Doing good, getting well - Salick's Health Care Inc. cancer clinic

Nation's Business, August, 1989 by Michael Barrier

At a Salick center, a patient can schedule chemotherapy on the weekend. A patient who suffers complications from chemotherapy in the middle of the night need not wait for hours at a hospital's emergency room, while doctors tend victims of gunshots and heart attacks, but can instead go to the cancer center and be treated quickly by nurses who specialize in cancer.

As the cancer centers have opened, Salick Health Care's operating revenues have shot up--from $21.4 million in fiscal 1987 to more than $38 million in 1988--and operating income has climbed accordingly, from $3.9 million to $6.9 million.

Salick's for-profit status is enough to make his whole operation suspect in some eyes. One official of the National Cancer Institute has spoken, for instance, of "entrepreneurial endeavors ... seducing and inducing doctors to bring patients into their local facility."

In response, Salick says that an explicitly for-profit orientation can help correct sloppy management practices that drag many nonprofit hospitals down. Typically, he says, nonprofit hospitals "operate their facilities in a terribly inefficient fashion. Nobody's cracking heads; nobody's watching if somebody goes home at 5 when they should have gone home at 5:30. When we operate a program, we have to watch every dollar."

But the larger issue, everyone agrees, is whether the search for profit unavoidably compromises the quality of care--an issue that Salick addresses by setting up his cancer centers only under the auspices of hospitals.

The doctors who practice at each center are not on Salick's payroll; they must instead be on the hospital's staff. The doctors bill patients individually for their services, and they pay Salick Health Care for the use of its office space and services. Doctors need not rent offices in the center if they choose not to, Salick says. And, he adds, a doctor in a Salick facility has a choice between using on-site equipment for X-rays or sending patients elsewhere for that service.

The hospital charges patients for their use of the Salick center as it would charge them for their use of any other hospital facility.

It is thus the hospital, and not Salick Health Care, that ultimately controls both fees and quality of care. Most of the Salick cancer centers bear the parent hospital's name; Salick's name is on none of them.

"Our goal," Salick says, "is to affiliate with the larger teaching hospitals [which are overwhelmingly nonprofit]. They have radiation therapy departments; they have some level of cancer care," even if not for outpatients. "When we affiliate with top-notch institutions, we bring them the capital--which we can raise in industry, because we're a public company--we use their staff, we have teaching programs affiliated with them, and we make a profit. I don't think there's anything wrong with that."

Through such arrangements, Salick believes, a balance can be struck that honors both economic efficiency and medicine's best traditions. "That's how you silence criticism," he says. "You have the very best people, and you charge competitive prices in the community."