The Maryland Proton Treatment Center chose "Survivor" as the theme for its grand opening in 2016, invoking the reality-TV show's tropical sets with its own Tiki torches, palm trees and thatched booths piled with pineapples and bananas.
It was the perfect motif for a facility dedicated to fighting cancer. Jeff Probst, host of CBS' "Survivor," greeted guests via video from a Fiji beach.
But behind the scenes, the $200 million center's own survival was less than certain. Insurers were hesitating to cover radiation treatment at the Baltimore facility, affiliated with the University of Maryland Medical Center. The private investors who developed the machine used for treatment had overestimated the revenue it would generate. Bankers would be owed repayment of a $170 million loan soon.
Only two years after it opened, the center is restructuring, converting to a nonprofit from for-profit operation and using tax-exempt municipal bonds to refinance its bank loan at a lower interest rate over a longer term. Its original investors face huge losses.
It has never made money, although it has ample cash to finance operations, said Jason Pappas, its acting CEO since November.
Last year it lost more than $1 million, he said, because of volume projections that were "north" of the current rate of about 85 patients per day. How far north? "Upper Canada," he said.
The challenges facing the center, which is expected to break even by the end of the year after reducing its debt payments, reflect wider industry troubles. For years, health systems rushed enthusiastically into expensive medical technologies such as proton beam centers, robotic surgery devices and laser scalpels — potential cash cows in the one economic sector that was reliably growing.
There are now 27 proton beam units in the United States, up from about half a dozen a decade ago, including a newly opened one at MedStar Georgetown University Hospital in Washington. More than 20 more are either under construction or in development, including projects by Inova Health System in Northern Virginia and Sibley Memorial Hospital in Washington.
But now that employers, insurers and state and federal governments seem determined to curb growth in health care spending and to combat overcharges and wasteful procedures, the return on such investments is less of a sure thing.
The problem is that the rollicking business of new medical machines often ignored or outpaced the science: Little research has shown that proton beam therapy reduces side effects or improves survival for common cancers compared with much cheaper, traditional treatment.
"The biggest problem these guys have is extra capacity. They don't have enough patients to fill the rooms" at many proton centers, said Dr. Peter Johnstone, who was CEO of a proton facility at Indiana University before it closed in 2014 and has published research on the industry.
At the Indiana operation, he said, "we began to see that simply having a proton center didn't mean people would come."
Sometimes occupying as much space as a Walmart store and costing enough money to build a dozen elementary schools, the facilities zap cancer with beams of subatomic proton particles instead of conventional radiation. The treatment, which can cost $48,000 or more, affects surrounding tissue less than traditional radiation does because its beams stop at a tumor rather than passing through.
Except in cases of childhood cancer or tumors near sensitive organs such as eyes, commercial insurers have largely balked at paying for proton therapy.
"Something that gets you the same clinical outcomes at a higher price is called inefficient," said Dr. Ezekiel Emanuel, a health policy professor at the University of Pennsylvania and a longtime critic of the proton-center boom. "If investors have tried to make money off the inefficiency, I don't think we should be upset that they're losing money on it."
Investors backing a surge of new facilities starting in 2009 counted on insurers approving proton therapy not just for children, but also for common adult tumors, especially prostate cancer. In many cases, nonprofit health systems like the University of Maryland Medical Center partnered with for-profit investors seeking high returns. But the patients and the dollars haven't flowed in as expected.
Indiana University's center was the first to close. Before long, others were in dire financial straits.
California Protons in San Diego, developed by the same group that invested in the Baltimore facility, Advanced Particle Therapy, filed for bankruptcy protection last year. An abandoned proton project in Dallas involving the same group is in bankruptcy as well.
In Virginia, the Hampton University Proton Therapy Institute has lost money for at least five straight years, financial statements show. In Knoxville, Tenn., the Provision CARES Proton Therapy Center lost $1.7 million last year on revenue of $23 million, $5 million short of its revenue target.
Centers in Somerset, N.J., and Oklahoma City run by privately held ProCure have defaulted on their debts, according to the investment firm Loop Capital. A facility associated with the Seattle Cancer Care Alliance, a hospital consortium, lost $19 million in fiscal 2015 before restructuring its debt, documents show. A center near Chicago lost tens of millions of dollars before restructuring its finances as part of a 2013 sale to hospitals now affiliated with Northwestern Medicine, according to regulatory documents.
Representatives from ProCure and the facilities in San Diego and Hampton did not respond to repeated requests for interviews.
Scott Warwick, executive director of the National Association for Proton Therapy, a trade group, blames "over-exuberant expectations" for the problems.
"I think maybe that's what went on with some of the centers," he said. "They thought the technology would grow faster than it has."
In the absence of evidence showing protons produce better outcomes for prostate, lung or breast cancer, "commercial insurers are just not reimbursing" for these more common tumors, said Brandon Henry, a medical device analyst for RBC Capital Markets.
About 60 percent of all cancer patients have radiation, and though dozens of studies are still in the works to understand who may benefit most from protons, the promise of the more precise technology has lead to a boom in construction of the costly facilities and interest from patients who hope to for better outcomes and fewer side effects
The most expensive type of traditional, cancer-fighting radiation — intensity modulated radiation therapy — costs around $20,000 per treatment, less than half what a proton treatment costs, while others cost far less.
"While proton therapy alone may be more costly than some other treatments, however, this is not the entire story," said Dr. Charles B. Simone, the Maryland center's medical director, in a statement.
Simone said recent studies have found standard radiation therapy more costly than proton treatments over a cancer survivor's lifetime due to the cost of treating complications.
Even so, insurers remain reluctant to pay for it. The government's Medicare program for seniors covers proton treatment more often than private insurers but is insufficient by itself to recoup the massive investment, analysts said.
Until the insurance outlook changes, those developing new proton centers have scaled back their ambitions. Georgetown's unit, for example, cost $40 million and has a single treatment room. The one in Baltimore cost $200 million and has five.
Following the Georgetown model, with one or two treatment rooms, should allow centers in major metropolitan areas to make money, said Prakash Ramani, a senior vice president at the investment firm Loop Capital, which is involved with projects in Alabama, Florida and elsewhere.
As they work to complete restructuring, officials at the Maryland Proton Treatment Center are optimistic despite growing competition in Washington and Virginia.
Only about a fifth of the center's treatments are for prostate cancer, said Dr. William Regine, the facility's executive director and chair of the University of Maryland School of Medicine's department of radiation oncology.
The original financing was "unsustainable," Pappas said. But "once we hit 90 and 100 patients [per day], we are going to be a break-even, making-money center."