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May 24, 2012

Knights in White Lab Coats

Reported and rumored causes for the Nevada Cancer Institute's demise abound: A stand-alone nonprofit clinic didn't have a prayer in this market. There were too many administrators for too few doctors and patients. Management overspent on marketing and ignored community connections.

Speculation aside, the outcome is there for all to see. The nonprofit patient care and research facility referred to as NVCI declared bankruptcy in December, eight months after shedding about half its staff—including its director and CEO—in a last-ditch effort to keep the doors open. It had racked up $91 million in debt.

But now, NVCI's 6,000 patients have reason for renewed hope. Concurrent with the bankruptcy, UC San Diego Health System announced it would buy the patient-care portion of the institute for $18 million and the promise of future donations from its nonprofit fundraising arm, which lives on. The bankruptcy court approved the sale in mid-January, just before another hero, Desert Research Institute, struck a bargain to take over a part of the institute's research operations that UCSD didn't want.

Observers agree it's a good deal for all concerned, but the relative neatness of the legal process won't cure the ills that led to NVCI's slow death. With the new facility and staff in place, the two university-affiliated programs have their work cut out for them: convincing patients, grant-makers, and donors, as well as the rest of the Southern Nevada medical community, to give NVCI a second chance.

"When I was looking at it, I thought it was a great deal for UC San Diego Health System," says Adam Higman, a Tampa-based consultant who has worked on similar transactions. "They're getting entrée to a whole new market, which usually comes at a much higher price tag."

For more information, read the full article Knights in White Lab Coats.

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