The Joslin Diabetes Center in Boston annouced today that it's hired a prominent Massachusetts business leader as its new president and chief executive – marking the first time that someone with no background in diabetes will hold that position.
The move underscores the dire financial straits that Joslin finds itself – its combined operating losses were $14.8 million in 2004 and 2005, on combined operating revenues of $26.8 million – and the red ink has raised concern about the long-term viability of the most famous clinic in the field. The question is whether the new president, Ranch C. Kimball, can successfully apply his business experience to the seemingly intractable economics of diabetes – and if successful, whether that approach could rescue struggling clinics across America.
Kimball, 49, was most recently the secretary of economic development; his job ended when a new governor took office. Kimball has also run a private equity group and has worked at Boston Consulting Group, advising technology, telecommunications, manufacturing, and media companies. According the Boston Globe, he cultivated a high profile while working in state government, visiting companies, frequently testifying before the state legislature, and wooing corporations to move their plants to
It’s an impressive resume, but what’s not there – any expertise, background, or personal experience with diabetes – is striking. (The Joslin press release mentions none.)
By contrast, Kimball replaces Dr. C. Ronald Kahn, a leading diabetes researcher who is staying at Joslin to devote full time to that work.
That Joslin is experiencing financial woes is nothing new. The clinic was founded by Elliott P. Joslin in 1898. His mother was heir to a large fortune, and Joslin’s inheritance supported the clinic, which has probably never experienced an operating profit in its long, prestigious history. In more recent years, many diabetes clinics across the country have either closed or are on life support as part of an academic center; but Joslin, a nonprofit institution that’s affiliated with Harvard Medical School and Beth Israel Deaconess Medical Center, has survived mostly through private donations.
The problem that Kimball faces is that the economics of diabetes are bad and getting worse – and clinics like Joslin, which strives to provide superior care, are suffering the most. The cost to provide outstanding diabetes care is simply greater than what insurers are willing to pay, and improved therapies, while a boon to patients, are usually more expensive.
In Joslin’s case, it has more board-certified physicians with expertise in the disease, and a larger staff of certified educators, than any other center. It employs nurses, dieticians, exercise physiologists, mental health experts, and even child care specialists who play with youngsters while their parents meet the pediatrician. (I was shocked when our child-care specialist called me to see how our son was doing.)
The problem is that third-party reimbursements do not fully cover these services, and Joslin loses money every time a patient walks through the door. Joslin estimates that it is reimbursed 70 cents for every dollar it spends.
Research dollars, meanwhile, are also under pressure because of cuts in the NIH budget. As Kahn once told me, “The two businesses we’re in both lose money.”
To complicate matters further, Joslin has lost some top researchers and clinicians in recent years, who can make more money and have greater impact working in industry. Attracting and retaining staff is now a huge challenge at every diabetes clinic.
For all of these reasons, the long-term prospects of Joslin are anything but certain – and that explains the naming of Richard Kimball. Is he the answer? We have no idea, but let’s hope that early in his tenure, he visits the archives and reads some of the letters sent by grateful patients, including children, whose lives were saved by the Joslin Clinic.
The stakes are high.
James S. Hirsch