UH regents remain undecided on a Cancer Center plan

Six months after a mainland consultant issued a report outlining ways to turn around the financially struggling University of Hawaii Cancer Center, the Board of Regents has yet to take action, adding to lingering uncertainty around the research facility’s future.

The report — prepared for UH by Warbird Consulting Partners, with headquarters in Atlanta, and Navigant Consulting Inc., based in Chicago — recommended the university strongly consider turning the Cancer Center into a semiautonomous business entity, co-owned and run with community hospital partners, to keep the research facility viable.

The center’s interim director, Dr. Jerris Hedges, dean of the John A. Burns School of Medicine, used the consultant’s Oct. 16 report to draft a proposed business plan that instead suggests short-term steps to maximize revenue and productivity to finance the center’s research operations, including:

>> Consolidating the medical school and the Cancer Center’s administrative services to reduce duplicated services.

>> Seeking up to $5 million in state general funds to pay for research faculty and staff.

>> Generating revenue by leasing empty space in the center.

>> Changing the way researchers are paid by requiring newly recruited faculty to cover a portion of their salaries with grants.

The Board of Regents on Thursday could not reach consensus on how best to move forward with the plan. Some regents want the university’s president to improve on the proposal and make a formal recommendation; a few others backed the idea of forming a regent task force to help take the lead.

UH President David Lassner said his administration has been soliciting feedback on the plan and has met with external reviewers, and continues to make amendments.

“It is my opinion that at this point it would make more sense to see what the Legislature does, because we’ll know that over the next couple weeks,” Lassner told the board Thursday at its monthly meeting, held at Honolulu Community College. (Lawmakers are negotiating the state’s budget for the upcoming fiscal year.)

“And depending on what number comes out of the Legislature, we will have to modify that plan if it isn’t the same number that was built into that plan, which was the $5 million,” he added. “It could come out anywhere from $5 million to zero. Frankly, we’re not quite sure at this point.”

An agenda item seeking the appointment of a task group ultimately failed Thursday in a 2-13 vote.

UH-Manoa professor Bob Cooney, chairman of the Manoa Faculty Senate, had supported the idea.

“What was presented or put together by the dean of the medical school is not a business plan or a strategic plan,” he testified. “It really needs to look at where the Cancer Center is going and what is economically feasible.”

Regent Benjamin Kudo, who opposed the idea, said, “I don’t think that a task force at this time should be formed to supplant the responsibilities of the administration to bring forward a better plan — a better business plan.”

Kudo added, “I think that it’s very important that the administration proceed forward in good faith to really look at the business plan that was put forth by Dean Hedges, and to determine whether it can be improved upon both in terms of financial resources as well as management issues and restructuring.”

The regents did, however, unanimously support a resolution acknowledging the worth of the Cancer Center and its federal National Cancer Institute designation for the state and region.

As one of 69 NCI centers, UH has an edge when competing for federal funds and recruiting scientists. As much as 80 percent of the NCI’s $5.2 billion annual research budget goes to its designated cancer centers.

But university and state officials have been grappling for some time with how to deal with the center, which has been operating in the red and draining its reserves to stay afloat. The latest business plan is the third in recent years intended to come up with a way forward.

The facility’s financial troubles stem from a faulty business plan that had assumed the university’s share of the state’s cigarette tax would remain constant at $19 million per year. But as fewer people smoke, the tax revenues have dropped to about $14 million annually. Turmoil surrounding the center’s previous leadership and the negative publicity that ensued also affected philanthropy and recruitment of researchers.

Adding to the problem, UH in 2010 pursued building a $130 million facility in Kakaako using that outdated business plan. To pay for the building, UH issued revenue bonds, which have saddled the facility with a nearly $8 million annual mortgage payment.