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A plan to allow the UCSD Health System to partially exit its $18 million investment in the Nevada Cancer Institute of Las Vegas has unraveled, the Las Vegas Review-Journal is reporting.

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As noted here last month, the R-J broke the story of UCSD's costly acquisition and troubled operation of the cancer center, which the university purchased out of bankruptcy in January of this year.

“We are proud to have Nevada Cancer Institute join UC San Diego Health System,” Tom McAfee, then interim CEO of UC San Diego Health System and dean of clinical affairs, said in a January 23 news release announcing the takeover. “As a world-class health system for cancer and surgical care, UC San Diego is fulfilling its mission of caring for patients locally, nationally, and around the world.”

But shortly after the sale closed according to yesterday's account, UCSD apparently began to have second thoughts and opened negotiations to unload at least part of the operation to Comprehensive Cancer Centers of Nevada.

Says the R-J.: "Discussions with UCSD began in May or June and became much more serious in mid-September. This led to the signing of a pact allowing exclusive negotiations for 90 days that will expire Dec. 17.

"In essence, UCSD would have remained a landlord and brought clinical trials and services like genomic sequencing to patients of its tenants, with Comprehensive Cancer taking 43,000 square feet of the 142,000-square-foot main building."

However, the paper says, Comprehensive Cancer Centers backed out of negotiations when it came to light that the UCSD clinic's real estate was covered by a non-compete covenant inserted about a decade ago by Universal Health Services Inc., proprietor of nearby Summerlin Hospital Medical Center.

The covenant limits tenants to non-profit corporations; Comprehensive Cancer Centers is for-profit, according to the newspaper.

UCSD officials declined to comment on their failure to reach an agreement with Comprehensive Cancer Centers, the R-J story says, adding, "But with Universal Health refusing to budge on the nonprofit restriction, it could be difficult to find anyone who could move into the institute's building."

Legal clashes associated with UCSD's apparently ugly exit attempts from its Nevada investment may run into the millions, one source close to the university asserts.

By coincidence, it was recently revealed that Margarita Baggett, the new acting chief operating officer of UCSD’s Health System, is being paid over $400,000, a controversial salary point that has plagued SDSU president Elliott Hirshman.

"The institute started a decade ago as a high-profile effort to bring [a] higher quality of cancer treatment to Las Vegas," says the R-J story.

"But the institute tumbled into bankruptcy last year after amassing nearly $100 million in debt without the revenue to repay it. UCSD emerged as the only bidder for the building and the medical practice.”

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