Clash With Specialist Worsens CHOC’s Woes

ORANGE â€”  Not long ago, Dr. Mitchell S. Cairo gained prominence as one of the best things that ever happened to kids with cancer.

The specialist at Children’s Hospital of Orange County treated baseball Hall of Famer Rod Carew’s dying daughter. Last year, he appeared on the “Today� show and gained national repute for himself and the hospital for attempting to save her with an experimental transplant of umbilical cord blood.

Months later, thanks to Cairo, CHOC won its first multimillion-dollar federal research contract, landing in the big leagues of competition for national research dollars.

But now the county’s only hospital for children is locked in a battle with its most famous doctor that has raised questions about research practices and the financial future of the hospital.

* In January, the hospital abruptly stripped Cairo of several key posts and succeeded in pressuring him to step down as chairman of a medical group he led for more than a dozen years. The group is responsible for much of the hospital’s revenue. Former medical partners have sued the group and Cairo, alleging financial improprieties.

* The hospital continues a lengthy medical peer review of Cairo that led to a temporary suspension of his hospital privileges earlier this year, a step that one CHOC administrator described as rare. Hospital officials said he has since regained his privileges.

While the reason for these actions remains a mystery, at least one issue raised in the hospital review was a parent’s concern about Cairo’s treatment style, according to a letter from a hospital administrator.

Cairo blames what he calls a few detractors who chafed during his years of leadership. He says the campaign against him was touched off by business difficulties between the medical group and the hospital’s former chief executive officer, Thomas Penn Jones, who resigned abruptly in late January. Attempts to reach Jones for comment were unsuccessful.

“The previous administrator did not give me a fair opportunity [to defend myself], and any of these allegations and the inquiries associated with them were not conducted in a fair-minded way,� said Cairo, 46.

“The present administration has been very reasonable and I think will bring most of these issues to a close in a very short period of time and I will be vindicated.�

A recent federal audit criticized the hospital--and Cairo as its principal investigator--for putting patients on government-supported research studies and taking them off inappropriately, according to a summary of the audit obtained by The Times. As a result, Cairo was suspended from his top research role for the group that runs the studies, although he has retained other titles with the research group.

Cairo says that he considers the audit findings minor, and is appealing the resulting suspension.

The hospital’s falling-out with its star researcher is worsening what are already the toughest times in CHOC’s history:

* The hospital estimates it will post a loss of about $13 million for the fiscal year ending June 30--the worst in its 33-year history and nearly double last year’s losses.

* Department heads have just been ordered to slash their budgets by 15%. And the boards of trustees of CHOC and neighboring St. Joseph Hospital plan to meet this week to consider “a close affiliation� that would fall just short of a merger, an insider said.

* The hospital has temporarily closed its oncology intensive care unit for lack of patients. And more hospital beds are empty: Overall, patient admissions have dropped by 25% over the past five years.

* In its struggle with Cairo, CHOC has alienated some donors, polarized its staff and lost business.

A Troubled Transition

Like children’s hospitals throughout the nation, CHOC is straining to uphold the costly mission of caring for youngsters with rare, life-threatening illnesses, whether or not they can pay.

But it has lost business, in part, industry observers say, because it was slow to adjust to massive changes in health care, such as the transfer of local children on Medi-Cal into managed care.

“I’ve been on the CHOC board for close to 25 years and this is without question the most difficult time we’ve had,� said L. Kenneth Heuler, chairman of the hospital’s board of trustees.

Of the hospital’s initial reluctance to meet the demands of managed care, Heuler said, “I’m absolutely sure that if we had it to do over, there are things we would have done differently.�

The search for a new chief executive has stalled while the hospital seeks new direction, Heuler said.

Morale is low, and parents who have entrusted their children’s lives to the hospital are wondering what it all means.

More than a dozen parents of his patients formed a group in February to support Cairo and demand answers about his demotions.

