When MD Anderson Cancer Center's financial losses started piling up early last fall, the first administrator to sound the alarm was Dr. Stephen Hahn.

Hahn, a self-described Philly kid who'd been recruited by President Dr. Ron DePinho two years earlier to head the division of radiation oncology, laid out a slide presentation to top officials that showed the elite Houston hospital was on track to lose up to $450 million in the new fiscal year without swift and decisive action.

"We better get a handle on this," Hahn said at the time. "If we continue on this path, this is where we'll be. It's not a good place."

Hahn says he came to MD Anderson with no ambitions beyond leading radiation oncology, but he's suddenly the man in the spotlight. He was appointed chief operating officer in February, and on Wednesday, the job became even bigger after DePinho announced his resignation.

DePinho's move was not a surprise - insiders had predicted it in recent weeks, critics had called for it for years - but it still landed like a bombshell on the campus. DePinho will step down, under fire, after less than six years in the job. He was just the fourth president in the institution's 75-year history.

DePinho talked a lot about curing cancer, but he will leave his successor with more basic goals: restore financial stability to a center bludgeoned by monthly budget deficits in the tens of millions of dollars; repair a fractured relationship between administrators and faculty who had grown increasingly wary of the direction he had been leading them; and convince stakeholders there is no lasting damage from years of turmoil.

Back to Gallery After chief resigns, all eyes on COO at MD Anderson 11 1 of 11 Photo: Gary Coronado, Staff 2 of 11 Photo: Brett Coomer, Houston Chronicle 3 of 11 4 of 11 Photo: Johnny Hanson 5 of 11 Photo: Eric Kayne 6 of 11 Photo: Johnny Hanson, Staff 7 of 11 Photo: Marie D. De JesÃ©ºs, Staff 8 of 11 Photo: Marie D. De JesÃ©ºs, Staff 9 of 11 Photo: KAREN WARREN, CHRONICLE 10 of 11 Photo: Curt Teich Postcard Archives, Getty Images 11 of 11 Photo: Michael Ciaglo, Staff





















Despite the tumult, MD Anderson should have no problem attracting a top leader - University of Texas System officials say they hope to launch a national search soon - but it may take a while to heal an institution that DePinho acknowledged in his resignation speech is in need of uniting.

Hahn said Friday he believes the COO position has a role to play in inspiring that unity. He said he has begun reaching out to faculty and staff about their thoughts on MD Anderson's "strengths, challenges and directions."

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The campus shell shock is reflected in an institution-wide email sent Friday by Dr. Thomas Buchholz, MD Anderson's physician-in-chief. It called on employees to "recommit to our mission in the face of uncertainty, speculation and gossip."

"In this moment, let's show the world who we really are," wrote Buchholz. "Let's support one another through this journey. Let's provide the highest quality patient-centered, value-driven care. Let's teach, share and mentor others. Let's stop cancer before it even starts. Let's show our caring, pursue discovery and demonstrate our integrity in every interaction."

Buchholz wrote that "how MD Anderson responds to change speaks volumes about our character and culture."

"People counting on us cannot afford disruptions and delays (and) look to us with a heightened sense of urgency."

Such cheerleading would normally seem unnecessary at what's long been considered the world's best cancer hospital - No. 1 in U.S. News & World Report's survey of best such centers nine of the last 10 years - but to those who have observed the constant strife, it was completely logical.

Under DePinho, MD Anderson was often in the news for all the wrong reasons - faculty unrest, questions of conflict of interest, mounting financial difficulties.

The times stood in contrast to the glamour DePinho initially brought to the job. A renowned geneticist whose Harvard lab turned old mice young and whose high profile included an appearance on "The Colbert Report," he promised big things for MD Anderson. He sold UT System leaders on the notion that he could make the center a profit-making, drug-development pipeline. He envisioned curing cancer.

In truth, the hiring was always a gamble. Critics at the time noted DePinho lacked significant administrative experience and wondered how he would take to spending most of his time with regents, donors, finance officers and faculty instead of in the laboratory. Also, although a medical doctor, DePinho stopped practicing soon after getting his degree, making clinical faculty worry about how sensitive he'd be to their concerns.

