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For Salick Centers, Treating Cancer Is a 24-Hour Battle

September 19, 1988|GEORGE WHITE | Times Staff Writer

To Dr. Bernard Salick, founder and chairman of fast-growing Salick Health Care Inc. in Beverly Hills, persistence is the key.

It took perseverance to start a new kind of medical service--cancer care centers that provide diagnosis and treatment on a 24-hour basis. But Salick Health Care, which affiliates its centers with existing hospitals, now operates four around-the-clock facilities--one at the Cedars-Sinai Medical Center in Los Angeles and three in Florida--and has plans for more.

The cancer care operations--outpatient kidney dialysis is the company's other line of medical service--have bolstered Salick Health Care. Since 1985, when the company opened its first cancer center, profits have more than doubled, to $3.3 million on revenue of $25.7 million. Last year, about 30% of Salick's revenue was produced by the cancer care centers; now they generate nearly 55%, the company says.

Salick, which already has agreements to open new centers at two East Coast university hospitals, is negotiating deals to open at least eight other centers. In addition, it agreed earlier this month to develop outpatient cancer treatment facilities for Premier Hospitals Alliance Inc., a for-profit cooperative owned by 40 hospitals. Premier, based in Westchester, Ill., has agreed to recommend Salick to its members and help the firm negotiate deals with alliance institutions.

More and more hospitals are likely to seek convenient, specialized operations like Salick's centers because it can give them a competitive edge, according to Larry Selwitz, an analyst at Cruttenden & Co. in Newport Beach.

"People who run hospitals are asking themselves, 'What can we do to make the public view us more favorably?' " Selwitz said. "Hospitals are even advertising more. A cancer treatment center is something you can point to. . . . It also helps with fund raising."

Selwitz said Salick has very promising prospects if it does not expand too rapidly and grow beyond the company's management capacities, a mistake that some health-care companies have made.

"Their financial situation is extremely strong," said Theodore Levy, an analyst with Sage, Rutty & Co. in Rochester, N.Y. "I see this company . . . filling a gap in medical treatment. A lot of hospitals are clamoring for something like this."

Hospitals, said Levy, need more outpatient operations because it is less costly than keeping patients in hospital beds, an important consideration in an industry that has been scrambling to cut operating costs.

Much Investment Income

The cost cutting has been prompted by the federal government's 1983 Medicare reforms. Under the reforms, which are designed to stop the rapid rise in Medicare costs, the government established a payment system that predetermines the amount it will pay for certain services. Hospitals, which had been submitting bills based simply on their rising costs, were forced to tighten their belts to cope with the new fee system.

Some analysts say Salick centers are attractive to hospital executives because the firm, not the hospitals, accepts the financial risks. Salick, they note, finances the construction of the center and provides the attendant equipment. Salick hires and pays the nurses and technicians. The doctors, who are self-employed, are offered space.

Much of Salick's initial financing came from investors who bought the company's $18-million stock offering in 1985 and $30-million bond issue in 1986, deals that were underwritten by the investment firms Drexel Burnham Lambert and Swergold, Chefitz & Sinsabaugh. Bernard Salick still holds about 45% of the firm's stock.

The company's early operations were also boosted by the stock and bond sales. About 30% of Salick's pretax profits in 1987 and 1986 came from investment income.

The company's expansion is being marshaled by its founder, a kidney specialist who initially had difficulty selling the concept of 24-hour cancer care to hospital executives and investment bankers. In fact, Salick said he might not have attempted to develop a chain of 24-hour facilities if not for the needs of a young girl.

Salick's daughter, Elizabeth, was 6 years old when she complained of leg pain the night of June 28, 1983. Salick suspected a sprain because Elizabeth sometimes suffered minor injuries during gymnastic exercises. As a precaution, he arranged to have his daughter undergo X-rays the next day. On that day, Salick said he was given the bad news by a sad and solemn-sounding radiologist: Elizabeth Salick had bone cancer in one leg.

When doctors recommended amputation of the leg, Salick and his wife authorized the operation. Doctors also prescribed chemotherapy, a treatment that kills cancerous cells. However, because chemotherapy also kills some non-cancerous cells--including the white blood cells that attack the microscopic causes of illness--Elizabeth had to be given periodic blood tests to ensure that her white blood cell count was sufficient.

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