A University of Hawaii task force that reviewed operations at the trouble UH Cancer Center says the center’s business model is "flawed and incomplete," and that relying on state support, including from tobacco taxes, is unsustainable.
In its 124-page report, which UH Manoa released Monday morning, the group said the Cancer Center is draining its reserves at an "alarming rate" and that a 2010 business plan that relied on UH’s share of the state’s cigarette tax remaining steady was "too optimistic."
The Cancer Center, a research unit of UH-Manoa, ended last year with a nearly $10 million deficit and is draining its reserves to stay afloat.
"Future business models must be tied to clinical participation and patient care in hospitals and community centers across Hawaii — with a focus on building independent clinical trial sites associated with the University of Hawaii," the report’s authors wrote.
The center is one of 68 National Cancer Institute-designated centers in the country, and its researchers attract about $20 million a year in federal research grants. But UH officials have said the center is running in the red because of an outdated business plan that assumed UH’s share of the state cigarette tax would remain steady at close to $20 million a year to fund operations at the center.
As fewer people smoke, cigarette tax revenues have declined annually. Meanwhile, the recent expansion of the center’s Kakaako facility has left the center with an $8 million annual mortgage payment that it can’t afford.
The task force report said the center will require improved leadership and a return to faculty governance in order to succeed. It also said the university needs to consider whether maintaining the NCI designation is necessary and whether UH can afford it.
The report makes several recommendations to help "stabilize" operations at the center:
>>UH Manoa and system leadership, along with other important stakeholders, should decide on a course of action and revise its business plan accordingly.
>>The Center should consider alternative budgeting models.
>>Consolidate operations with the John A. Burns School of Medicine through shared services.
>>Change the funding of debt service from a volatile source, such as cigarette taxes, to the tobacco settlement fund. Legislation would be necessary to make such a change.