MD Anderson Reports Operating Loss of $102M in First Two Months of Fiscal Year '17

HOUSTON, TX — Economic reports for Houston are a mixed bag; oil prices remain at levels lower than most analysts — and executives — are comfortable with, and the city has still not fully rebounded from job losses sustained during the past several years. The Greater Houston Partnership's 2017 forecast, which was released earlier this month, predicts that layoffs will continue in the energy and construction fields. Now, a medical giant has reported huge losses for the first two months of its '17 fiscal year.

The MD Anderson Cancer Center recorded operating losses of $102.4 million in September and October; for October, the losses totaled $60.9 million, compared to a surplus of $11.5 million in the same period in 2015. Ronald DePinho, the institution's president, accepted blame for the numbers.

"Who is accountable for the financial performance? I take full responsibility for the challenges," Mr. DePinho said at a Nov. 15 faculty forum on MD Anderson's finances, The Cancer Letter reported. Executives at the institution are urging faculty members to add clinical days and to attempt to convince out-of-town patients to remain at the cancer center for the duration of their treatments, the Letter continued, adding that other ideas, including eliminating overtime, instituting a hiring freeze, eliminating catering, and turning holiday parties into potluck events, have also been discussed

The Letter reported that at least one other similar institution, New York-based Memorial Sloan Kettering Cancer Center, was facing no such woes.

"Memorial Sloan Kettering Cancer Center, an institution similar in size and stature to MD Anderson, reported $164 million in operating income through the first nine months this year, a 14.6% increase from the same period last year. Growth in the volume of outpatient visits and overall surgical visits resulted in an 8.9% growth in operating revenue to $2.9 billion. Operating expenses grew 8.6% to $2.8 billion."

The Cancer Letter reported that "DePinho has triggered several controversies over his five years at MD Anderson, but past controversies — such as famously appearing on a Wall Street television show and touting the stock of a company he cofounded and in which he held stock — occurred when MD Anderson was in the black."

Responding to the poor numbers, MD Anderson officials are expressing optimism, maintaining that the center's long-term financial outlook is robust.

"MD Anderson has reserves and non-operating revenues that give us the opportunity to adjust our operating revenue and expense structure without making overly drastic changes," Dan Fontaine, the center's executive vice president for administration, told The Cancer Letter. "We are implementing action plans now to ensure we can address short-term losses and maintain our focus on our mission."

— Image courtesy Texas Medical Center