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Disagreements over doctor pay and the long-term partnership between the Detroit Medical Center and Wayne State University’s School of Medicine are clouding contract talks with 400 WSU faculty physicians who treat patients at southeast Michigan’s largest health care provider.

The controversy is rooted in DMC negotiations with WSU over the University Physician Group, which represents WSU faculty who teach medical students and provide the hospital system with one of the university’s largest sources of practicing physicians. WSU wants to broaden the talks to include joint strategies that would raise the profiles of the medical school and the DMC.

The DMC first wants to resolve a longstanding issue over how to pay WSU physicians better and wants the hospital, not the university, to become their employer of record. The hospital system says it wants to take over the physician group and work more closely with Wayne State.

“Our focus is on the patients and how do we provide the best services,” said Joseph Mullany, president and CEO of the DMC, which includes eight hospitals and partnerships with the Kresge Eye and Karmanos Cancer institutes. “We know we can do that by working together rather than separately.”

But officials at Wayne State — under university president M. Roy Wilson, a physician — are lobbying for what they say would be a more transformative alliance between the medical school and the DMC, with the hospital system becoming more of an academic partner rather than taking over the physician group.

David Hefner, the university’s vice president of health affairs, has worked at other institutions, including Pennsylvania State University, where the medical school and the teaching hospital have done joint strategic planning, recruiting and investment, and built joint programs.

Wilson was involved in a similar partnership as a chancellor at the University of Colorado. Hefner and Wilson envision similar outcomes at Wayne State, saying the partnerships in their previous tenures boosted the national rankings of the medical schools and teaching hospitals.

A DMC takeover of the physician group would fall short of a broader strategy and would not propel either institution, Hefner said.

“That is just another transaction,” he said. “It is not transformative. ... What does Detroit/southeast Michigan need from Wayne State University and the Detroit Medical Center? It needs many more programs that would have people stay in this area of the country to seek their care.”

Jack Sobel, dean of the WSU School of Medicine, added that a more collaborative model, along with tens of millions of dollars in investment, could elevate both the medical school and the DMC to prominence along the lines of the renown University of Pittsburgh Medical Center — a nationally ranked hospital system that is affiliated with the university that shares its name.

“We are unable to reach our goals, we are unable to develop and grow and progress without a meaningful partnership,” Sobel said. “And it is so close, yet so far.”

Variety of doctor contracts

Among the thorniest issues between the DMC and WSU is how members of the University Physician Group are paid. The physician group — which represents WSU doctors in fields such as family medicine, neurology, psychiatry, cancer, surgery, urology and dermatology — represents 18 percent of the DMC’s business, Mullany said.

The DMC has four other contracts with WSU doctors who are not part of the University Physician Group, including pediatricians, emergency medicine doctors, anesthesiologists and radiologists. The rest of the hospital system — with more than 2,000 licensed beds and 3,000 affiliated physicians — is served by private physician groups.

DMC officials argue that the current structure, with the doctors employed by the university rather than the hospital system, creates a competitive disadvantage for both parties because the physicians are underpaid.

Because WSU physicians are not employed by the hospital, federal law requires the hospital to pay them a market rate, said Conrad Mallet, the DMC’s chief administration officer.

Acquiring the University Physician Group would make the physicians employees of the hospital and allow the DMC to pay them under a model known as relative value units, or RVUs. Under it, doctors are paid based on work performed versus the number of patients seen.

Mullany said acquiring the University Physician Group is an important first step toward closer ties that would benefit both the hospital and the medical school.

“It would be a win-win,” Mullany said. “It would bring more doctors to the area, it would help the DMC to grow and would allow them to have more physicians to be in the system. It’s not a hostile takeover.

“It’s got to be two parties interested in this. ... We’re looking to grow and foster new services,” he said. “We have a whole stream of public health policies, but Wayne State is not able to be at the table. We are moving ahead in many exciting areas while they are not.”

Pay issue stalls progress

Since WSU wants to maintain the physician group’s independence, Mallett said one option is a “professional service agreement” under which the DMC would pay the doctors with the RVU model.

“Part of the concern of Wayne State University physicians is we are underpaying them,” Mallett said. “Once compensation is solved, then we can have the more profound conversation about what we should be doing collectively to make ourselves nationally important in the delivery of care, research and medical innovation. That is a discussion both sides are anxious to have, but we are stuck.”

The pay issue is holding up progress on the larger issues surrounding the century-old relationship between the parties, leaving both sides frustrated.

“We keep having these constant discussions on compensation,” said Mallett, noting the last clinical services contract with the University Physician Group was for one year and expired in March. The two sides are working under a six-month extension.

Hefner said the DMC’s arguments delve into arcane matters while Wayne State wants to look at broader collaboration. He declined to discuss the contract.

“Teaching hospitals or hospitals with a university and medical school traditionally have a long-term understanding of what you both are involved in and how the parties come together in the sum of the parts to be stronger than the individual pieces,” Hefner said.

“Normally in other cities, you would find a very tight relationship between these entities and you would find that they are dealing with the external environment by being strategic, investing together, sharing resources together, and it would not be a contract or a series of contracts,” he said.

This is not the first time the contract between the DMC and the University Physician Group has generated friction. In 2010, the two sides agreed to transfer 10 WSU faculty physician groups to the DMC under a five-year agreement aimed at overhauling the relationship.

The recent struggles come as the Wayne State medical school, which has about 1,200 students, resolved an accreditation probation warning last year from the Liaison Committee for Medical Education, the accrediting body for 144 medical schools.

Then at the end of last year, WSU officials acknowledged a $29 million deficit spread among the physician group, the Fund for Medical Research and Education, and the Wayne State medical school. Officials said then it would take three years to eliminate.

The issues surrounding WSU’s medical school and its ties with the DMC also have emerged as the hospital system operates under its second for-profit owner. Vanguard Heath Systems bought the DMC in March 2010, turning it from a nonprofit to a for-profit system. In October 2013, Tenet Healthcare Corporation acquired Vanguard.

Sobel points to the University of Pittsburgh Medical Center as a successful model that could be emulated in Detroit.

In Pittsburgh, the university and the medical center are separate entities but began working closely 18 years ago. Under their partnership, they make decisions collaboratively and share board members. The hospital committed to investing heavily in medical school research and created programs combining research and clinical care, Sobel said.

The university/medical center collaboration has fueled innovation in patient care, helped recruit and retain physicians, and promoted research, said Dr. Steven Shapiro, UPMC’s chief medical and scientific officer.

“It brings everyone together under the same roof and allows us to work together,” said Shapiro, who also is a professor in the University of Pittsburgh medical school.

WSU eyes investment boost

While Wayne State University is nationally known for its cancer center, bone marrow transplant program, pediatric services at Children’s Hospital and pioneering psychiatric treatments, Sobel said more programs are needed.

WSU’s medical school brings in about $100 million in biomedical research funding annually, and school officials want to raise that figure.

Attracting such investment is critical, Hefner added, since Wayne State is among a handful of academic research facilities nationally in an urban setting.

“We are a rarity in the landscape that should be invested in, and grown,” Hefner said. “Most urban cities don’t have a university, which is a huge economic benefit to a city and a continuous source of renewal ... Part of the reason Detroit is the way it is is the fabric of the university. It attracts researchers, students and people who want to gain knowledge.”

kkozlowski@detroitnews.com

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