Thinking Through a $30 Million Technology Investment

The new proton therapy system at Ackerman Cancer Center in Mandarin represents the type of technology that can change the direction of a practice—and alter patients’ lives.

DrAckerman for webIn offering the world’s first proton therapy in a private, physician-owned practice, Dr. Scot Ackerman has staked $30 million on a new technology that has yet to be offered outside of institutional facilities like university medical centers.

His commitment goes well beyond just the system. He has also expanded his facility,  added staff and invested in marketing to draw patients from outside of North Florida. “We’re trying to bring proton therapy to the community,” Ackerman said.

For more than a decade, Ackerman has seen proton therapy as “the future of radiation,” embracing its potential to help patients by more precisely treating tumors, particularly those around critical areas like the eye and brain. But proton therapy has been cost prohibitive for private practices because of the space and expense required to build large systems like those at Jacksonville’s University of Florida Health Proton Therapy Institute, which used public funds to help pay for the $120 million system that it has used to treat patients since 2006.

It was not until 2008 that Ackerman contracted with a company that had developed a compact delivery system that could be used in a single room and purchased for a fraction of the cost. But as convinced as he was of the clinical benefits of proton therapy, he had to make a business case to justify a capital expenditure that far exceeded any he had made—not to mention incurring significant increases in operating costs.

So, rather than marking a culmination of his quest to provide proton therapy to his patients, 2008 would represent the start of a new journey to bring the technology to fruition. Like other business owners, he would find that implementing a new technology requires operational patience and financial flexibility.

Ackerman Cancer Center’s proton therapy system was supposed to be operational by 2011 but it would not go live until this spring.

“There have been lots of delays because of technology and the newness of technology,” said Ackerman, whose practice also includes a center on Amelia Island. “When you’re an early adopter you have to expect things to not to go smoothly.”

“Each minute that passes without being operational costs $2. What keeps me up at night is the delays we’ve had and my mistiming of ramping up to be clinical.” – Ackerman said.

Trying to dovetail practice growth, staffing, marketing, financing and the acquisition and implementation of technology and equipment simultaneously means that a delay in each could throw off the timelines for others. “If I buy a new $400,000 piece of quality assurance equipment and it sits there for a year I could lose time value of money and maybe debt service,” Ackerman said.

Ackerman worried that he might be able to get approved by a vendor but not have the financing needed to make the requisite purchase, or vice versa. Looking back, he said, “I would have delayed some of the funding until I had a better assurance that we would be operational or that different milestones would be met at different times.”

Ackerman used the project as an opportunity to review all of his existing debt and to restructure it when possible before seeking new funding. “Money is a commodity and I want to find the best vendor,” he said.

Unlike with traditional equipment, with which the vendor often provides the purchaser with access to financing, the proton therapy system was so new that its manufacturer could not yet connect Ackerman with a lender. He also considered mezzanine financing before deciding to seek conventional loans from local banks.

Knowing that his time would be best spent working on his practice, Ackerman engaged Jacksonville-based Heritage Capital Group to help him secure financing. They reached out to more than 60 banks.

bill nicholson“We looked at the sources and what the uses would be with a goal of not putting the Ackerman Cancer Center or Dr. Ackerman in a position where there was undue risk, but rather in a position where there was reasonable risk for what the anticipated financial returns from this machine would be—with the primary goal of providing first-rate care to his clients,” Heritage Capital Group Principal Bill Nicholson said.

Ackerman made presentations to 30 institutions, spending 1.5 hours with each to tell his story. “That’s how long it takes to explain to someone about proton therapy and financing and the practice and everything else,” he said.  Subsequent question-and-answer sessions and tours of the center would then bring the total time with each prospective lender to two to three hours.

“He’s a consummate salesman in terms of understanding all the technical aspects of it and the financial aspects,” Nicholson said of Ackerman. “That was critical in terms of the banks getting comfortable.”

Ackerman eventually went with four lenders: The Jacksonville Bank, Synovus Financial, BBVA Compass and Key Bank. Each took on a different portion of the project like equipment or operating capital.

“I like banks to compete,” Ackerman said. “I don’t just go to the first one.

“Capital is capital. I want to get it as cheap as I can.”

Ketterman_150204_1712-COPYNicholson credits the banks for backing the new technology and the manufacturer, Mevion Medical Systems, for helping to secure the financing. “It was a team effort in making sure that the people who were going to write big checks were comfortable and knew that they had the right people involved in the deal,” he said.

Mevion has also assisted Ackerman Cancer Center with each phase of the project, from planning to installation. “The daunting part is understanding all of the steps,” said Lionel Bouchet, vice president of marketing for Mevion.

Mevion has educated the center’s staff on the differences between conventional radiation therapy and proton therapy as well, so that they can better inform their patients in turn. “The benefit of the proton is you can vary the depth,” Bouchet said.

As a long-time advocate of proton therapy, Ackerman himself is well aware of its benefits and eager to provide them to his patients. His journey has finally neared its end.


Visit Jax helps with promotion grant

Visit Jacksonville is bolstering the area’s reputation as a leading destination for top-notch medical care.

Together with local medical partners that include Ackerman Cancer Center, the city’s official tourism marketing office has secured a $99,200 matching grant from Visit Florida to promote Jacksonville’s award-winning medical industry to new patients and medical convention planners.

paul astleford“Being sick is a delicate and complicated situation,” Visit Jacksonville President and CEO Paul Astleford said in announcing the grant in February. “We want to help patients make their journey to wellness at least a little bit easier by letting them know that our city has the medical infrastructure and the overall appeal to help them and their families heal.”

Visit Jacksonville and its medical partners will match and exceed the grant amount, resulting in a total of more than $200,000 in funds to market the city as a destination for medical tourism. In addition to Ackerman Cancer Center, medical partners include Mayo Clinic, University of Florida Health Proton Therapy Institute and Market Staging Inc.

Ackerman Cancer Center will use grant proceeds to help market its new proton therapy system to nearby markets like Savannah, spokeswoman Aryn Lentz said. “We get calls from people outside the state.”



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