UCSF Medical School Dean Fired After Protesting Financial Irregularities

Multiple news reports over the weekend recounted the firing of the Dean of the University of California - San Francisco (UCSF) medical school, Dr David Kessler, after he claimed he tried to identify and rectify financial irregularities at the school. First, here are the main points from the San Francisco Chronicle:

Dr. David Kessler, the onetime commissioner of the Food and Drug Administration who became dean of the UCSF School of Medicine in 2003, was fired Thursday night after years of discord over finances at the prestigious medical school.

Kessler's boss, campus Chancellor Michael Bishop, announced the dean's departure Friday morning in an internal e-mail to faculty members but did not disclose the reason.

Hours later, Kessler told The Chronicle that he had been labeled a 'whistle-blower' by the University of California after he repeatedly sought to uncover what he called 'financial irregularities that predated my appointment.'

At the heart of the dispute, Kessler said, are tens of millions of dollars in funds that he believes should have been in the dean's office account prior to his starting the job, but have never been properly accounted for because of what he called 'poor financial controls.'

UC officials countered that Kessler was mistaken about how much money should have been in the fund, and a university spokeswoman said Friday that two audits done after he raised the matter found no irregularities.

The spokeswoman said Kessler first raised the issue in the spring of 2005.

If so, that was after an anonymous complaint was sent accusing Kessler of lavish spending. An internal UC audit found no support for the anonymous allegations against Kessler.

Kessler talked to the Chronicle reporter about what happened.

In an exclusive interview with The Chronicle, Kessler claimed the firing was the culmination of a long effort on his part to straighten out the finances of the medical school dean's office - an effort that he said remains unfinished.

'It was a matter of financial integrity,' he said. 'I tried to work within the system for 2 1/2 years, to get it fixed. I wanted to protect the school, the institution.'

He said that Bishop had asked him to resign last summer, but that he had refused. When Bishop asked him to resign again on Thursday, Kessler said, he once again declined and was fired.

At issue, according to Kessler, was his discovery after a year in office that the amount of money available to run discretionary programs in the dean's office was millions of dollars less than he was promised when he took the job. He conducted his own financial analysis in December 2004, concluding the source of the problem was an $18 million annual discrepancy dating from the fiscal year ending in 2002, a year before he arrived.

Kessler told The Chronicle that he had been provided financial documents before he joined showing there would be an annual infusion of $46.4 million for the dean's office to spend on a variety of programs, but he subsequently discovered the figure was $28.8 million.

With each successive year since 2002, the discrepancy has been accumulating, reducing the financial viability of the dean's office.

An interview with the New York Times provided more detail,

Dr. Kessler said that before he accepted the position as dean in 2003, he requested information on the medical school’s financial condition. The documents he received showed that the institution expected generally to take in more, from grants and other sources, than it spent.

But Dr. Kessler said that he requested another such report once he was dean. He found that the two reports showed different numbers for years that had already passed.

'No accounting system should give you different numbers for the same closed fiscal years,' Dr. Kessler said. He said he took his concerns to the university. He said he also commissioned an outside report that found 'the financial practices of the school did not meet operating standards that would be expected at a large organization or business and that there was insufficient oversight.'

As did a report in the Los Angeles Times,

Kessler said UCSF officials from the time of his recruitment misled him about the financial health of the so-called central medical school, which provides funds available for use by the dean. Kessler provided The Times with several internal memos, financial spreadsheets and letters to support his contention.

The central fund's financial health affects the school's ability to remain competitive, recruit prominent faculty and launch innovative research.

According to a financial spreadsheet dated April 5, 2007, supplied by Kessler, the school's finance unit projected that the central medical school would run out of money in the 2008-09 fiscal year. By June 2011, it is projected to have negative net assets of $49 million.

According to financial estimates given to Kessler in June 2003, the school was projected to have revenue of $46 million to $47 million each year. In reality, Kessler said, the school's revenue was far below $40 million every year since he arrived, except in fiscal year 2006 because of a one-time patent settlement.

