X-Message-Number: 1301
Date: 13 Oct 1992 13:12:40 -0700 (MST)
From:
Subject: unbundling, splitting, structure of Alcor
Notes on the Structure of Alcor in a Time of Change in the Cryonics
Industry
by Mark A. Voelker, Director, Alcor Life Extension Foundation
September 29, 1992
INTRODUCTION
Cryonics as a whole, and Alcor in particular, is growing very
rapidly. The concepts underlying cryonics are gaining exposure in
the media and the technology behind cryonic suspension is poised to
make new advances after a period of dormancy. In response to these
changes, Alcor is making the painful transition from a small
"amateur" organization made up of a dedicated band of volunteers to
a professionally run business enterprise. It is the purpose of this
paper to initiate discussion of Alcor's future structure and offer
a model of that structure as a starting point.
ALCOR'S PRESENT STRUCTURE
The Alcor Life Extension Foundation is a California non-profit
corporation, whose mission is to save the lives of its members (if
possible) by developing and offering a working technology of
suspended animation, thus carrying terminally ill members forward
in time to the advanced medical technology of the future. To that
end, we conduct an experimental program of cryonic suspension
research and development. Our corporation's member base is
presently about 320 suspension members and 450 associate members,
and has been growing at a rate of about 36% per year for the last
decade. Alcor is a "vertically integrated" company, providing its
members with a complete program of cryonic suspension services,
from assistance with initial sign-up through actual suspension to
long term care of suspendees (patients). Alcor funds research aimed
at improving cryonic suspension technology and intends to support
development of reanimation technology as its finances permit and as
the state of supporting technology advances. We have in the past
spent considerable funds defending ourselves in court against
hostile government agencies and individuals, and this involuntary
but necessary "investment" has resulted in an improved legal
climate for cryonics in California.
Alcor relies heavily for its day to day operations on a network of
unpaid (and often uncompensated) volunteers. These two or three
dozen activists provide much of the manpower for our marketing and
public relations efforts, and contribute significantly to the labor
involved in providing cryonic suspension services. Alcor volunteers
in many areas are forming chapters to help Alcor grow and to
provide improved suspension capability in their local areas.
We have seven paid employees, all working at our headquarters
facility located in Riverside, California. Alcor has an additional
facility in Florida and maintains a cooperative arrangement with a
sister organization, Mizar, in England.
Ultimate resonsibility for the health and growth of Alcor resides
with the nine-member Board of Directors, all of whom serve without
pay and at present without compensation of any kind. Three of the
Directors are also employees, namely the President (Carlos
Mondragon), Hugh Hixon and Ralph Whelan.
ALCOR OPERATIONS
Alcor's operations can be broken down conceptually into the
follwing areas: marketing and public relations, suspension
services, patient care, administration and research.
Marketing and Public Relations
Activities in this area include: informing the general public about
cryonics and Alcor in particular, aiding members in the sign-up
process, maintaining a dialog with our members, monitoring
political affairs affecting cryonics and publishing Cryonics
magazine.
Suspension Services
Suspension Services includes all activities involved in freezing
members who have been declared legally dead. This includes:
monitoring the status of terminal patients, putting volunteers in
the field when members are judged to be near death, working with
medical personnel, government officials and relatives during a
suspension, performing all phases of the suspension and transport
of the patient, and maintaining the physical plant necessary to
perform suspensions.
Patient Care
Maintenance of suspended members at cryogenic temperatures
(presently 77K) is the task of the Patient Care portion of Alcor's
operations. This invloves purchase and acceptance of dewars,
ensuring a ready supply of liquid nitrogen, and monitoring the
dewars in the Patient Care Bay of the Riverside facility. Patient
Care will eventually also include reanimation of suspended
patients.
Administration
Alcor personnel must of course perform the standard management
functions associated with any business enterprise. Included in the
Administrative functions are accounting, management of the various
funds such as the Patient Care Trust Fund, business planning and
policy, legal defense, personnel management, training, chapter
relations, internal communication, supplier relations and record
keeping.
Research
Alcor conducts research as part of its suspension services program
(each suspension is an experimental procedure) and directly through
internal technology development and by awarding grants to outside
investigators. The research program also must include ongoing
review of the state of relevant technology, evaluation of proposed
research projects and review of ongoing projects.
Alcor's Capabilities
Comparing the list of tasks above with the resources available to
accomplish them demonstrates just how mismatched are our goals and
means. Alcor's total personnel number about 50 (seven paid) and our
annual expenditures are about $250k. Most of us were not trained to
perform the jobs we've accepted as Alcor activists. Yet most people
involved with Alcor expect nearly flawless performance in the
context of a competitive, rapidly evolving, hostile business
environment, and to do this on poverty-level wages (or without any
compensation at all) and without any real prospect of future gain
(since Alcor is a non-profit organization)! To borrow a phrase:
why hasn't Atlas shrugged long ago? And, if he does, what will be
the result for cryonics if our patients are lost?
CRYONICS OUTSIDE ALCOR
Alcor does not hold a monopoly position in providing cryonic
suspension and patient care services. The American Cryonics Society
(ACS) in northern California is a non-profit membership
organization that provides services similar to Alcor's, and the
Cryonics Institute (CI) in Michigan provides "lower tech" (and
lower cost: $28k) cryonic suspension and storage to its members.
ACS does not actually perform suspensions, it contracts with Trans
Time, a for-profit company located in the San Francisco bay area,
to suspend its members. In addition, Mike Darwin's new company,
Biopreservation (also for-profit) offers suspension services, which
Alcor has used for several recent suspensions.
