Wayne State, DMC leaders agree to contract negotiating plan

Top officials at Wayne State University and Detroit Medical Center have agreed to a new negotiating plan to move contract talks forward, Crain's Detroit Business has learned.

On Sunday, Wayne State President Dr. M. Roy Wilson, met privately with DMC CEO Joe Mullany to discuss what both sides acknowledge was a miscommunication last week about long-term goals between the two medical partners.

Wilson told Crain's Wednesday evening his meeting with Mullany was prompted by his feeling that the talks were stalled because of federal regulatory concerns voiced by DMC, which is owned by Dallas-based Tenet Healthcare Corp., an investor-owned chain that primarily operates community hospitals.

"I kept on getting complaints from faculty about this or that," Wilson said. "Whenever I mentioned to Joe something about it, I got a different viewpoint. I thought maybe it was time to clear the air and make sure we lay the facts out as we know them. More importantly, I wanted to make sure our vision for the future was articulated correctly and we have a path forward."

Mullany was traveling Thursday and not available for comment.

Wilson said Mullany has agreed to a five-point plan that would lead to a clinical services contract approved by June 7. The current contract expired March 31.

While the initial contract would simply be a series of transactional agreements that can be agreed to by both parties, Wilson said talks would continue this year to develop addendums to the contract that would spell out and pay for the "transformational relationship" both sides have wanted.

"The future is bright, but we will not compromise our vision or pay any cost to establish this partnership," Wilson said.

Two of the more surprising points in the negotiating plan call for DMC and Wayne State to jointly hire and pay for a consultant and attorney to work through sticky details of the contract talks.

Asked about contract problem areas, Wilson said he did not discuss specifics of the contract with Mullany. Negotiating teams for Wayne State and DMC met Tuesday.

Wilson did say that DMC's offer to acquire 400-physician Wayne State's University Physician Group is a nonstarter and will not be considered. He said financially successful medical schools must operate on the three legs of teaching, research and clinical services, revenue of which is provided through an academic faculty practice plan.

However, Wayne State officials said Jack Sobel, M.D., the medical school dean and chair of UPG, will present DMC's offer to the UPG board at its meeting Thursday evening.

"I made it clear. I have absolute faith in the leadership (of the medical school negotiating team)," Wilson said. "We have an A-plus team with (David) Hefner, Sobel and Lisa Keane, (Richard) Baker and Herbert Smitherman. They are very capable people."

"If we sign a contract that does that, that would be terrific. Otherwise, what will happen is we die a slow death," he said.

Wilson said he doesn't want a repeat of 2008-09, when Wayne State and DMC reached an impasse in contract talks and DMC unilaterally suspended monthly payments for about eight months. Wayne State still insists it was not paid by DMC for those months.

Financial and operational repercussions of the eventual contract that was signed between the two providers, which Wayne State officials still say was a bad deal for the medical school, are still being felt. Mullany has told Crain's that payment declines were mostly due because of lower volume of services rendered.

"I can see why people say that" the previous contract was bad, said Wilson, who wasn't at Wayne at the time. He arrived in 2013. "We want a path forward that will be good for both DMC and Wayne State."

Here are the highlights of the five short-term goals:

• Agree to the contracts by June 7. Conduct work on a parallel path of aligning the long-term vision for an integrated academic medical center 20- 50 years into the future.
• Jointly hire a third-party consultant to assist in identifying viable funds, flow models and organizational alignment models that are used successfully at other academic medical centers.
• Because no history exists between Wayne State and DMC on the two parties working closely together to resolve issues or misunderstandings, appoint a joint team to "recommend process/code of behaviors" to define relationships, roles and responsibilities and communications. Wilson said the team would consist of Sobel and UPG president Keane representing Wayne State. DMC would be represented by Suzanne White, M.D., DMC's chief medical officer, and another DMC official who hasn't been named.
• Jointly hire an outside counsel to advise the parties on regulatory issues involving federal Stark Law, which limits payments from hospitals to doctors to fair market value.
• Encourage DMC to create financial incentives through executive compensation plans to reward DMC executives to increase clinical research at Wayne State. DMC executives are not rewarded currently for increased clinical research conducted by Wayne State doctors at DMC.

Wilson also said Mullany agreed to work on improving the future relationship with Wayne State.

In a statement, Wayne State said its vision includes the following:

"We envision an academic medical center with a tripartite mission that adopts and perpetuates the cultural values of integrity, innovation, quality/safety, and excellence.

"We need a strong, committed partner to join us in that endeavor. We believe it would be best for Wayne State University (that the partner be) Tenet/DMC … but we will not compromise our vision or pay any cost to establish this partnership. We will be true to our north star; we will not settle for less."

Wilson said he discussed this future vision at a town hall meeting at Wayne State on Tuesday before a standing-room-only crowd. The event was not live-streamed or available on YouTube, unlike other meetings.

"I read a passage about Wayne State being about a place of light. … When Wayne State talks about the 150th year anniversary in two years, we are talking about the founding of the medical school. It was called Detroit Medical College. Notice the initials are DMC. It started on the grounds of what is now Harper Hospital."

Wilson said the two entities of Wayne State and DMC are closely intertwined.

"What is best for DMC is best for Wayne State and the city of Detroit," he said. "We can build a very strong academic medical center, but it can't be at any cost. If one of our core values is innovation, what better time than now to think of the future of medicine, future training models, the future of how patients treated with much smaller delivery care clinics."

Wilson said Wayne State needs to stay true to its core values.

"Wayne State, DMC leaders agree to contract negotiating plan" originally appeared on the website of Crain's Detroit Business.