CARTI Preparing for Growth

The opening of CARTI’s $90 million cancer center in the fall of 2015 can’t come soon enough for CARTI President and CEO Jan Burford.

“We’re getting more patients,” Burford recently said in her office in Baptist Health’s Higginbotham Building in Little Rock. “The baby boomers are entering their peak cancer years. The volume is going to go up for everyone.”

In December 2011, the nonprofit CARTI was treating about 3,000 patients a year. CARTI then began adding doctor groups, and it is now seeing about 20,000 patients annually, Burford said.

But seeing more patients is not necessarily good for CARTI’s financial health, Burford said.

About half of CARTI’s patients are on Medicare, the federal health care insurance program view for people 65 and older and for the disabled. Medicare’s reimbursement for cancer treatment is less than the cost to provide the service, she said. The reimbursement rate depends on what cancer is being treated.

“It’s pretty devastating,” she said of the reimbursement rates. “Unfortunately, when Medicare is paying you less than cost, it’s not as if you can make up the difference on volume.”

In addition, CARTI is still dealing with the effects of the federal budget sequestration. Burford said CARTI missed out on about $1 million in 2013 as a result of sequestration and the same amount is projected for this year.

“Every time they come up with a cut, we have to decide how we adjust to that,” Burford said. “We’re still figuring out how to cope with that.”

And she’s not sure how the Affordable Care Act will affect CARTI. “We’re caught up in health care reform just like everybody else,” Burford said.

The earlier a cancer is detected, the cheaper it is to treat. Some chemotherapy drugs cost as much as $50,000, she said. With improved cancer treatment, however, more people have survived cancer only to be diagnosed with a second and third cancer, Burford said.

For the fiscal year that ended June 30, 2012,CARTI had net income of $16.6 million on net patient revenue of $85 million, according to its most recent IRS Form 990. For the year that ended in June 2011, CARTI had a net income of $8 million on net patient revenue of $41.2 million.

The Center
The new 170,000-SF cancer center is expected to slash CARTI’s expenses. Burford said she didn’t know exactly how much CARTI is expected to save when all of its doctors’ offices and support staff are under one roof in west Little Rock. It currently has 26 physicians and about 470 employees.

The savings from reducing expenses will be spent on more support services for patients, she said.

CARTI currently is renting 100,000 SF. For the fiscal year that ended June 30, 2012, CARTI spent $2 million on land and building leases, which was up 45 percent from the previous year, according to its Form 990.

The cancer center also will make it easier for patients who now have to travel across Little Rock to see different CARTI doctors for treatments.

The cancer center will offer medical, surgical and radiation oncology, diagnostic radiology and hematology services.

CARTI tried to design the building to be as “patient centered” as possible, Burford said. The four-story building will have five main entrances so patients can get inside the building as quickly as possible, she said.

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