Memorial Sloan Kettering’s Stake in Startup Raises Concerns

More Entanglements?

Memorial Sloan Kettering Cancer Center – one of the nation’s most prestigious institutions – is in the news again. In a New York Times article by Charles Ornstein and Katie Thomas that was reported and written in a collaboration with ProPublica, the nonprofit investigative journalism organization, it is explained that a startup in which the hospital has a financial stake is raising red flags among the institution’s pathologists. The dissension comes on the heels of another ethical question.

Paige.AI, an artificial intelligence startup that was created by three insiders at Memorial Sloan Kettering Cancer Center made its debut in February. Receiving $25 million in venture capital, the startup had “the promise that it might one day transform how cancer is diagnosed,” according to the article. Paige.AI is one of many in a growing field of new companies that are using artificial intelligence to solve problems in health care. This company has an advantage over others, because it has an exclusive arrangement to utilize Memorial Sloan Kettering’s huge archive of 25 million patient tissue slides, as well as a long history of work by the cancer center’s esteemed pathologists.

The cancer center has an equity stake in Paige.AI. A member of Memorial Sloan Kettering’s executive board, the chairman of the pathology department and the chief of one of its research laboratories also hold equity stakes in Paige.AI, and three of the cancer center’s board members are investors.

As reported in the article, “The arrangement has sparked considerable turmoil among doctors and scientists at Memorial Sloan Kettering, which has intensified in the wake of an investigation by ProPublica and The New York Times into the failures of its chief medical officer, Dr. José Baselga, to disclose some of his financial ties to the health and drug industries in dozens of research articles.” Dr. Baselga resigned recently. The cancer center’s chief executive, Dr. Craig B. Thompson, created a new task force to review Memorial Sloan Kettering’s conflict-of-interest policies.

“At a staff meeting Thursday morning, Dr. Thompson and others, including Dr. Lisa DeAngelis, the acting physician-in-chief who replaced Dr. Baselga, described the recent events as a disruption and acknowledged that the hospital was under a microscope, according to several people who attended,” according to the Times article. Doctors appeared to be unhappy about “a lack of communication from hospital leadership,” and one doctor stated that “patients were nervous that their health data was being commercialized by the institution.”

Pathologists at the cancer center have had strongly objections to the Paige.AI deal, because they think it is “unfair that the founders received equity stakes in a company that relies on the pathologists’ expertise and work amassed over 60 years.” They were also leery if using patient data, although it is anonymous, without their knowledge in a for-profit-driven company.

Another concern is that some experts in nonprofit law and corporate governance wonder if Memorial Sloan Kettering is in compliance with federal and state law governing nonprofits when it established the Paige.AI deal. These experts have said that charitable institutions such as Memorial Sloan Kettering need to demonstrate that they did not “provide assets to insiders for less than the fair market value.”