Serious debate swirled around a proposal to enter into a limited partnership agreement with Radiation Oncology Associates at a meeting of Carson-Tahoe Hospital's finance committee Thursday. The proposal is central to the hospital's efforts to develop an accredited cancer center, and while everyone seemed to agree with that concept, some felt the price tag for this partnership was too steep.
Under the agreement, the hospital would purchase the equipment, lease-hold on the building, and 40 percent of the practice for $2.3 million. A portion of the receipts will go to hospital, with a projected 14 percent return on this investment. But appraised value of the actual equipment involved is $129,000, meaning the balance will be spent primarily on buying into the practice.
"That's $2 million for good will, or blue sky," Dr. Basil Chryssos said, noting there's nothing to stop this hospital from opening its own facility. Two million dollars will buy a lot of equipment.
Carson-Tahoe Hospital Pathologist Dr. Elizabeth Jack countered his argument.
"If you go out for bids to another agency or you bring in another group. . . . no one wins, because the volume now is split," Jack said. "If you bring in another player as a competitor to that group, the hospital would not have the necessary rate of return.
"I can't speak for Dr. Kelly, but I know he's made the comment that he thinks this group (Radiation Oncology Associates) is very conservative in their treatments, and does not over-treat, which I think is very important for the community to know, because it certainly is a cost issue for them."
Dr. Kelly is a local oncologist.
Radiation Oncologist Associate Dr. Gary Campbell said there are real advantages for the hospital, his practice, and the community. The basic premise, according to Campbell, is to avoid fragmented care. Physician services are easier to coordinate when medical oncology, radiologic oncology, and surgeons are under one roof, and patients aren't shuttled from one office to another.
And the center needs the radiology service revenues to remain solvent.
"Traditionally in cancer centers across the country, it's the reimbursement of radiation oncology that provides the funding for the operation of the cancer center, because generally the reimbursement for (services such as) infusion services and transfusions are not adequate," Jack said.
"I think we're looking at this from the wrong angle," Dr. Roger Meyers said, noting he shared Dr. Chryssos initial reaction. "I think we need to divorce ourselves from the cost of the proposal, and look at it more from a financial aspect. . . . I think from the simple, plain business aspect, and the money that will be generated for the cancer center, it's a good deal."
The facility would be the first combined cancer center in the area.
"It's a very exciting step forward," Campbell said. "In the long run, it will mean excellent cancer care for the people of the Carson City area."
The physicians' group is presently located near the proposed site for the center. The new, three-story building will be constructed around or connected to the linear accelerator and vault already in place. The building carries a price tag of $20 million, and the Center is projected to cost about $9 million. Funding for the purchase will come from board designated funds.
The 19,500 square foot center will include a radiation oncology suite, medical oncology suite, ambulatory infusion center and retail pharmacy suite.
Plans for the center call for the purchase of new equipment, primarily a new linear accelerator that will either replace or work in combination with the present accelerator. Profits from this investment are to be banked for the purchase of this equipment, probably in two to three years.
With a staff of five physicians, Radiation Oncology Associates Inc. has been practicing in Reno for 30 years, and in Carson City since 1987.