'If you had $47 million a year, you wouldn't be in a hole,' Kessler said in an interview.

In a letter dated July 5, 2007, [UCSF Chancellor and Nobel Prizer winner J. Michael] Bishop acknowledged to Kessler that the financial data provided to him during his recruitment 'did not accurately portray funds available to the dean for discretionary use. In retrospect, I can see how these presentations might have misled you and influenced your decision to accept the offer from UCSF. I regret this circumstance and apologize on behalf of the university.'

Furthermore,

Kessler said he relied upon detailed financial information shared with him by Jaclyne W. Boyden, who was then the medical school's vice dean for administration and finance. In a letter dated March 31, 2003, she said the dean's office had about $50.6 million in available funds in 2001-02 and was projected to receive about the same amount the following year.

That June, the school provided him with updated figures showing revenue was actually $46.4 million in 2001-02 and projecting revenue of $47.1 million in 2002-03.

But in December 2004, after Kessler had hired his own chief financial officer, he said he received new financial statements that greatly troubled him. The actual revenue in 2001-02 was only $28.3 million and revenue in 2002-03 was less than that.

'I get the December spreadsheet and I say, 'What's going on here?' ' he said. 'This thing looks all negative now.'

The next day, another article in the Los Angeles Times suggested that while Dr Kessler seemed willing to try to come up with some solution to the financial disagreements, the university was not interested,

During a three-hour interview Saturday at a San Francisco-area hotel, Kessler described the behind-the-scenes tension that he said led to his termination. He pointed to three actions he took that he believed may have played a role.

First, in April, he sent an e-mail to a university lawyer accusing the UC auditor of 'obfuscation or worse.' Then, he said, he provided a UC regent, whom he would not name, with documentation to support his allegations of financial improprieties. And finally, he called a meeting in April to share information about the financial position with medical school chairs and senior school leaders.

'It was clear that the university did not like us doing this,' Kessler said, referring to the chairs meeting. 'The chancellor was very upset.'

[Medical school Executive Vice Dean Keith R.] Yamamoto and Jed Shivers, the medical school's former vice dean for administration, finance and clinical programs, said Kessler was genuinely interested in finding a solution.

Shivers said he resigned in April to take a job in New York, in part because of the ongoing turmoil. He had worked with Kessler when Kessler was dean at Yale University School of Medicine, before coming to UCSF.

'My opinion is that they've resisted at every step of the way to really get to what occurred here,' Shivers said.

Yamamoto said he was baffled that the two sides couldn't work it out.

'David did everything that he could to actually solve the problem, to reach a resolution without anything blowing up,' he said. 'I believe he presented many options that could have gotten there, but they were rebuffed.'

Obviously there is an element of "he said, he said" in this story. In my personal opinion, Dr Kessler seems to have supplied the media with more evidence supporting his version of events than have the top UCSF leadership that fired him. In any case, the story suggests something was seriously wrong in the management of UCSF, whether it was attributable to the now former Dean (seemingly less likely), or to other university adminstrators (seemingly more likely).

We have not recently posted about problems in the leadership of UCSF, one of the US' premier medical schools. However, we posted quite often in the past about issues about the leadership of the University of California system as a whole (most recently here), and about the leadership of the University of California - Irvine (UCI) medical school (most recently here). It seems now a long time ago, but UCSF was the locus of the first more or less well-publicized stories from the 1990s about suppression of medical research (the "thyroid storm" case, see the Scientific Misconduct blog post here for its references, and the editorial in JAMA by Drummond Rennie [Rennie D, "Thyroid storm" JAMA, Apr 1997; 277: 1238 - 1243].)

Again, this is one more link in the chain of evidence that something serious has gone wrong with the leadership of major health care institutions. Now what are we going to do about it?

ADDENDUM (17 December, 2008) - see some comments on Wachter's World blog.