The University of Maryland Medical System’s awards of millions of dollars in contracts to members of its own board is a terrible business practice that must be stopped. The contracts for everything from pest control to the purchase of thousands of children’s books written by Mayor Catherine Pugh present inherent conflicts of interest that cast doubt on the system’s management. Legislation by Sen. Jill Carter to ban such self-dealing is more than justified.
There are two basic problems with the situation. The first is that contracting with board members inherently leads to questions about whether the system is getting the best products and services at the best cost. Perhaps it is in some cases. Kelly & Associates Insurance Group is a big player in its field, for example. Maybe UMMS would have done business with it notwithstanding former state Sen. Francis X. Kelly’s service on the board and longstanding association with the institution. Lots of physician groups have relationships with UMMS, so Vascular Surgery Associates might well have done business with the system whether Dr. Roger E. Schneider was on the board or not. Maybe Mayor Pugh’s books really are the best available means to communicate with kids about exercise and nutrition. But how confident can UMMS stakeholders be that the system’s management is being totally objective about the good and services offered by those who have the power to hire and fire the CEO?
The second problem is the possibility that the contracts could cloud the board members’ ability to fairly judge the management of the system. Are their views on how efficiently and effectively UMMS is being run colored at all by their financial ties to the institution? This isn’t like an investor sitting on the board of a publicly traded corporation; such a person stands to benefit from the decisions management makes but only in the same way that all other shareholders do. In UMMS’ case, board members with contracts stand to benefit specifically and uniquely from management decisions. Even if they don’t realize it, their views are liable to be colored by the arrangement.
UMMS objects to Senator Carter’s legislation, arguing that it would prevent highly qualified people from serving on the board and would cause some existing board members to leave. But at least one of them — Mayor Pugh — says she doesn’t oppose the legislation. (Though it turns out she also failed to report on her city ethics forms that she served on the UMMS board, as she was required to do.) Meanwhile, there are 20 members of the board who don’t have contracts with the system, and there are some pretty big names among that group, too. And if the legislation as written actually would apply to those UMMS staff members who by statute serve in ex-officio capacities, as the system contends, it could certainly be amended. They are clearly not the issue here.
The public has a genuine stake in the management of UMMS, and not just because the system receives some state support for capital projects. Not only does it provide health care for thousands of Marylanders but its ability to constrain costs plays a major role in the state’s ability to fulfill the terms of its unique Medicare waiver with the federal government, an arrangement that benefits the state to the tune of $2 billion a year.
And one final note: We are grateful to Senator Carter for bringing this matter to the public’s attention, but it should have been more transparent from the start. Members of the UMMS board are required to file financial disclosure statements — that’s how The Sun's Luke Broadwater was able to find the examples of contracts benefiting board members — but not with the state Ethics Commission. They’re filed with the Health Services Cost Review Commission, and they aren’t posted online. Maryland has been behind the curve generally in posting such forms for easy public review, though an increasing number of counties are publishing such forms on their websites, and thanks to 2017 legislation sponsored by House Speaker Michael E. Busch (a member of the UMMS board with no contracts from the institution), the forms for elected officials, candidates for office and certain other state officials will be online starting this spring. As it happens, this is Sunshine Week, and we can see no better example of how important it is to shed light on how the public’s business is being done.