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Detroit leaders say they’re alarmed and upset at the prospect of severed federal funding to the Detroit Medical Center, which is one of the city’s biggest employers and serves its neediest residents.

A report made public this week from the U.S. Centers for Medicare and Medicaid Services deemed hospitals in the DMC’s Midtown campus in violation of federal rules because of chronic problems cleaning instruments. The hospital system is set to lose federal funding if issues remain during a surprise inspection before Dec. 14.

It’s a rare threat: Only 233 of the nation’s 6,000 hospitals were threatened with funding termination from 2010-15, according to CMS records. Losing funding is rarer. Only 13 of those hospitals were terminated, the records show.

“This is a big deal and has to be taken very seriously,” said Patricia Neumann, a senior patient safety analyst for the ECRI Institute, a Pennsylvania-based nonprofit that researches improvements to patient care.

“Once you get a notice like that, you have to move very aggressively. It’s not a matter of progress. It’s a matter of fixing the problem or losing funding.”

Loss of funding likely would decimate the DMC. Medicare numbers weren’t available Wednesday, but the Midtown hospitals received at least $509 million in Medicaid alone in 2015, state records show.

The investigation was prompted by a Detroit News series that documented 11 years of complaints about improperly sterilized surgical tools. Based on 200 pages of internal emails and incident reports, the articles found dirty instruments complicated operations ranging from brain surgeries to spinal fusions, kept patients under anesthesia unnecessarily and led to cancellations of dozens of operations.

The federal threat caused waves Wednesday among Detroit leaders. State Sen. Bert Johnson, D-Highland Park, and a community leader, the Rev. Horace Sheffield III, say they plan to seek meetings soon with DMC administrators. Both said they doubt the problems sterilizing instruments would have persisted so long at the DMC’s suburban facilities.

“They need to address how they have imperiled an already threatened population and tell us what assurances they can offer before we formally ask people to stop using the facility,” said Sheffield of the Detroit Association of Black Organizations, a network of 130 grassroots groups.

“The public needs to be alarmed. What risks have we been exposed to?”

The DMC has maintained no patients were harmed. Its administrators declined comment Wednesday, referring to an earlier statement saying they are committed to fixing problems. CMS has accepted the system’s plan of corrective action to fix issues at hospitals at its Midtown campus: Detroit Receiving, Harper University, Hutzel Women’s and DMC Heart hospitals.

Children’s Hospital, which does not receive Medicare funding, was not included in the investigation. According to CMS, its investigation came in response to a complaint about Receiving and University Health Center, which includes Harper, Hutzel and Heart hospitals. Since no complaint was lodged against Children’s, they did not inspect that facility or threaten to terminate its federal funding.

Among other things, investigators faulted the DMC for a host of problems sterilizing equipment and implementing infection control procedures. The report documented workers putting dirty gloves back in a box with clean ones, neglecting to wipe blood off surgical instruments or soak them, and failing to perform audits or require training.

One of three cases of surgical instruments checked during the two-day inspection in August wasn’t properly sterilized, the report found.

Skepticism on fixes

The hospitals were allowed to continue surgeries because state regulators who performed the inspection on behalf of CMS found there were no immediate risks to patients. That state agency, the Department of Licensing and Regulatory Affairs, issued a separate report finding the DMC in violation of the health code because of lax training.

“Although there were numerous findings that demonstrated violations to the public health code and federal requirements, none posed an immediate jeopardy to patients, based upon CMS guidance and definitions,” Jason Moon, communications director for LARA, wrote Wednesday in an email.

“LARA did find deficient practices in the sterilization processes which were cited in the report, but the redundancies and multi-steps that are built into the processes eliminates the threat of immediate jeopardy.”

Mark Graban, a Texas-based hospital consultant, said the findings are “pretty appalling” and suggest a longstanding problem.

“It seems like too little too late. Where is the regulatory oversight if The Detroit News is telling them where to go investigate?” asked Graban, a speaker and author who specializes in hospital efficiency.

“(Lost funding) is a serious threat, but it seems like what happens is things miraculously turn around by the deadline,” Graban added. “The skeptic in me says, ‘Did it really turn around or did they just make it look OK?’ ”

Under federal rules, CMS can only revoke funding. It can’t levy fines. The state has licensing authority over the DMC and could impose penalties if problems aren’t corrected.

The lack of consequences for violating hospitals “certainly is an example of hospitals not having to play by the same rules as other industries,” said Erica Mobley, spokeswoman for The Leapfrog Group, a Washington, D.C.-based group that publishes hospital quality grades.

“If an automaker didn’t manufacture safe cars there would be consequences,” Mobley said. “But a hospital can keep their license.

“It does seem that there should be more penalties that CMS has the ability to impose on hospitals, given the severity of harm that could be caused to patients based on what they found (at DMC).”

Fear for the poor

The DMC employs about 11,000 workers and has deep roots in Detroit, providing a significant level of care to low-income and vulnerable populations.

It was nonprofit for a century before it was bought in 2010 by Vanguard Health Systems, which was acquired three years later by Tenet Healthcare, a Dallas-based corporation that owns 79 hospitals nationwide.

“Who is going to get hurt most if the feds (sever) funding? It isn’t Tenet or the DMC. It’s the citizens who receive services from the DMC,” said Johnson, the state legislator.

“Poor people just don’t have a way of demanding the kind of service they should be getting. If this kind of thing has been happening, then there’s clearly already collateral damage that has already affected an unknown people who are customers of the DMC.”

In 2010, as part of the Vanguard purchase, the city and state approved tax credits at the DMC. The deal saved some $200 million in taxes over 15 years in exchange for $850 million in investments, according to state records.

Sheffield argued that public money should give the “public a seat at the table and a right to get answers from the DMC.”

“They have already had the luxury of dealing with this privately,” he said. “Had it not been exposed, we would have never known about it.”

JKurth@detroitnews.com

kbouffard@detroitnews.com

Twitter: @joeltkurth; @kbouffard_DN

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