DMC, Wayne State Physician Group talks break down

Kim Kozlowski
The Detroit News

Contract negotiations between the Detroit Medical Center and the Wayne State University Physician Group have broken off, which will have “cascading implications,” according to an email sent Wednesday by the dean of the university’s medical school.

But DMC officials say they thought negotiations to replace a pact that expires Sept. 30 were merely at an impasse — not over.

While a month remains in which talks could be restarted, a failure to reach a deal between the two entities could have wide-ranging impacts on health care in Metro Detroit. The DMC is the region’s largest hospital system, with 3,000 affiliated physicians.

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.

It wasn’t immediately clear whether WSU medical students and residents who train in DMC hospitals could be affected.

Following a negotiation session Tuesday, WSU Medical School Dean Jack Sobel sent an email Wednesday telling faculty that Tenet Healthcare Corp., owner of the DMC, terminated the discussions Tuesday over the issue of nonsolicitation of physician group doctors.

Sobel said the physician group — which represents 400 Wayne State faculty who teach medical students — had successfully negotiated with the DMC on “a number of issues,” including finances, during talks to replace a contract between the two parties that expires Sept. 30.

But according to Sobel, hospital officials pulled out of discussions over a proposed nonsolicitation agreement — which prohibits both parties from soliciting the services of the other’s employees for a specified time. Officials with the University Physician Group say their current contract with the DMC includes such language and argue it’s necessary to protects their physicians from being poached by the DMC or other employers.

“The abruptness of the termination was unexpected as the WSUPG negotiations team had been making significant progress toward a final set of agreements over the past three months,” Sobel wrote. “In fact, there was consensus on a number of issues, and WSUPG was even willing to accept another reduction in the current rate of payment for services.”

In a statement, DMC officials expressed their disappointment in the latest development but didn’t rule out restarting negotiations.

“Yesterday the DMC and UPG were at an impasse,” the DMC statement said. “Today, according to Dean Jack Sobel, talks have been terminated. In this age of instant communication one might have expected at least a phone call. Reasonable business people would have behaved differently. The DMC is deeply disappointed. We however open to further discussion. One issue ought not prevent agreement.”

DMC officials said the University Physician Group’s call for a physician nonsolicitation/employment clause was a last-minute demand. Otherwise, an overall contract could have been signed within the next week, they said.

The DMC negotiating team left the negotiating session when physician group representatives announced that no one from their team was authorized to discuss the hospital systems’ concerns about the nonsolicitation/employment clause, according to the hospital system.

“UPG’s irresponsible decision to postpone yet again important discussion left the DMC no choice,” the statement said Wednesday. “Even if UPG does not take seriously its obligations to the residents we together teach, and the patients we together serve, the DMC does.”

The halt in contract talks comes five months after an agreement between the DMC and the physician group, which have a century-old partnership, expired in March. Though the contract had been extended for six months, Wayne State officials said it could mean a new era beginning Oct. 1 at the hospital and with the 400 Wayne State doctors who are part of the University Physician Group.

Officials with the DMC and the physician group warn of consequences that could affect health care across the region if a new agreement isn’t reached.

The WSU physicians would have to find another place to practice, the university would search for another partner with which to contract, and the DMC would have to find other doctors to serve patients who have been treated under contractual agreements with the physician group, said Lisa Keane, president and chief operating officer of the University Physician Group.

“We were hoping to come to closure so we could continue providing services through the DMC,” said Keane, who was part of the negotiations. “But they did not choose to go on with the conversation. They did not choose to stay with us to discuss the other matter and get through the discussions.”

David Hefner, WSU vice president of health affairs, said the contract that provides training of Wayne State residents — medical school graduates being trained in specialty practices such as cardiology or immunology — would not be impacted.

But the DMC officials said otherwise.

“DMC resident education programs would be thrown into jeopardy and resident education lives put at stake if there existed a restriction on the DMC’s ability to provide continuity of instruction,” the statement said. “The DMC is equally concerned about the continuity of patient care.

“Again if a physician left UPG what would happen to the patients treated by that doctor at DMC hospitals? The DMC cannot allow patient care or resident education to be contractually compromised. UPG leadership’s failure to understand how resident education is managed or continuity of patient care insured is alarming.”

The DMC is southeast Michigan’s largest health care provider and has five contracts with WSU doctors. The largest is the University Physician Group, which represents WSU doctors in fields such as family medicine, neurology, psychiatry, cancer, surgery, urology and dermatology.

DMC also has contracts with physicians practicing in pediatrics, emergency medicine, anesthesiology and radiology. The rest of the hospital system — with more than 2,000 licensed beds and 3,000 affiliated physicians — is served by private physician groups.

The cutoff of contract talks comes as the University Physician Group was engaged in high-profile negotiations with the DMC that included disagreements over doctor pay and the long-term partnership between hospital system and Wayne State’s medical school.

It also included a controversial offer by the DMC to acquire the physician group, which was declined by the university. WSU officials, meanwhile, had been lobbying for 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.

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

As the current talks stall, DMC officials are dealing with a visit this week from state and federal regulators investigating issues with improperly cleaned surgical instruments disclosed by The Detroit News.

The break in contract talks also comes as Wayne State’s School of Medicine has struggled with a financial crisis.

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

Of that amount, $13 million had been attributed to the University Physician Group, Keane said. Today, University Physician Group’s share of the deficit has been reduced to about $1 million due to expense reductions.

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 wrote that he is “still working to understand in detail the cascading implications of Tenet’s decision (to end talks).”

“I believe this provides us with an opportunity to plot our own course consistent with our vision and values,” Sobel wrote. “We have been rightly focused on improving our own operational management in both the School of Medicine and in the WSUUPG, and we are not beholden to short-term profitability and shareholder returns.”

DMC says on-site investigation ends

Federal and state regulators have ended an on-site inspection of the Detroit Medical Center, sparked by revelations of improperly cleaned surgical instruments disclosed by The Detroit News, the medical center said on its website Wednesday.

On Monday, a “team of surveyors” from the Centers for Medicare and Medicaid Services and Michigan Department of Licensing and Regulatory Affairs were at the Midtown campus as part of the probe, DMC said. The visit was launched after The News reported the results of a six-month investigation revealingdirty, broken or missing surgical instruments have delayed or canceled surgeries for than a decade at the center’s five hospitals.

The review was finished Tuesday, DMC officials said on the center’s website. Other details were not released.

“The hospital continues to work diligently to improve efficiencies and processes and maintain our community’s confidence in this important function,” the statement read. “DMC is committed to providing the award-winning, high-quality care that has been our legacy in Detroit for more than 150 years.”

Officials said the probe would include a multidisciplinary team of state building and health inspectors who would look at records, charts, policies and procedures. Team members also would interview patients and staff.

The News studied more than 200 pages of emails and internal reports showing that doctors complained to top DMC officials for more than 11 years that patients were being put at risk.