Mogul Won’t Give Up on Health Chain

By most measures, any businessman whose interests include an office development with David Geffen, a Holsteiner horse breeding operation and a Hollywood production company ought to feel successful enough.

But these are far from glory days for the once high-flying Bernard Salick.

Four years ago, the Beverly Hills businessman completed the $480 million sale of his namesake Salick Health Care Inc., a chain of groundbreaking, outpatient cancer centers, to British pharmaceutical giant Zeneka PLC.

The intent of the sale was not so much to cash out but to finance an ambitious worldwide expansion. Instead, Salick, who now acknowledges naivete, found himself ousted as CEO just as the sale was complete.

His response?

To form another company, Bentley Health Care Inc., and attack Zeneka head on, opening cancer, as well as AIDS treatment centers, in New York, Britain and elsewhere. He also donated $4.5 million to Queen’s College, his alma mater, as seed money to open a world-class AIDS research center run by Luc Montagnier, co-discoverer of the HIV virus. Maybe even find a “cure” for AIDS, too.

The result?

Agreements that Salick reached with three hospitals to open a dozen cancer and/or AIDS centers in the New York City metropolitan area were put on hold last year after he failed to raise the $300 million or more he needed to get them off the ground. And the AIDS research center ended in a debacle when Queen’s College was unable to raise a dime, prompting an embarrassed Salick to publicly demand his money back.

Even Salick, who trades in hyperbole equal perhaps only to his fortune, can’t put a good spin on all that.

“I am stymied,” he admits, in a recent interview at his Beverly Hills offices. “I am frustrated.”

It’s hard to feel too sorry for a guy who sold his company for nearly half a billion dollars, but in today’s business world, four years is a long time. The Internet boom had yet to hit its frenzied peak, and the collapse of the high-tech sector was way beyond the horizon.

And in that period, while Salick was trying to regroup, fortunes far larger than his were made and lost. It is that atmosphere that the 61-year-old entrepreneur clearly blames for much of his current problems.

Large centers

The cancer centers that Salick Health Care Inc. had built were not dinky medical offices. They were opulent free-standing complexes operating 24 hours a day, seven days a week – with complete services: chemotherapy, radiation therapy, bone marrow transplants, outpatient surgery and gene therapy.

Salick says Bentley was close to a deal with two major investors, but it fell apart over a potential conflict of interests. At the same time, Salick says, other investment avenues were shut off. No one wanted to spend that kind of money on a stand-alone cancer center during an era when new-media companies could get off the ground for a song.

“(You) have all these companies that consist of a room the size of a toilet, they’re valued at $28 trillion. (And then) they say you are too capital-intensive,” says Salick.

And, of course, once Internet stocks crashed last year, their coattails were long and wide.

“How come people are not pouring money into this?” Salick asks rhetorically. “Well, for the past three or four years, every wacko Dr. Koop dot-com raised a trillion dollars, and people got badly burned.”

Financial pitfalls

As far as AIDS treatment centers go, there was no money in it in New York, he now says. The insured are treated by private physicians, while the state reimburses poorly for impoverished infected drug addicts. Skeptics had publicly warned of this at the time.

It’s congenitally impossible for a guy like Bernard Salick to admit defeat. And he won’t. While no longer focused on the AIDS centers, Salick maintains that he is “lining up deals all the time” and in “constant discussions” to open his cancer centers.

“Everybody to this day calls me 10 times a day,” he says, with classic hyperbole.

Indeed, Salick says he still travels to New York and elsewhere regularly on his Gulfstream III – talking to bankers, trying to pin down a deal to open his cancer centers. He claims the New York hospitals he once had agreements with would reactivate them in a “second” should he secure his financing.

It appears to check out.

Stanley Jacobson, senior vice president and general counsel for Montefiore Medical Center, the giant Bronx medical center that was to open three Bentley centers, says the hospital would still love to go forward.

“We believe that, with a new facility and the money that would be available for research, we could bring in real top-flight physicians,” Jacobson said. “What Bernie created with his original concept was a patient-friendly atmosphere. If (he) could raise the money tomorrow, we would be happy to resume discussions.”

The problem is the big “if,” especially in today’s health care marketplace.

Managed care has permeated the country. There are questions over the future levels of government reimbursements and a shortage of health care capital in general, said Martin Cammer, vice president of finance for Maimonides Medical Center, the Brooklyn hospital where Salick had inked a cancer center deal.

“Centers of excellence are good concepts, but it’s a changing market,” said Cammer. “People are building cancer centers (nationwide), but perhaps not at the same scale.”

Cammer says that Maimonides would sit down again with Salick should he raise the funds.

Managed-care hurdle

For managed care to rise as an obstacle for Salick is perhaps the ultimate irony. His centers broke ground by making money on managed care, accepting fixed monthly payments per patient from insurers. Profits came by taking cancer care out of the hospital, and reducing its relative costs, while the plush surroundings and 24-hour care attracted volume.

Ever the optimist, Salick thinks he sees a light at the end of the tunnel. He notes that the IPO marketplace is loosening up, and it may be Bentley’s time in a year or two.

“Now I’m saying, ‘OK, I’ll start a little smaller than that.’ I don’t have to build 10 or 12 at a time,” he says.

In the meantime, the man who says he has a “defective gene” that keeps him constantly busy occupies himself with his horse breeding, real estate, and like every self-respecting L.A. mogul, a production company.

The horse breeding operation is run out of Sandstone Ranch, the Hidden Hills ranch he bought in 1983 with his wife, Gloria. It recently expanded operations to Fort Lee, N.J., where his daughter, Gabriella, an accomplished equestrian, oversees it.

And just a stone’s throw from the Wilshire Boulevard office building that Salick owns in Beverly Hills, a four-story $60 million office building is under construction at 407 N. Maple Drive in a joint venture he has with David Geffen.

Salick also has invested in Blum Israel Productions, a production company recently formed by former Miramax Film Corp. executives Amy Israel and Jason Blum, who happens to be Salick’s nephew.

It’s a well-known story that Salick started building his original cancer centers after the harrowing experience he suffered when one of his daughters contracted but survived a rare form of bone cancer.

“You can invest in real estate and be very successful. You can get into the movie business and be very successful. You can breed horses and be very successful,” he said. “But if you’re interest is in health care, there is an empty spot.”