UMMS Board of Directors chair Stephen A. Burch and other members of the board met with Governor Larry Hogan and Senate President Miller. (Ulysses Muñoz / Baltimore Sun video)
The University of Maryland Medical System board of directors has confronted one crisis after another in the past year or so, from a patient-dumping accusation at one hospital and sexual harassment in its ranks to a shooting outside its Shock Trauma emergency room.
But now it’s the directors themselves who have thrown the system into distress, with nine members found to be profiting while they served in volunteer posts on the high-profile board. They or their businesses have been making hundreds of thousands to millions of dollars off the taxpayer-backed hospitals they are charged with governing.
All of the scandals brought a level of legal, regulatory or public scrutiny, resulting in some sweeping changes to policies and staffing. But the latest controversy reached the institution’s highest levels, with Robert A. Chrencik, president and CEO of the university health system, forced to take a leave of absence and the General Assembly quickly moving emergency legislation to ban such deals and force the current board to resign.
Three board members have already resigned, including Baltimore Mayor Catherine Pugh, who took in $500,000 from 2011 to 2018 for children’s books she sold to the university health system. And several board members were put on leave, including former Baltimore County Sen. Francis X. Kelly, whose insurance company won $2.8 million in business last year. The medical system has thus far declined to release a list detailing which of the board member deals went through a bidding process, but has acknowledged Pugh’s did not.
The fallout of the latest crisis on the system’s leadership, as well as its business and public image, is yet to be determined. But some observers say it likely will have at least a short-term effect on the hospital system’s credibility.
General Assembly leaders are expressing outrage and calling for reforms and an audit of the University of Maryland Medical System after The Baltimore Sun reported nine members of the system’s board — including Baltimore Mayor Catherine Pugh — have business deals with the hospital network.
“I have been following the series of scandals involving UMMS over the past year, and I find it — as many others do — very alarming,” said Anna Palmisano, who heads Marylanders for Patient Rights and has pushed for a patients’ rights bill that recently passed the state House of Delegates.
“We expect more of our state hospital system,” she said. “We as patients are losing faith in the ability of Maryland hospitals to act in the best interest of the patient. The culture of Maryland hospitals has degraded to the point where patients can no longer feel confident they are getting the best possible care.”
Doing business with board members is not against the law or any rules or even uncommon, so long as the deals are properly awarded and don’t cause a conflict of interest. But some state lawmakers want to ban such insider contracts, arguing the Maryland system is quasi-public, receiving millions in operating and capital dollars.
“When we’re talking about managing conflicts of interest, it’s less about completely avoiding them, it’s about handling them properly,” said Anne Wallestad, president and CEO of BoardSource, a Washington-based nonprofit that researches and trains boards of directors. “The transactions need to be transparently disclosed and meet the highest standards of decision-making rigor.
“To me, what’s most troubling in this situation is it’s not an isolated or single incident,” she said.
The flagship University of Maryland Medical Center also announced a broad set of policy and leadership changes in November aimed at improving the culture for women after a former research coordinator filed a lawsuit alleging harassment by a doctor. The Baltimore Sun identified more women who had complained about the doctor, and the newspaper obtained a letter written to leaders of the hospital and the affiliated University of Maryland School of Medicine by female faculty members and residents complaining of a “hostile work environment.”
The University of Maryland School of Medicine planned to announce a sweeping initiative Friday that aims to change the culture in the venerable institution that took a public bruising recently from allegations that officials there failed to consider the poor treatment of women.
“It can’t be overstated how important and essential the oversight role of a board is,” Wallestad said. “It has a job to do for an institution, and in the nonprofit space, it’s voluntary but it’s still a job.”
Now that questions have been raised about the board’s scrutiny, officials said there will be outside, independent review of the system’s contracting practices.
“There is no question trust is the most important equity element of any organization, particularly those in health care,” said Mary Lanham, a UMMS senior vice president, in a statement to The Sun.
“While there have been concerns surrounding board relationships, they are being addressed swiftly through decisive board action,” she said. “While uncomfortable now, this adversity is an opportunity for UMMS to focus on even more transparency while building sound, longer-term reputational equity.”
The recent spate of crises came amid tremendous growth of the university health system, with the board approving multiple hospital acquisitions in a little over a decade, including one in the suburbs of Washington, D.C., and others in Harford County and on the Eastern Shore. The moves are aimed at delivering health care more efficiently but also have raised concerns among local officials and patients as the hospitals closed some buildings and reordered services.
One observer said the growth and the crises might not be unrelated.
A 26-year-old Baltimore man arrested in the shooting of a University of Maryland School of Medicine employee outside a hospital ambulance bay on Monday had previously been in a relationship with the victim and quickly confessed to the shooting after being arrested, according to court records.
Often, hospitals systems that grow quickly have trouble keeping good control, said Barak Richman, a Duke University professor of law and business administration who specializes in the economics of contracting, new institutional economics and health-care policy.
“It is not unusual for growing hospital systems to struggle with maintaining quality assurance,” he said. “Protecting patients and ensuring high quality care is complicated and requires fastidiousness, of course, and often that challenge gets harder as systems get bigger.”
Speaking generally, Joshua Nemzoff, president of Nemzoff & Co., a New Hope, Pa.-based hospital consulting firm, said it’s rare for hospitals to outright “line the pockets of board members” without following their own policy and industry guidelines. But insider deals still can easily raise the appearance of a conflict of interest.
Hospitals that don’t make a strong effort to follow proper bidding procedures and publicly disclose deals can make their board members “look like they had their hands in the cookie jar,” Nemzoff said. “And it makes you wonder what else is going on that we don’t know about.”
Nemzoff said hospitals have to keep the public’s trust. The Maryland hospital system stepped in and did a good job restoring that public bond after it bought St. Joseph Medical Center in 2012 on the heels of a scandal there, he said. In that case, a doctor was accused of performing unneeded heart procedures at the Towson community hospital, leading to a class action lawsuit and a federal investigation that cost millions of dollars to settle. The publicity drove away patients and staff in large numbers.
The purchase came at the urging of UMMS board member Kelly, who was then tapped to chair St. Joseph’s board and helped lead the resurgence. Kelly is now among the Maryland system board members drawing scrutiny for business awarded to his insurance company, though the company defended the work as aboveboard and he said he welcomes the review.
Nemzoff said he expects system officials to make appropriate and transparent policy changes after that review and move on.
“Their job is to deliver health care and my understanding is they do an outstanding job of that,” he said. “They’ll get to the bottom of it and hopefully restructure a bit and put in more stringent conflict of interest policies and take care of it. It won’t effect the way they deliver care.”