The acting CEO of the University of Maryland Medical System said Tuesday former state Sen. Francis X. Kelly and two of his sons are taking voluntary leaves of absence from the boards of six affiliated organizations amid a continuing controversy at the hospital network.
The Kellys’ Baltimore County business, Kelly & Associates Insurance Group, has done millions of dollars in business with the hospitals. Such deals between UMMS’ volunteer board members and their companies are under intense scrutiny following The Baltimore Sun’s report last month that nearly a third of the UMMS board of directors — including Kelly — did business with the hospital system.
“I am disappointed, but respect and understand their decision,” John Ashworth, the system’s interim CEO said in a statement. The family’s “desire to put the system, its employees and, most importantly, the patients first and to preserve the validity of the independent review during this critical time is indicative of who they are and how they lead. … The Kellys’ long-term commitment to servant leadership, coupled with their dedication to delivering world-class healthcare, has made a marked difference in our community.”
The Sun reported last month that nine of the board’s 30 members — including Baltimore Mayor Catherine Pugh — had deals benefiting their private companies with the hospital system they were tasked with overseeing. From 2010 through June 30, 2018, Kelly & Associates Insurance Group generated about $16 million in revenue from commissions, consulting fees and administrative costs it earns from managing insurance and benefits for the system’s hospitals and medical centers, according to the annual disclosure forms it files with the commission.
Approximately $12 million was collected over the last five years, according to the forms reviewed by The Sun.
Former Sen. Kelly has already taken a leave from the UMMS board, but he and his sons had remained on the volunteer boards of other hospitals affiliated with the system.
Kelly continued to sit as chair of the Shock Trauma Board of Visitors and chair of the Board of St. Joseph Medical Center. Son David Kelly sat on the board of St. Joseph Medical Center; and son John Kelly sat on the Mt. Washington Pediatric Hospital board, the University of Maryland Medical Center board, the University of Maryland School of Medicine board and the Institute of Human Virology board.
Tuesday marked the start of a “deep review” of contracts awarded to members of the UMMS board; it is to be conducted by a company the system hired.
System President and CEO Robert Chrencik has been placed on a leave of absence amid scrutiny of the medical system.
On Tuesday, hours before the Kellys stepped down from their board positions, The Sun had sent a series of questions to them on a range of issues, including their business with the various UMMS entities for which they sit on boards.
“A dimension of service must also include avoiding distractions that might impede, even in a small way, the ability of these organizations to focus exclusively on the delivery of their unique missions,” former Sen. Kelly wrote to Ashworth in a letter dated Tuesday. “For this reason, all members of the Kelly family have joined in a shared decision to take a voluntary leave of absence from all boards within the UMMS family of institutions. We feel that the best way to serve the system and its affiliated hospitals at this time is to take a step back to eliminate any potential distractions and to allow for a complete and thorough review of Board governance and practices.”
The older Kelly grew his insurance brokerage company through his work with the medical system after he led the legislative charge to privatize the hospital network in 1984. The system is now a network of more than 14 academic, community and specialty hospitals that generated $4.4 billion in 2018.
He was a member of the UMMS board when the hospital system acquired St. Joseph Medical Center in 2012, helping to rescue his hometown hospital after revenue losses and legal issues surrounding a cardiologist who performed unnecessary stent operations.
Steven Silverman, an attorney for Pugh, said Tuesday that the Office of the State Prosecutor was investigating her deal with the medical system; she received $500,000 for 100,000 copies of her “Healthy Holly” children’s book series. Pugh has resigned from the UMMS board and has taken a leave of absence as mayor, citing a recent bout with pneumonia.