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Site Solutions survey: Lack of operating capital, cash flow plague investigative sites

Monday, November 15, 2010

Sixty percent of investigative sites have less than three months of operating cash on hand in the bank, according to the 2010 Site Solutions Summit survey.

But that dramatic statistic is no surprise to Summit organizer and RxTrials President Christine Pierre, who found the survey results from 220 unique sites troubling for the industry as a whole.

“I am now more highly concerned about the stability and sustainability of sites being able to continue, given the current standard business practices of our industry,” she said.

Pierre cited these findings reported by sites over the last 12 months: a decrease in the average number of new studies implemented from 22 in 2008 to 16 in 2009; average compensation for study start-up activity down from $3,742 in 2008 to $3,554 last year; sites needing to write off bad debt of $3,000 to $151,000 from sponsors and CROs in 2009; and over 50% of payment terms still being made quarterly.

“I do not believe the current financial situation of sites is because of the sites’ poor financial management, but rather it is the result of how they are paid and the high costs of running a quality site,” Pierre said. “With sites having almost 50% of studies paying quarterly coupled with six to 10% being withheld until study closeout, it is no surprise sites have no operating capital.”

This year’s survey respondents were 54% stand-alone sites, 38% private practices doing research, 4% hospitals and 4% academic centers. Only 32% were part of a site network. Survey results were released at the Site Solutions Summit in Clearwater Beach, Fla., last month.

“The results are meaningful in a variety of ways to the entire research community,” said Pierre, noting that 80% of the sites responding have been in business for five or more years. “These sites are not the ones that enter and leave in short order – they are the backbone of our industry.”

The survey provided current and otherwise unavailable benchmarking data pertaining to clinical research sites. “After four consecutive years of surveying sites we are beginning to see trends in a variety of areas—operational challenges, return on investment of research staff, recruitment activity and related costs, just to name a few,” she said. “Each year we add new dimensions to the survey by asking additional questions.” This year, said Pierre, the survey centered on quality and compliance at sites, audit trends and results, site debt and concerns over the future of research sites.

Of the sites surveyed, 38% said they are carrying debt of up to $380,000, with 21% saying their debt load had worsened from the year before. On average, sites reported annual income of $1.6 million.

“Everyone agrees sites are vital to the success of this industry, and therefore it is time for everyone to ensure that fair and standard best business practices are being upheld,” Pierre said. “Sites need the cash they have earned.  If they do not receive it, we will continue to see sites closing at a steady and continuous pace, leaving industry with inexperienced sites—not a prognosis for long-term success.”

Sites used a variety of ways to save money in 2009, including decreasing staff, not replacing staff, eliminating overtime, decreasing employee hours, repairing items instead of replacing them, cutting out FedEx services and ordering office supplies only as needed. 

But sites also worked to grow their businesses, attending meetings to increase study opportunities, bringing on partners for strategic site growth, hiring part-time business development professionals and broadening the scope of services offered.

The majority of sites rewarded their research staffs: 68% reported giving bonuses to staff, 41% of those for meeting enrollment targets and 34% for meeting the site’s annual gross revenue goals. Referring to that 41%, Pierre told the more than 350 Summit attendees, “I’m thinking this is not a best practice—it’s a slippery slope. You have to have a potpourri of metrics to base any bonus on, if that is a path you choose to take, with quality at the very top.”

Sites also reported an increase in FDA audits, from 28% in 2007 to 34% in 2008 and 35% last year. And while in 2008 only 29% of those sites audited received a 483 letter, last year that jumped to 50%. “We as sites need to wake up and realize there’s a new game in town,” Pierre told Summit attendees. “You cannot infuse quality once a study is done; it has to come while the study is going on. Given the pilot program the FDA is embarking on, in which sites are being audited while studies are ongoing, you need to be audit-ready all the time.”

The annual Site Solutions Summit, now entering its sixth year, brings together executives and professionals from clinical research sites around the world, executives from sponsors and CROs and other industry representatives at an annual conference to tackle business challenges and identify best practices with which to meet them.

“We are grateful to all the sponsors and CROs who attend the Site Solutions Summit to discuss these real issues that ultimately impact everyone, and, more importantly, to work with sites in finding viable solutions,” Pierre said. “It is through this type of partnering that real change can be realized for our industry, which ultimately will lead to the advancement of medicine and treatments for our patients—the goal for which we all work so tirelessly.”

—Cheryl Appel Rosenfeld

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