbers and look at the bottom line.

"Cancer would be about second or third in terms of total revenues for us," said Art Ushijima, president and chief executive officer of The Queen's Medical Center. Advertiser library photo

"Certainly it's a concern," said Dew-Anne Langcaon, executive vice president of Hawai'i Pacific Health, speaking about the possibility that a new comprehensive cancer center would also treat patients in an outpatient clinic. Hawai'i Pacific Health includes Kapi'olani Medical Center, Pali Momi, Straub Clinic & Hospital and Wilcox Health System on Kaua'i.

"When you look at the goal of getting the latest treatment to the patient faster, we can certainly understand where a clinical component can play a role," Langcaon said, "and we're evaluating for ourselves the pluses and minuses to that."

For many hospitals, cancer care is an important source of income in an era of low Medicaid and other health insurance reimbursements, and increasing costs for charity care.

"Over the last seven or eight years every one of our facilities has downsized," said Rich Meiers, president of the Hawai'i Healthcare Association, which represents the state's hospitals and many nursing care facilities.

"Queen's has let go well over 300 people over the last few years, and we've seen a lot of services dropped because facilities just can't afford to provide them."

Citing an Ernst & Young study, Meiers said that by 2000, Hawai'i hospital expenses of $1.36 billion had exceeded hospital revenues of $1.35 billion for the first time since 1996. And the losses to charity care and bad debt were taking a higher and higher toll each year, amounting to $92 million last year alone.

"The financial condition of the hospitals is improving in some cases," he said, "but in others there are still very serious problems."

In the five years since the federal Balanced Budget Act was adopted, Hawai'i hospital revenues slipped $145.4 million. The 1997 law aimed at balancing the federal budget resulted in drastic cuts from hospitals' Medicaid reimbursements nationwide.

This is not a new dilemma. Regions across the country have wrestled with the same questions of how to maximize care for patients without doing economic harm to the providers.

In Seattle in 1997, the Fred Hutchinson Cancer Research Center joined with the University of Washington Medical Center and Children's Hospital Medical Center to create the Seattle Cancer Care Alliance. While the separate pieces aren't exactly equivalent to those in Hawai'i, the result has improved patient services and maintained revenues for all.

"I think we're still working on that," said Edmonds, from Seattle. "It's not something that happens overnight. Part of it was getting everyone to agree on what it would look like and how they would fit into the alliance, since we all had our separate programs."

Like the proposal in Hawai'i, the Seattle alliance built an outpatient care center, and the three centers liberally moved departments and services around among them.

"Our University of Washington-based physicians who were seeing patients at U.W. now see their patients at the alliance," said Edmonds. "And when that patient at any time needs to be admitted, they're admitted into the medical center.

"It's very complicated," added Edmonds. "I think that they thought it would be for the greater good for all cancer research and would benefit patients in the long run."

A similar scenario is happening in Nashville, Tenn., where the Vanderbilt-Ingram Cancer Center serves 11 hospitals in three states through an affiliated network offering cutting-edge clinical trials to the patients of rural doctors and rural centers. Just five years old, the partnership draws patients from all over the nation but also provides the same high level of care even when it refers patients back home to their neighborhood hospital.

Vogel said the plans in Hawai'i — and the new agreement — will be a major benefit to all of the state's patients and will set the stage to lure patients from throughout the Pacific and Asia, building business for Hawai'i's entire medical community.

UH President Evan Dobelle sees the center as part of the effort to shake the state out of its economic doldrums. He envisions the cancer center as part of a $1 billion biotech industry here within five years of completion — an industry "as big as agriculture is today," said Dobelle.

The most likely site is Kaka'ako, next to the John A. Burns School of Medicine, which broke ground in October. Negotiations are under way for 5.5 acres of state land adjacent to the medical school construction, plus an additional three to four acres for parking.

That would create a Biomedical Research Center, Dobelle said, which could compete more vigorously for $23 billion in research money available annually from the National Institutes for Health. Hawai'i now gets less than 1 percent of that.

"If we got 1 percent more of the market share — that's a $350 million business," Dobelle said. "And one would hope you could get 3 (percent) or 4 percent."

The lack of a central place to treat cancer patients was made an issue in 1999 when former Gov. Ben Cayetano appointed a Blue Ribbon Committee on Cancer to make recommendations to improve care. A major committee proposal: that Hawai'i have a centralized outpatient center to offer better treatment options and better coordination for patients.

Hawai'i hospitals provide care for the 5,000 to 6,000 new cancer patients diagnosed every year in Hawai'i — care that's now spread throughout the community, with Neighbor Island patients often forced to travel for critical radiation or chemotherapy treatments.

According to figures provided by the Hawai'i chapter of the American Cancer Society, $60.9 billion was spent last year nationally for direct medical costs to treat the disease. In Hawai'i, figures are harder to extract, but inpatient cancer charges from all hospitals amounted to $232 million in 2001, according to the Hawai'i Health Information Corp. According to the best estimates, that would put the total cost of cancer care in Hawai'i at around $500 million a year.

At The Queen's Medical Center, which handles the largest percentage of O'ahu's cancer patients (about 35 percent or around 2,600 patients) — annual inpatient cancer care provides $45 million in revenue annually.

"Cancer would be about second or third in terms of total revenues for us," said Art Ushijima, president and chief executive officer of The Queen's Medical Center. "It's somewhere around 12 percent of our total admissions annually."

For Hawai'i Pacific Health, cancer care provides $55 million in gross revenues statewide, according to executive vice president Langcaon.

CEO Roger Drue said his organization looks forward to working collaboratively with other providers to make a network work. "A focused, statewide effort to provide the very finest cancer therapies for Island residents is the right approach," said Drue.

Tom Driskill, CEO of Hawai'i Health Systems Corp., a quasi-public entity that runs the state's 12 community hospitals, said the same, adding that the collaboration could "provide the highest levels of cancer care."

But Ushijima, of Queen's, wonders about the need for an outpatient clinic as part of a new center.

"From our perspective we've supported that designation (of a comprehensive cancer center) and we certainly continue with that support. But the designation of 'comprehensive' doesn't specifically require that it have a clinical facility. So it's certainly conceivable to have a comprehensive designation involving multiple clinical sites. It must have a clinical program, and the clinical program can entail a number of facilities like ours that are providing treatment."

The best idea, said Ushijima, is to "develop a program that best suits your community and allows you to access the most patients."

Reach Beverly Creamer at bcreamer@honoluluadvertiser.com or 525-8013.