“The bigger question is, what’s happening to children’s care in Orange County?� said Raymond Kerr, a Cairo supporter whose son received a bone marrow transplant last year. “Is CHOC just going to be a fix-’em-up, get your tonsils out facility?�

Cairo was a leading figure in the effort to make CHOC much more than that.

He was the first doctor in Orange County to perform transplants of “stem� cells--culled from bone marrow, cord blood and the like to restore a child’s immune system. The hospital remains the only place in the county where such transplants are available.

But as of January, Cairo no longer heads the transplant program, and over the past year, the number of such transplants has plummeted.

The lost business is most apparent in the oncology intensive care unit, a dozen hyper-sterile rooms for children with cancer who must undergo such severe therapy that their immune systems are ruined.

A small sign is taped to the ward’s door. “Unit closed,� it reads.

Cairo Led Rapid Rise

Before CHOC opened 33 years ago, local children requiring specialty pediatric care were sent miles away to Childrens Hospital of Los Angeles.

In the late 1950s, local doctors teamed with ladies’ auxiliaries and wealthy entrepreneurs, the likes of Walt Disney and Walter Knott, to create a place for children the county could call its own.

Fund-raising for the hospital became a darling cause of local socialites, businesspeople and celebrities that continues today. Its cartoon logo of “CHOCO�, the teddy bear with the slight smile and bandaged paw, was designed by a Disney artist.

As its reputation for clinical prowess grew, hospital leaders also aspired to join the ranks of top research centers in pediatric medicine.

The hospital hired Cairo in 1981, fresh from a fellowship in pediatric hematology/oncology at Indiana University, to make its name in cancer research.

And for awhile, everything went as planned.

Cairo, known by both admirers and detractors as driven, intelligent and demanding, recruited battalions of specialists, PhDs, fellows, transplant nurses and the like. He and his staff published prolifically in scientific journals. In the process, he boosted the hospital’s visibility in research circles, eventually landing it membership in Children’s Cancer Group, an elite federally-funded national cooperative of leading researchers. He became the principal investigator for the cancer group’s program at CHOC.

Under his direction, the hospital racked up numerous firsts in Orange County: a bone marrow transplant in 1986; a bone marrow transplant from an unrelated donor in 1993; an umbilical cord blood transplant in 1995.

Cairo launched the hospital’s fellowship program and expanded the Pediatric Subspecialty Faculty, a private physicians’ partnership of which he became chairman.

By 1995, he was the head of cancer research and directed the hospital’s bone marrow transplant program.

That summer, Cairo learned of federal plans to spend millions of dollars to establish a group of facilities to bank and transplant umbilical cord blood.

Within a month, he pulled together a proposal to make CHOC one of those facilities. A colleague called it “a masterpiece of organizational skill.� In partnership with St. Joseph Hospital, CHOC competed against more than 50 institutions across the country, and last fall, won.

Throughout the late 1980s and early 1990s, Children’s Hospital swelled in size and importance. Flush with support, it spent $64 million to build a dazzling six-story hospital on the site of the original. It put up clinics for the poor in Santa Ana and Anaheim, and added a branch at Mission Hospital in Mission Viejo.

On the third-floor cancer ward, Cairo often charmed young patients, getting down on all fours to play, and dressing up for Halloween, often as a clown. The personal touch is important in his sensitive work, he said.

“I’ve been to many weddings, I’ve been to sweet 16s and bar mitzvahs and baseball games and symphony and camps,� Cairo said. “I try to be there for the kids and the family, because when the crisis really hits they really do look to their primary physician for help, not just medical help but any other help, because you’re kind of their last resource.�

CHOC also became a home away from home for patients’ families, what one mother described as “part prison, part dormitory and part hotel.�

Dan and Bonnie Rosen’s son, Bobby, who died last fall after a third stem-cell transplant, entered adolescence while being treated by Cairo for a rare form of anemia. The Rosens reminisce about how, even when infections forced Bobby to be hospitalized, the teenager brightened at the chance to be attended by the female nurses on the oncology floor.