Last week, DePinho's dreams finally crashed. In an extraordinarily forthcoming video, he apologized for his shortcomings and said it was "a time for a change in leadership." He said MD Anderson needed someone who could wrestle with "the tectonic changes in health-care delivery and economics."

Rice University health care economist Vivian Ho said whoever takes over will have a tough challenge.

"Insurance companies and employers have said enough is enough to the crazy price-raising by hospitals," Ho said. "They've passed the cost onto beneficiaries and workers in terms of high-deductible and high co-pay health plans and locking out high-cost hospitals like MD Anderson."

Hahn said the cancer center is hard at work responding to such changes - documenting where MD Anderson's more sophisticated treatment produces better outcomes, reducing costs where such benefits can't be confirmed. He says insurers and patients will be willing to pay more for care that has been shown to produce cures, extend survival or improve quality of life.

Hahn is buoyed by progress against the financial issues he warned about and which led to the January layoffs of 778 employees, the biggest workforce reduction in the cancer center's history. New data shows the center's operating revenues exceeded expenses by $92 million in January, the first positive margin since the launch last spring of a complex electronic record-keeping system whose steep learning curve adversely affected productivity.

January numbers benefited from a one-time, $71 million Medicare payment. Still, it marks a significant turnaround from the more than $460 million the cancer center lost over the previous 16 months, which included $58 million in December.

Hahn hopes to have MD Anderson's operating margin in the black at least by the end the fiscal year, Aug. 31, though preferably sooner. The year's deficit is now down to $77 million.

He said he thinks the "Moon Shots" effort to cure certain cancers and the Institute for Applied Cancer Science, a high-spending, drug-development arm of the hospital, are important to the institution and its patients, though they were controversial under DePinho. But Hahn said he is open to reassessing spending priorities.

"If your mission's threatened, it means everything you do has to be looked at," Hahn said. "The question is, how much do we spend and can we do it in a fiscally responsible and transparent way?"

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Hahn, who graduated from Rice University before returning to Philadelphia to attend medical school at Temple, has made strides with faculty, chronically at loggerheads with DePinho. Many told the Chronicle late last week that DePinho's exit was an overdue, needed step.

Dr. Julie Izzo, chair of MD Anderson's faculty senate, said there has been a very positive reaction to Hahn by her group, which usually might "resist another layer of bureaucracy." She said Hahn has won the senate's respect, because he's "a clinician who's been on the front lines" and because "he walks the walk - if he says he's going to do something, he does it."

It is unclear to what heights Hahn might ascend at MD Anderson. He said he was honored to be asked to serve as COO and will continue doing so as long as leaders want him in the role. But he said being the head of radiation oncology is "a dream job, and it would be absolutely terrific to return to that."

Still, his name appears to be gathering momentum for an MD Anderson presidential candidacy, either the interim position, expected to be named in the next two weeks, or the permanent job, for which some national observers mentioned him late last week.

Asked Friday about the chance Hahn could be named the interim president, UT System Executive Vice Chancellor for Health Affairs Dr. Raymond Greenberg said that "the support for Dr. Hahn is very strong among all constituents, and we are convinced that he will continue to play a key leadership role for MD Anderson Cancer Center going forward." He said the system is considering all options for the interim appointment, for which the data-gathering process will continue well into this week.

Hahn acknowledged that DePinho's resignation has created a feeling of uncertainty but said he believes everyone at MD Anderson remains "focused on the mission and the patients and families counting on us." He said DePinho's "resignation message was one of sincerity and grace, and it has helped shape our institutional dialogue about where we go from here."

Art Caplan, a professor of bioethics at New York University's Langone Medical Center who has commented on the alleged conflicts of interest at MD Anderson, said UT System leaders waited about as long as they could before making a change.

He said that it should be healing to have the person "who was the tip of the spear of controversy move on" and that he thinks "any stain should wash away quickly."

"People expect a lot from premier institutions, and when they have leadership issues or other problems, everybody notices - but I kind of think MD Anderson will be there doing well next year, five years from now, 25 years from now," Caplan said.

"It's like if Harvard has some problems," he said. "I think most people's reaction would be like, yeah, well, I think I'd send my kids there anyway."

Mike Hixenbaugh contributed to this report.