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TN Legislature Derails University Proton Deal

April 22, 2013
Written by: , Filed in: Abdominal Imaging, Neuroradiology, Pediatric Radiology
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The University of Tennessee would, according to businessman Terry Douglass, PhD, be getting free money.

Tennessee legislators worried that there might be a catch.

And so the University of Tennessee will not be affiliating with Provision Center for Proton Therapy, which is under construction as part of a health care center in Knoxville. The Knoxville News Sentinel reported yesterday that the university has abandoned its push for legislation that would authorize the venture.

According to documents the newspaper obtained through a public records request, the university had expected to receive $80 million to $180 million or more in 2023, plus total income of more than $62 million from 2014 until then. That would have funded a medical physics degree, a new engineering building, and other academic and research programs. The university considered it a step toward becoming a top 25 research institution, according to the documents.

But state Senator Randy McNally, a Republican from Oak Ridge, worried about financial risk to the university and about using public money to benefit a private enterprise. McNally told the newspaper:

I can’t say that I’m right on this, but I felt it was a risk to the state that it didn’t need to be taking. I couldn’t tell you with everything the return would justify the risk.

Proton therapy centers are all the rage. They promise radiation therapy that’s more focused than conventional X-ray therapy, reducing damage to healthy tissue. We’ve reported on them most recently in December.

They’re also very expensive. The deal with Provision would have had the university guarantee up to $98 million of the project’s cost in exchange for 30 percent interest in the company. The guarantee would have allowed Provision to refinance at lower interest rates and free $85 million in Provision assets tied up as loan security.

Dr. Douglass, who is developing the center, co-founded and led CTI Molecular Imaging, acquired by Siemens in a billion-dollar transaction in 2005. He tried to reassure university officials that it would generate enough cash to pay the $6 million in annual principal and interest payments. “There is essentially no circumstance in which the UT guarantee will ever be at risk or in which UT will ever have to provide cash to PCPT,” he wrote in an e-mail.

Despite that, university President Joe DiPietro, DVM, didn’t wholeheartedly back the project. “Douglass is very successful,” he said. “Many people were telling us to bet on him and that it wouldn’t be that much risk. But I have to think about the whole place and take to heart all our needs.”

The comparative benefits of proton therapy remain unproven, which also apparently made some legislators nervous. And McNally’s employment with a health-care company whose parent company has been in a dispute with Provision over Provision’s conventional radiation therapy center may or may not have played a part.

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A new Minnesota law blocks construction of cancer radiation treatment facilities in the Minneapolis-St. Paul area. Find out why on our Facebook page.

Related seminar: UCSF Practical Body Imaging


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