“It was like going to a sleepover,� Bonnie Rosen said.

Added Shirley Quackenbush, mother of a 3-year-old cancer patient. “It is the most pleasant, horrible experience you’ll ever have.�

Clashes Alleged

Even his admirers say Cairo can be difficult--a taskmaster, at times harsh and intimidating, who insisted he knew best. Some colleagues bridled under his raw energy and ambition.

And seven doctors who have left CHOC during the past three years, told The Times that Cairo was part of the reason, although only two would say so publicly.

“I left because of a very challenging opportunity,� said Dr. Joseph Rosenthal, who since December has headed the pediatric bone marrow transplant program at City of Hope Hospital in Duarte.

“But the atmosphere of tyranny [at CHOC] certainly helped me make this decision. It was an atmosphere where there was no room for a different opinion other than the opinion of Cairo.�

Dr. Felicity Hodder left to head a pediatric cancer program for Cottage Hospital in Santa Barbara. “I made a conscious choice because I knew I wouldn’t feel happy working under that leadership,� she said of Cairo.

An eighth doctor, oncology fellow Dr. Robert Sweetman, said he plans to leave CHOC this summer because of Cairo and related reasons.

Cairo said doctors left for more rewarding jobs, not because of him.

Since 1995, three physicians, including Hodder, have filed suits in Orange County Superior Court against the hospital, Cairo and the rest of the medical partnership, alleging they were denied access to the partnership’s books under Cairo’s leadership.

Cairo denies all the allegations. But they have nevertheless taken a toll on the medical group, which has spent about $400,000 on legal bills, Cairo said.

Even his friends told him to use a more restrained tone.

“I think people were concerned that there was turnover and were concerned that [Cairo’s] style of leadership was responsible for that,� said Dr. Nick Anas, who replaced Cairo as chairman of the partnership earlier this year. “We were pretty open with him about that. ‘You’re infuriating people with your leadership style.’ �

Anas declined to comment on the lawsuits.

Cairo acknowledged his expectations are high, but said he is not difficult to work with.

“Somebody like myself might be seen a little bit differently than the majority of people who maybe aren’t trying to get to a national or international level,� he said.

As head of the Pediatric Subspecialty Faculty, the elite doctors’ partnership that brings CHOC much of its business, Cairo had influence with the hospital administration. Patients seek out the top specialists; when the patients are hospitalized, CHOC gets the business.

By mid-1995, differences between the hospital and the medical group worsened, Cairo said, in part when then-chief executive Jones attempted to restrict the group’s efforts to add more specialists.

That summer, the hospital reported its first serious losses--a staggering half a million dollars a month. Admissions were down, as were the number of days patients spent in the hospital. But emergency room and clinic visits, with larger numbers of uninsured patients, shot up. The result--CHOC was doing more business with patients who could not pay. The recession and 1994 county bankruptcy also took a toll.

At the same time, officials announced the first staff cuts in hospital history, laying off 200 managers, nurses, and maintenance and security workers--15% of the hospital’s work force.

“Morale got really bad,� said one oncology nurse. “Everyone started saying, ‘What is Tom Jones doing?’ �

The biggest blow came with the creation of Cal-OPTIMA--a program that shifted the county’s Medi-Cal patients into managed care.

With the shift, smaller hospitals that previously had no interest in treating Medi-Cal children have siphoned off some of the healthier patients, leaving Children’s Hospital with a smaller and sicker population, Heuler said.

“As a result of Cal-OPTIMA, we’ve lost numbers,� Heuler said. “And that’s where we get whacked.�

Symptoms Worsened

Last year, the hospital’s own crisis and disenchantment with Cairo intensified.

A committee looking to cut costs scrutinized Cairo’s transplant program--until now his personal bailiwick--which relies on high-priced drugs and technologies.

In May, the hospital passed over Cairo when selecting a new director for the hematology and oncology department, which treats children with blood diseases and cancer. Cairo had been widely assumed to be heir apparent to the title, both critics and supporters say.

