Ron’s Plan: What Is It?
By
Leonard Zwelling
At a recent Managers’ Forum, the leadership of MD Anderson sought to quell the unease in the body politic of the institution by assuring the gathered that they had the budget shortfall problem in hand and were going to solve it.
The President himself assured the audience that his plan had taken into account all of the vicissitudes of the current health care roller coaster of shrinking reimbursement, the cost of big science, and the questions brought to bear on the institution by reluctant payers, crowded templates and empty clinics on Fridays. He also stated that the institution could no longer count on gleaning 80 to 90 % of its revenue from patient care. This suggested to me anyway that the various contracts and agreements, as well as intellectual property spinning out of IACS, were going to make up the difference caused by the falling clinical revenues and the ever-rising spending.
I doubt it.
First of all, what exactly is the DePinho strategy anyway?
It appears to be the same one that he sold to the Regents and Ken Shine five years ago. He had a way of developing drugs more efficiently than that employed by the pharmaceutical industry and he would apply it to not only curing cancer but also sustaining MD Anderson’s bottom line forever. How’s that going in the first five years?
From the comments of Drs. Buchholz and Dmitrovsky, the progress does not seem promising. Layoffs and RIFs were not being ruled out. No specific solutions that I could see were being initiated by this leadership team to enhance revenues beyond the President’s claim at remarkably prescient drug development. I heard nothing specific about how costs were to be contained from any of the leaders or from the head of HR who spoke briefly. I wasn’t comfortable. And neither will you be since you can’t use your Faculty Development Funds to fly first-class any longer.
If the goal of this meeting was to calm the fears of the faculty and staff, the goal was not met. My guess is that the wise are already planning for the worst whether that is more time in the clinic and less doing research or actual job loss.
While Dr. DePinho, to his credit, did take responsibility for the recent poor financial performance, the CFO was not to be found at the meeting and the head of hospital operations made no appearance either and it must be at his feet that much of the problem with EPIC and patient volumes must be set.
A real strategic plan does a couple of things.
First, it defines your business. What is the business of MD Anderson? Is it patient care, drug development or basic research, because it is pretty hard to do all three very well. It means that you are competing with Methodist, Pfizer, and Southwestern all at once.
Second, what are you NOT going to do? Besides football and astronomy, what else does MD Anderson not need to do? I still want to know the actual cost of the drug development effort vs. the current revenue stream from that effort. In the real world, a drug company’s stock price is an indicator of the net present value of its future earnings. What is that metric for a state-run, academic drug company?
Third, how are you going to compete? Is MD Anderson a broad-based provider of cancer care competing with Cancer Treatment Centers of America or is it a specialized facility caring for those uniquely in need of its expertise? Surely, it used to be the latter, but that was before reimbursement pressures got severe and there were so many players in the cancer marketplace in Houston and throughout the country.
Personally, I could have used a lot less of the glibness of suggesting that Dr. DePinho could stand in for Dr. Buchholz in the Radiotherapy Clinic as a means of augmenting the revenue of MD Anderson and a little more from the President of what his strategy really is.
I think enquiring minds want to know.
