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After months of contentious negotiations, the Detroit Medical Center and the Wayne State University Physician Group have agreed to a contract, which includes a substantial reduction in payment from the DMC to the School of Medicine, a union official said Sunday.

The DMC’s payment to the medical school for services rendered by clinicians has been slashed by more than half when compared to the DMC payment to WSU under then-DMC president Mike Duggan, said Charles Parrish, president of the American Association of University Professors at Wayne State University. Parrish could not cite a figure but called it “dramatic.”

“It will mean finances will be very tight,” Parrish said, “and the consequences are they will likely put pressures on compensation for physicians paid by the UPG for the services rendered in the DMC.”

The previous contract between the DMC and the physician group, which represents 400 doctors who provide medical, administrative and clinical services in DMC hospitals, was set to expire in March, but was extended for six months. The extension expired Sept. 30, a month after the two sides reached an impasse.

On Friday, Jack Sobel, dean of Wayne State’s School of Medicine, and DMC CEO Joe Mullany said in a joint statement an 18-month deal had been reached.

“Terms of the agreement are confidential,” the statement said.

DMC spokeswoman Melanie Moss on Saturday declined to comment, saying the hospital has agreed to WSU's discussion schedule.

“We won’t be prepared to talk about it until at least the 17th,” Moss said in an email.

On Aug. 30, talks broke down between the two sides over issues that potentially could have had a wide-ranging impact on health care in Metro Detroit.

Among the issues was a clause prohibiting both parties from soliciting services of the other’s employees for a specified time, along with 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.

After talks broke down, The Detroit News obtained an email in which Sobel told Wayne State faculty that Mullany had contacted him Sept. 2 to resume negotiations.

“Though we have made progress, some significant issues remain, including extension of the current non-solicitation clause and payment of previously agreed upon financial commitments to the university,” Sobel said. “However, I sense a renewed commitment by all parties to work through these issues and come to agreement.”

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

The DMC is southeast Michigan's largest health care provider with 3,000 affiliated physicians 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.

kkozlowski@detroitnews.com

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