Then last summer, the hospital demanded that the medical group boot Cairo as its chairman or jeopardize renewal of its contract with the hospital, Cairo and Anas said. The group came to a “mutual decision� with administrators in January that Cairo would not run for a new term.

Cairo claims this effort touched off a string of allegations and actions against him by “a small group of people trying to discredit me professionally.�

Then, in January, three letters from the hospital’s administrator arrived via Federal Express at Cairo’s Santa Ana home, Cairo said.

The first announced that colleagues had made allegations that Cairo had falsified and fabricated data on research studies by the Children’s Cancer Group, a national research collaborative.

The next letter removed Cairo as director of the Bone Marrow Transplantation program, and the last stripped him of the directorship of the Hematology/Oncology Fellowship Program.

There were no explanations, Cairo said. “I received nothing. I have nothing.�

Weeks afterward, Jones resigned as chief executive officer. Heuler declined to comment on the reasons, saying the board had signed a confidential severance agreement with Jones.

The Children’s Cancer Group then conducted an audit, finding no evidence of falsification of data, according to officials with the group. Cairo’s critics, however, took their complaints higher, setting in motion the multi-agency federal probe.

Earlier this year, federal investigators conducted a massive audit of the hospital’s involvement in research studies overseen by the Children’s Cancer Group. The resulting report, a summary of which was obtained by The Times, criticized the hospital--and Cairo as its principal investigator--for enrolling patients in research studies who were not eligible.

It said the hospital took patients off studies without following proper procedures and moved them into the transplant program. It also encouraged the hospital to review the way families were persuaded to participate.

“Of greater concern,� the audit summary continued, “was evidence, in a number of records reviewed, that although patients were enrolled in CCG studies, the intent appeared to be to keep the patients on-study for a limited period of time and then proceed to transplant.�

“There was no evidence that . . . other experts in the field were consulted to assist with these decisions.�

According to a source, nine patients were taken off experimental therapies, and most were assigned a transplant without another expert being first consulted. Two other patients were enrolled in studies when they weren’t eligible.

Cairo confirmed those figures, but said he was not the group’s principal investigator when the two patients were enrolled. He said the infractions in all 11 cases were minor.

The audit found no fabrication or falsification of data, the allegations that sparked the probe, the report said.

Cairo characterized the findings as “not serious because they do not fall under anything that would be considered misconduct in research.� The issue of patients being removed early from studies is “a dilemma for every treating physician and clinical investigator,� he said.

As a result of the investigation, Cairo on April 13 was suspended for six months as the hospital’s chief investigator for the group.

“[Dr. Cairo] has been chastised by his peers for not following the same rules of the ballgame that they have all agreed to follow,� said Dr. Rick Mowery, who heads the National Cancer Institute branch that monitors clinical trials and participated in the audit.

Suspensions of principal investigators are uncommon, said Kara Smigel, an NCI spokeswoman.

Cairo said he plans to appeal the suspension.

Separately, Cairo remains the subject of an ongoing internal review at CHOC, though neither he nor hospital officials will comment on its focus, citing laws that mandate the confidentiality of peer review. Meanwhile, he retains staff privileges and several other titles at the hospital.

Heuler confirmed that the review by the hospital’s medical executive committee continues, and that it led to a brief suspension of Cairo’s hospital privileges earlier this year.

Dr. Christy Sandborg, chairman of the hospital’s risk management committee, declined to comment on Cairo’s situation but said it is extremely rare for the peer review process to result in a suspension.

Changes Pronounced

Hospital officials are distancing themselves from Cairo.

“I think Dr. Cairo is an important component to our overall program and he has certainly done a tremendous job in helping us from a public relations and fund-raising standpoint,� said Kim Cripe, the hospital’s acting chief executive officer.

“But I think there are a number of other highly qualified physicians who are equally committed to the program and our future research efforts.�

Cairo still heads several committees for the Children’s Cancer Group and remains the principal investigator for the hospital’s multimillion-dollar cord blood contract. He said he is considering fighting to regain some of his other titles.

