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Bernard Salick Launches a New Health Care Enterprise

Bernard Salick Launches a New Health Care Enterprise

Bernard Salick, the man some call a medical visionary, does not brood on his setbacks. A mere 24 hours after Zeneca Group PLC had assumed total control of Salick Health Care, the Southern California nephrologist had launched yet another medical enterprise--Bentley Health Care.

(Zeneca Group PLC is a multinational bioscience company, which, through its separate Pharmaceuticals business, is the second largest maker of cancer drugs.)

Zeneca Take-Over Raised Ethical Issues

When Zeneca completed its purchase of Salick Health Care, the British company experienced an initial public relations setback when some medical ethicists frowned upon the prospects of a pharmaceutical company overseeing the activity of physicians who prescribe its drugs.

In a front page story on April 15, 1997, in the New York Times, well-known bio-ethicist Arthur Caplan, remarked:

"It is quite possible that Zeneca's motives are pure, but I think we will see more deals like this in the future, and the real question is what sorts of checks and balances ought to be in place. Having your doctor, your clinic, your pharmacy, and your testing lab all owned by the same person is not the optimal structure for health care."

In response, Michael O'Brien, head of Salick, said that Zeneca would never lean on physicians to prescribe Zeneca's drugs. He also pointed out that Zeneca Pharmaceuticals and Salick Health Care are separate and independent businesses, although both are under the umbrella of Zeneca Group PLC.

"It never entered Zeneca's mind that this would be a way to sell more Zeneca drugs," said Mr. O'Brien, adding that the proportion of Zeneca's business that is generated by the use of its drugs by Salick physicians is a tiny fraction of 1%.

Before the telephone company had even been notified of the name switch, Dr. Salick was already courting potential investors, whom he hoped would sink up to $300 million into his most ambitious venture ever.

Just like his old model of cancer care, Dr. Salick envisions Bentley Health Care as a provider of user-friendly outpatient centers that offer such amenities as valet parking and round-the-clock, integrated medical services. He also intends to continue to provide medical treatment through affiliations with top-flight academic medical centers.

"If I can't treat a member of my family there, I don't want anything to do with it," is a refrain Dr. Salick likes to use. But his plans far exceed that mission. He envisions establishing centers that would not only continue to specialize in cancer and renal failure, but would also branch out into the fields of AIDS and HIV treatment, as well as organ transplantation. And he fully expects to establish Bentley beachheads, in conjunction with government health services systems, in Europe and Asia.

Dr. Salick believes that catastrophic illnesses, which are by their very nature chronic and long-term, can be treated as carve-outs (in which an HMO or a managed care organization refers all patients with a specific disease to an allied specialty health care provider). Noting that 40% of each health care dollar ends up paying for catastrophic illnesses, he said the main drivers in his operation will be specialists not primary care doctors.

With an initial focus on cancer and AIDS, Dr. Salick said he expects his first centers to open within the next three months in California, Florida, and New York City.

He has already created quite a stir in New York City by continuing his practice of luring away big name medical stars to his facilities. (Last year, for instance, Dr. Salick enticed Ronald Blum, MD, of New York University; Timothy Gee, MD, of Memorial Sloan-Kettering; and Geoffrey Herzig, MD, of Roswell Park Cancer Institute, to the new cancer facility that Salick Health Care opened at St. Vincent's Hospital.)

In his most recent move, Dr. Salick announced in May that he had engaged as a consultant the renowned AIDS researcher, Dr. David Ho, who will retain his position as director of the Aaron Diamond AIDS Research Center.

New AIDS Center Planned

Even more amazing is the spectacular hire for an enterprise that doesn't even have a New York address yet. In April, Dr. Salick lured Luc Montagnier, the French co-discoverer of the AIDS virus, to set up shop in the most unlikely of places--Queens College in Flushing, NY.

Dr. Salick donated $4.5 million to his alma mater to create the institution's first endowed chair for Dr. Montagnier, who is leaving the Pasteur Institute in Paris. Dr. Montagnier will run a new AIDS research facility at the college, which will be funded with government, corporate, and private donations.

While Dr. Salick said he would have no say in how the college's new Center for Molecular and Cellular Biology would operate, he hopes that Drs. Montagnier and Ho, as well as other of the world's preeminent AIDS researchers, could collaborate under the Bentley banner.

Toward that goal, Dr. Salick has even been talking with Dr. Robert C. Gallo, director of the Institute of Human Virology at the University of Maryland and a chief rival of Dr. Montagnier. (Dr. Salick said representatives of Dr. Gallo had contacted him first.) If the California kidney specialist manages to bring the two AIDS researchers together, cracked one Salick insider, he should be awarded the Nobel Peace Prize.

A Fateful Meeting

Dr. Salick's frenetic efforts to launch his new enterprise were triggered April 10 in Los Angeles when Zeneca's chief executive, Sir David Barnes, and Thomas McKillop, chief executive officer of Zeneca Pharmaceuticals, told him that his long-term contract for roughly $5 million would be bought out.

The partnership with the $9 billion multinational corporation had begun in 1995, when Zeneca bought a half interest in Salick Health Care for $195 million. This deal included an option to buy the other half of the company in 1997.

At the time, Dr. Salick saw the partnership with the British conglomerate as a way to generate capital for his ambitious push to expand his cancer empire that ultimately grew to 11 cancer centers, seven breast facilities, and 10 kidney dialysis centers. He assumed that when Zeneca bought the rest of the company, he would remain as chairman and chief executive officer.

