Salick Healthcare to enter New York market: it plans to launch cancer center in Manhattan.

LOS ANGELES - After expanding into the Midwest and Southeast, Salick Healthcare Inc. will tackle the New York market with the opening of a cancer treatment center in the Chelsea/TriBeca section of Manhattan later this year.

Los Angeles-based Salick entered into a 20-year agreement to provide cancer treatment services to Saint Vincent's Medical Center, an 814-bed hospital at Seventh Avenue and 11th Street.

Salick will open a temporary, 75,000 square foot facility this summer four blocks from the hospital, then eventually move into a permanent site at an office building being developed nearby. The facility will be called the Saint Vincent's Comprehensive Cancer Center.

Like its previous deals with other hospitals, Salick will finance the construction of the center, but share profits with the hospital.

Salick officials said the company expects to capitalize on Saint Vincent's affiliation with other regional Catholic hospitals as a way to rapidly expand its business base.

"We are talking to other multiple hospitals, and groups of doctors in cancer private practice about linking them up," said Dr. Bernard Salick, Salick's chairman and chief executive. "We want to blanket the area, not just have one place or facility, but to have many satellite facilities."

Salick said his company will also gain a competitive advantage on cost by taking fixed, or "capitated," payments for treatment, a linchpin of managed care that has yet to take hold in New York.

Unique concept

"They don't do capitation in town," Salick said. He observed that most of New York's health coverage still allows enrollees to choose their own doctors, meaning that the practice of medicine is associated with higher costs and is "provincial."

"A subscriber in the Bronx won't want to go to (Brooklyn) for treatment, which means to strike an agreement with one provider like Saint Vincent's is not what they do," Salick said.

Observers said the potential of success for Salick's deal was high.

"Going into New York City is a very smart move for them," said Peter Boland, president of Boland Healthcare, a Berkeley-based consulting firm. "It's a good location for them to work because the population is diverse, and using capitation gives them a big edge. What this allows them to do is develop new care management protocols for the area, and I think that's the key, rather than having a physical plant elsewhere."

Flagship site

Salick appears determined to make its permanent facility in Manhattan a sort of East Coast flagship.

Salick said he hired architect Charles Gwathmey - who has built various flashy buildings for the entertainment industry in Los Angeles and boasts Dreamworks SKG's co-founder David Geffen as a regular client - to design Salick's permanent facility and office space, which is estimated to cost at least $25 million. Salick will also offer such un-New York touches as an underground parking lot, validated parking and valet service.

Aside from its expansion in New York, Salick operates oncology and dialysis centers in Florida, Missouri and California, among other states.

For the fiscal second quarter ended Feb. 29, Salick reported net income of $2.2 million, or 20 cents a share, on revenues of $39.1 million. That's down 16 percent from year-earlier net income of $2.6 million, or 25 cents a share, on revenues of $38.2 million.

Salick attributed the dip to the development of new networks and information management systems, as well as the hiring of additional senior managers.