ALCOR'S GROWTH: A PROJECTION
Assuming a steady growth rate of 36% per year in suspension
membership, we are likely to have, for the next 12 years, the
following growth:
Present 3 Yrs 6 Yrs 9 Yrs 12 Yrs
------- ----- ----- ----- ------
suspension members 320 805 2025 5093 12812
patients in suspension(1) 25 64 156 388 971
annual revenues(2) $210k $528k $1.33M $3.34M $8.41M
patient care trust fund(3)$800k $2.05M $5.00M $12.4M $31.1M
Notes: 1) Assumes a constant suspension rate of 2 per 100 members
per year; 2) Assumes dues and donations rates per member are same
as at present; 3) Assumes the ratio (PCTF assets/No. of patients)
is the same as at present. All dollar amounts are in constant 1992
dollars.
A SUGGESTED STRUCTURE FOR ALCOR
To summarize the above observations:
1) Alcor is operating in an increasingly competitive environment.
The cryonics industry is growing rapidly and new organizations are
appearing on the scene that will compete with us.
2) Alcor is operating in a hostile legal and regulatory
environment. Although we have won many legal challenges to our
existence in the past, we are still small and so are not attracting
much attention. We must be prepared to survive, and above all to
protect our members in suspension, as we begin to be taken
seriously by our adversaries.
3) Alcor needs to conduct expensive, risky research and development
to advance the technology of cryonic suspension.
4) Alcor's suspension operations are highly visible both to our
members and to others not so sympathetic to our cause. Suspension
operations are also expensive and those expenses tend to be highly
unpredictable, as demonstrated by the recent Boston suspension.
5) Alcor's staff is compensated at well below market rates, and
cannot look forward to a big payoff in the future because Alcor is
organized as a nonprofit corporation. Much of our business is
conducted by volunteers, yet we need to attract talented
professionals from the highly paid medical and scientific
communities to perform the technically demanding tasks required to
make Alcor succeed.
6) Alcor is in a cash crunch now, but if growth rates are
maintained at past levels, economies of scale will help alleviate
this problem. But maintaining these growth rates depends on
Alcor's continued technical and managerial leadership.
7) If Alcor fails, that failure will be catastrophic: the patients
will be lost.
The above considerations make the following proposal worthwhile to
consider: That Alcor be split into two separate organizations, one
providing patient care, and in the future reanimation, and the
other providing suspension services and performing the rest of
Alcor's functions. This structure for Alcor would provide important
protection for our patients without reducing our ability to compete
in the risky, fast moving, interactive arena of suspension services
and marketing. Furthermore, the two organization could have
different structures and policies that would allow them to optimize
their operations in both fields simultaneously. For instance, the
Patient Care organization could remain as a non-profit corporation,
but the Suspension Services company could be a for-profit
corporation, allowing it to attract capital to stay ahead of the
competition.
Advantages of this arrangement
*The Patient Care Organization would remain insulated from the
risks and liabilities of the Suspension Company.
*The Suspension Company could be more aggressive in pursuing its
goals and competing in the marketplace, without increasing the risk
to the patients.
*The Suspension Company, as a for-profit corporation, could seek
outside capital to maintain its technological leadership and as a
joint stock company could provide incentives now lacking for its
hardworking staff.
*The Patient Care Organization could concentrate on serving the
needs of the patients and their relatives, and on managing its
assets conservatively for the long term.
*The Suspension Company could emphasize the needs of the members,
who tend to be demanding and vocal.
A more elaborate structure
As I concieve of it, the cryonics industry ten years from now could
consist of five types of organization:
1) Umbrella member service organizations that would act as cryonics
brokers. People interested in buying cryonic suspension for
themselves or their relatives would buy a "package" that includes
a choice of patient care providers, suspension service providers,
insurance companies, and reanimation trust companies.
2) Patient Care organizations. These would be nonprofit
corporations that would offer a variety of patient care and
reanimation contracts to cryonicists, and would accept a certain
minimum amount of assets along with the patient upon his
suspension. Some of the reanimation contract options might involve
personal or family "reanimation committees" that would have
authority over the circumstances of the person's reanimation.These
committees would have the right to monitor the Patient Care
Organization's financial health and to physically inspect the
patients, and take custody of them if the Patient Care Organization
was to fail. These nonprofits could also act as vehicles for tax-
deductible donations supporting cryonics and reanimation research.
3) Reanimation Trust Organizations or Committees. These would
represent the interests of the patients in suspension, as described
in part 2 above.
4) Suspension Companies. These for-profit companies would work
under contract to the Umbrella Organizations in 1 above, and would
perform the actual suspensions, ideally in hospital settings, and
would accept all the legal liabilities and financial risks of this
part of the cryonics procedure. They might also perform research
under contract to the Patient Care Organizations.
5) Democratically organized, grassroots "Cryonicist's Unions" that
would promote cryonics to the public, conduct political action, and
evaluate the other organizations as a service to their members.
IN CONCLUSION
There are advantages to splitting Alcor into two organizations, a
nonprofit Patient care Organization and a for-profit Suspension
Services Company. The primary advantage of this arrangement is
increased protection for our patients; another advantage is
increased operating freedom for the Suspension Services Company.
Further development of this idea should include detailed cost
estimates and legal analysis of the relationship between the two
organizations. The idea of splitting Alcor this way is currently a
topic of interest to the membership, and we should actively solicit
advice from our members before taking any concrete steps in this
direction.
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