And he has many supporters, including key fund-raisers who are watching the CHOC situation closely.

Michael Maxsenti, a member on the board of the Padrinos, a group of businesspeople who have raised $1.9 million for the hospital in the five years ended last June, said key donors threatened to pull their support because of the way Cairo has been treated.

“If Cairo went, so went the support of a lot of people,� he said, “Immediately. And that is something that under the circumstances of the hospital, would be extremely detrimental to many children.�

Inside this hospital, the changes are pronounced.

While hospital officials say the temporary closure of the oncology intensive care unit is part of a normal ebb of patients, Cairo said the unit has never been closed in his 16 years there.

The hospital has done more than 220 transplants since 1986, with the yearly number peaking at 34 in 1994. Over the past eight months, the hospital has done four, both Cairo and hospital administrators said.

Dr. Diane Nugent, who replaced Cairo as the transplant director, attributed the drop in part to a policy to no longer do high risk transplants from unrelated donors in cases where the blood characteristics do not fully match.

She said the hospital in the last two months has been reassessing the program, looking at costs and risks to patients to determine what kind of transplants make most sense in the current climate.

Nugent noted that three patients are scheduled for transplant and the hospital plans to reopen the oncology intensive care unit by the end of the month.

Cairo, however, attributes the drop in part to the change in leadership. He said he has always encouraged patients to seek second opinions at other leading transplant centers, but now more are doing so and not coming back.

“Less patients are coming to my door,� he said. “Of the ones that come, more are opting to get the procedure done somewhere else.�

One doctor at a regional transplant program said doctors inside CHOC have referred three patients to his program.

The hospital’s new leaders are scrambling to calm critics.

As for Cairo, he now finds himself with less to do.

He is playing ball with his young sons. He is watching movies with friends. With his wife’s support, he is reflecting on how to “chart new paths.�

“Things change over time. You pursue new things,� Cairo said.

“You think about your patients and how many you’ve cured over time, and try your best to understand some of the political and business aspects of things that are going on that have affected you but don’t necessarily mean that everything and anything people are saying about you is necessarily true.�

Times Orange County Edition library supervisor Sheila A. Kern contributed to this report.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Code Red

Declining revenues, beginning in 1994, have left Children’s Hospital of Orange County running increasingly in the red. Revenues and expenses in millions for fiscal years ending June 30:

Revenues

1992: $125.2

1993: $133.8

1994: $132.6

1995: $121.6

1996: $116.1

1997*: $107.8

****

Expenses

1992: $114.9

1993: $124.4

1994: $125.1

1995: $125.5

1996: $122.9

1997*: $120.8

****

Net Gain/Loss

1992: $10.3

1993: $9.3

1994: $7.5

1995: -$3.9

1996: -$6.8

1997*: -$13.1

* Estimated

Source: CHOC

Researched by BARBARA MARSH / Los Angeles Times

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Bedside Matters

Indicators of CHOC economic vitality such as patient days and admissions have diminished while the number of clinic visits--which normally involve care for poor and uninsured patients and often cost the hospital money--is on the upswing. The hospital’s work force is also declining:

Patient Days

1992-93: 47,729

1993-94: 44,387

1994-95: 38,728

1995-96: 32,438

1996-97: 31,000

****

Admissions

1992-93: 8,096

1993-94: 8,382

1994-95: 7,460

1995-96: 6,065

1996-97: 6,000

****

Clinic Visits

1992-93: 83,421

1993-94: 85,130

1994-95: 78,800

1995-96: 90,462

1996-97: 100,000-105,000

****

Employees

1992-93: 1,513*

1993-94: 1,547*

1994-95: 1,495

1995-96: 1,223

1996-97: 1,153

Note: 1996-97 figures are estimates

* Includes Children’s Hospital at Mission, a CHOC affiliate

Source: CHOC

Researched by BARBARA MARSH / Los Angeles Times