Strange Contracting at UCI

Well, it's been a while, but the medical school at the University of California - Irvine (UCI) is back in the news. We had posted last year about various management problems at the same institution, involving its liver transplant service, cardiology division, and bone marrow transplant service, (see posts here and here) which lead the new chancellor of the campus to "acknowledge a failure of leadership and accountability" (see post here.) Slightly more recently, we noted the almost 20 year history of questionable financial relationships that involved one of UCI's "biggest stars" in clinical researach and several pharmaceutical companies (see post here).
Last week, the Los Angeles Times reported about questionable relationships between the medical school and a local orthopedic practice.

UC Irvine's School of Medicine has hired an auditor to review the orthopedics department's finances in response to concerns about a contract with a private medical practice that has cost the school more than $1 million in lost revenue, UCI officials said.

The medical school entered into the contract with Mission Orthopedic Medical Associates and its well-known chief surgeon, Bernard Reimer, to help the school expand into the lucrative southern Orange County market, according to physicians in the orthopedics department.

But the contract immediately raised concerns among UCI's attorneys because of large sums paid up front to Reimer and his wife, Dawn, his office manager, which later triggered controversy within the department, according to UCI records obtained by The Times and interviews with UCI staff members.

'We are looking at things that don't make any fiscal sense,' said Dr. Ranjan Gupta, who took over as chairman of UCI's orthopedics department at the beginning of the year. 'I'm supposed to ensure that the university is giving the highest level of care and is getting the most for its money.'

The contract with Mission Orthopedic Medical Associates was negotiated in 2003 by Dr. Harry Skinner, then chairman of the orthopedics department, and Dr. Thomas Cesario, then dean of the medical school.

Skinner was forced to step down as department chairman in January. UCI had concluded he had made racially inappropriate comments to medical school employees. He remains on the faculty.

Cesario took early retirement late last year after an 11-year tenure marred by doctors stealing women's eggs and embryos, bodies missing from the medical school's willed-body program, and serious failings in the hospital's liver, kidney and bone marrow transplant programs.

In devising the contract with Mission Orthopedic, Skinner and Cesario agreed to cover part of the practice's overhead, pay Reimer's wife more than $100,000 to serve as its office manager, and give Reimer a place on the medical school faculty. In return, Reimer's patients would all be billed for their care through UCI Medical Center in Orange.

Both Reimer and his wife declined repeated requests for comment.

At the time the contract took effect, Reimer had been diagnosed with cancer and was working only part time, which enabled him to collect disability insurance payments, according to internal medical school e-mails and other records obtained by The Times.

He was eligible to receive insurance benefits as long as he earned no more than $100,800 a year, the UCI records show.

Skinner found ways to pay him for items other than salary to stay within that salary cap, the records show. For example, he agreed the university would pay Reimer and his wife $50,000 for attorney fees and an extra $10,000 a month for the first three months of his contract.

The Times also found that built into the overhead for the Mission Viejo office was a significant sum for Reimer's wife, the office manager. In addition to her $38,400 annual salary, Dawn Reimer received between $6,000 and $7,500 a month from UCI in additional payments described as 'general expenses,' the records show. As a result, UCI paid Dawn Reimer about $128,000 in 2005, more than what the school was paying her husband to treat patients, teach students and perform surgeries.

UCI's Credentials Committee placed Reimer on a list for "administrative termination" after noting that he had been on the faculty for more than a year without having been 'proctored,' a process in which a new faculty member's work is reviewed by a senior staff member.

The deal with Mission Orthopedic has been so expensive for the hospital that costs far exceed revenues from Reimer's patients, according to financial records reviewed by The Times.

As of the end of December, the losses were more than $1.2 million on total revenues of about $4.5 million over the previous three years and three months.

When all the numbers are tallied, expenses are expected to outstrip revenues by more than $1.7 million through June 2007.

As I noted the last time I posted about UCI...

It seems the more one looks, the more management problems one finds at the UCI medical school. This saga is another example of the complex financial relationships that pervade medical schools and academic medical centers. This recently revealed set of relationships is not about research or the pharmaceutical industry. However, it seems to be another demonstration that far too many leaders of health care organizations, including medical schools and academic medical centers, seem to have something other than the organizations' core mission in mind when making decisons.