But when Zeneca exercised its option in April, bringing the total purchase price to $450 million, Dr. Salick was offered the advisory position of chairman emeritus, which would pay $800,000 a year. Infuriated at the prospects of a figurehead advisory post, Dr. Salick, who said he was caught completely by surprise, declined the offer.

Zeneca's Perspective

What led to the change at the Salick helm and all the resulting acrimony? Foremost, Zeneca wanted its own team in place to operate the day-to-day management of an increasingly complex network. Under Dr. Salick, the driving force was expansion, and as far as the British corporation was concerned, he wasn't spending as much attention on the existing network.

To ensure that growth would be sustained, Zeneca replaced Dr. Salick with Michael J. O'Brien, who for the past 2½ years had been heading up Zeneca's specialties division, which produces high-quality inks and dyes and various industrial coatings, such as resins.

Prior to that job, Mr. O'Brien had worked for many years as the director of marketing for Zeneca Pharmaceuticals for countries outside the United States. In that capacity, he was heavily involved as a liaison between marketing operations and research and development. And for two years, he was based in Wilmington, Del, serving as vice president of sales and marketing for Zeneca Pharmaceuticals in the United States.

"I've seen Salick Health Care make a big splash of a new relationship and then move on to the next relationship, and I want to be sure that the relationships that have been established are very solid," Mr. O'Brien said. He believes it was "too much" to expect Dr. Salick to actually run a complex business while spending 50% to 60% of his time out looking for new opportunities. "We felt we needed to put in professional managers to improve the day-to-day operations to create a strong platform for growth," he said.

Dr. Salick responded that his organization had 2,000 employees to run the day-to-day business. "If they acknowledge I'm a great visionary and a great strategic planner, would they really want me to be arranging for the installation of computer systems?" he asked "Clearly, the company has to have one person at the top to define what the company does and hire the very best people."

Mr. O'Brien was quick to emphasize that Zeneca wants to continue "as strenuously as possible" Dr. Salick's legacy of cancer center expansion, including expansion overseas.

Said Mr. O'Brien: "My objective is to make sure that Salick Health Care continues to grow. I would say there is absolutely no change in the strategy except that I want to do it in a more organized way. When we establish relationships with, say, hospitals or physicians, it's clearly on a partnership basis; it isn't a win-lose approach."

The change in management has not hampered the talks under way with other health care institutions to establish new major cancer centers. In fact, Mr. O'Brien said that many people have approached him since the change, saying they want to do business with the corporation. New York was the only area where officials detected a hesitancy to talk with Salick Health Care. But he characterized the hesitancy as only slight and said that it has dissolved. "I personally think there are a lot more opportunities for Salick Health Care to grow here in this country and eventually outside the United States."

Mr. O'Brien also indicated that he wants to place a greater emphasis on the managed care portion of the business. Back in 1994, Salick Health Care signed its first and only capitated treatment agreement with Physicians Corporation of America, which covers 115,000 persons in South Florida.

Before Zeneca took over, Salick Health Care had been in serious negotiations with CIGNA in Arizona. When asked if that was still in the works, Mr. O'Brien said that discussions were continuing and that other new opportunities had emerged as well.

To fuel his ambitious expansion plans for the fledgling Bentley Health Care, Dr. Salick has been closeted with potential investors, including major mutual fund companies, hospital chains, European and American pharmaceutical and biotechnology companies, and those who have helped bankroll Salick Health Care in the past. "I've been doing extremely well and making great progress in getting the $300 million," he said.

Bringing AIDS Doctors Together

At the outset, one of Dr. Salick's major efforts has been laying the groundwork for a chain of for-profit AIDS clinics. As he sees it, his success will be incumbent upon involving three different groups--the scientists who are developing an AIDS vaccine and working on other breakthroughs; top-notch doctors who are involved in patient care and clinical trials; and the leadership in the AIDS community.

He says his talks with AIDS leaders have been critical so he can avoid a "political nightmare." Said Dr. Salick: "I've been saying to them, I'm not interested in politics, I'm just trying to cure AIDS. I will in my naïve way try to bring Montagnier, Gallo . . . and other great AIDS doctors together. Some might laugh, but I am very good at bringing people together."

Dr. Salick is also wasting no time trying to establish a presence in Europe. Next month he will visit several European countries where he will talk with, among others, a key AIDS physician in Italy and a physician who, he said, has been nominated to head the World Health Organization's cancer efforts. "You can be very sure that I'm going to try to persuade him not to join WHO but to join me," he said.

Future of Salick Health Care

What will happen to Salick Health Care without its namesake remains to be seen. But some of the physicians who were recruited by Dr. Salick to run the original centers believe that the transition should proceed smoothly. One of those making that prediction is John S. Macdonald, MD, chief of medical oncology and medical director of the Temple University Cancer Center.

Calling Dr. Salick an "idea-a-minute person," he said that the Southern California physician was the lifeblood of the company, as he took risks to develop a medical concept that no one else had tried.

But now with the organization more mature, Dr. Macdonald thinks the enterprise can exist without Dr. Salick. "His creative talents were very well used for implementing start-up concepts," Dr. Macdonald observed. "With the course of the future development and growth of the company now firmly charted, his leaving is not as critical."

Whether all the old Salick centers stay in the Zeneca constellation remains to be seen. When asked if any of these medical centers were talking with him about an affiliation with Bentley, Dr. Salick uncharacteristically had nothing to say. Observing that it was a "tricky" area, he simply said, "I can't comment."

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