New Competition Threatens NARTI

Competition for cancer patients is coming to Northwest Arkansas.

While Northwest Arkansas Radiation Therapy Institute has served the area for a dozen years, a private company is poised to open a competing venture in Fayetteville.

PPB Inc., an arm of a Louisville, Ky.-based private corporation, has obtained a building permit for a 7,080-SF, $950,000 structure at 60 E. Monte Painter Drive. The 5 1/2-acre site is in North Hills Medical Park.

At the same time, NARTI’s directors are not complacent about that facility’s place in the market. The institution’s board recently voted to proceed with the idea of building a satellite facility in Benton County. That facility will be in Bentonville, although the location is still uncertain. The board is currently considering two locations, one on property it already owns in the Beau Terre development and the other near the intersection of U.S. Highway 71 and Arkansas Highway 102, near NorthWest Arkansas Community College and the new Mercy Health Center.

The board’s president, Richard P. Osborne, says the vote was “rather substantial” on the issue of a new facility.

“It appears to me we’re going to open a satellite facility in Benton County,” he says.

In fact, Osborne says, the board, which usually meets every other month, will probably convene in early May once NARTI’s accountants have gathered financial information requested by directors.

NARTI’s executive director, Eddie Bradford, has been concerned about the impending competition although he’s certain that his facility delivers the best care possible. Recently, a new scanner was installed — at a cost of more than $1 million — that provides the latest technology available.

“It will certainly have an impact on us to have competition,” Bradford says. “It would be unrealistic of us to think it wouldn’t.

“But,” he continues, “we’re obviously going to continue providing the quality service that we have” in the past.

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Differences in mission

Certainly, there are differences in the way the two facilities came about.

PPB and its sister company, Radiation Therapy Associates Inc., which does business under the name RTA Inc., are subsidiaries of a holding company, Oncology Resources International Inc. The subsidiaries share offices in Louisville and Roanoke, Va.

In late April, the company said it planned a “state-of-the-art cancer center” equipped with a linear accelerator and a Ximatron Simulator. Dr. Maureen Holasek, a board-certified therapeutic radiologist, will provide radiation oncology professional services as an employee of the center.

RTA already owns two freestanding cancer treatment centers in Arkansas, one in Benton and another in North Little Rock. Both operate under the name Arkansas Radiation Oncology Centers. The North Little Rock facility opened in November 1992 while the Benton center opened in June 1996.

James Parrott Sr. is majority owner, chairman and CEO of Oncology Resources International Inc., a holding company formed last year to provide centralized management to four other companies, including PPB and RTA.

Parrott formed PPB in 1982 to make and install high energy radiation-shielded doors, according to Business First, a Louisville business journal. PPB also designs, plans, builds and installs oncology centers.

RTA and two other companies, Serti and Mobile Medical Technologies Inc., grew from Parrott’s original company. RTA develops, owns and manages cancer treatment centers and owns several diagnostic imaging centers. As of last August, RTA owned 20 cancer treatment centers and had plans for eight more.

Serti provides services for cancer centers owned by PPB while Mobile Medical Technologies makes mobile radiation oncology technology equipment.

Parrott told the Louisville publication his 1997 revenues would be around $39 million while 1998 revenues were expected to be $60 million.

The building permit issued in Fayetteville estimates the value of the new structure at $950,000 or about $135 per SF. Sources familiar with medical construction say that figure is consistent with the industry average. The cost, however, does not include equipment expenses, which can easily top $1 million.

It is expected to open this fall about five months after construction begins.

Cooperation built NARTIt

By comparison, NARTI was a grassroots effort from the beginning. It is a shining example of a cooperative venture by the region’s hospitals from the days before competition was so fierce.

“It was developed at a time when an institution like this was far too expensive for any one institution to undertake,” says Bradford. “There has always been a total air of cooperation between NARTI and all the hospitals.”

Prior to NARTI’s opening, cancer patients from the region had to travel to Tulsa or Little Rock for radiation treatment. Having a facility nearer to home was deemed important enough that support spanned a four-county region: Benton, Carroll, Madison and Washington.

Some of the 13 hospitals that lent support to the project no longer exist today — Huntsville’s hospital, for example. Others have formed “systems” and alliances — Washington Regional Medical Center and St. Mary’s Hospital in Rogers, for one example; Northwest Medical Center and Bates Memorial Hospital in Bentonville, for another.

The hospitals’ financial support was relatively small although, together, they provided seed money for the center.

The major donations came from other supporters: industry as well as churches, social service groups, door-to-door solicitations, even pie suppers, Bradford recalls.

Key to the project, Bradford and Osborne agree, was the land on which NARTI now stands, a plot on what is now U.S. Highway 412 west. The property was donated by the Gene George and Gary George families.

That donation spared the founding group the expense of a land purchase, but, perhaps most importantly, the location was ideal for such a community project for several reasons.

It was a neutral site, not adjacent to any hospital; it was centrally located; and it provided easy access, just off what is now U.S. 71, Osborne says.

Currently, NARTI averages 78 patients a day. It employs 37 people, including three physicians and other trained technicians. The annual operating budget is about $3 million.

As a tax-exempt, non-profit organization, NARTI treats all patients, regardless of ability to pay, Osborne says.

“We don’t turn down anybody. We’re there to serve the public.”

Osborne says NARTI’s board hasn’t discussed the impending competition at length although directors have talked about the long-term effects on NARTI from a for-profit center.

The pool of potential patients won’t be increased by the presence of another treatment center, so RTA would obviously draw some patients who would otherwise be treated at NARTI, he says.

But as a for-profit center, RTA would only be expected to take those patients with insurance or the ability to pay for treatment.

“We will retain all the charity cases, and they will siphon off some of the paying cases,” Osborne says. “How do you plan for that?”

Bradford says competition won’t reduce treatment prices because most of those charges are set by managed-care contracts and Medicare.

“The rates are pretty much set up on a national basis, so how can [competition] reduce rates?” he asks.

Satellite plans

As for the new satellite facility, Osborne says Mercy Health System has offered NARTI “an excellent deal” on property at Arkansas 102. But, just as the Springdale site was chosen for its neutrality, there are similar considerations with selecting a Bentonville site.

“We don’t want to generate ill feelings with other hospitals on that count,” Osborne says. “I wish they would donate that [land] to us. Given the nature of our organization, our mission and our purpose, it would be a service to the people of this part of Arkansas.”

The property NARTI already owns in Beau Terre was purchased, at “an excellent price,” from Colin Washburn, who is developing that area. Osborne says Washburn asked only that, if NARTI decided not to build on the property, that he be allowed to buy it back.

Although the Springdale center will remain NARTI’s flagship campus, some of its equipment would be moved to Bentonville. That helps contain construction costs, and, Osborne explains, it’s expected that some patients who currently travel to Springdale for treatment would instead go to Bentonville.