Detroit Medical Center, physicians group have backup plans that could lead to new partnerships

Detroit Medical Center is working on a "Plan B" in case it cannot get Wayne State University Physician Group back to the contract bargaining table.

Trouble is, Wayne State officials also say they are working on a backup plan if its clinical services and medical director contracts can't be resolved with DMC by Sept. 30 when the current contract expires.

Earlier this week, contract negotiations broke down between the two academic health partners over the issue of whether DMC can continue to recruit physicians employed by Wayne State University Physician Group. Wayne State wants a "nonsolicitation of physicians" clause in its contracts with DMC to protect its business interests. DMC officials have refused, saying they cannot agree to that for various business and regulatory reasons.

There is a nonsolicitation clause in the current contract, but the proposed agreement for the new contract is more specific and DMC objects to those terms.

The DMC-Wayne State teaching relationship is significant because the medical center is one of Detroit's largest safety net hospitals with more than 3,000 physicians on its medical staff. DMC is owned by for-profit Tenet Healthcare Corp., a Dallas-based investor-owned chain of hospitals.

"Our first concern is always we provide access and quality care for patients. It is what we do and most concerned with," said Roger Wiseman, DMC's senior vice president of population health and president of the Michigan Pioneer ACO. "We are preparing, like in any large contract if expiring, to have a Plan B in place."

Wiseman said DMC's backup plan involves hiring other physicians and medical groups to replace UPG doctors. "We want to reach agreement with doctors at UPG, but we have to protect patients," he said.

On whether DMC would actively recruit UPG physicians to continue their service at DMC, albeit under DMC employment rather than UPG, Wiseman declined comment.

Wayne State's Plan B is to explore talks with other hospitals in Southeast Michigan, said Jack Sobel, M.D., chair of UPG and dean of the Wayne State University School of Medicine.

One hospital system that has come up in the past as a potential expanded partner is Henry Ford Health System, which is also located nearby in Detroit. Wayne State already trains medical students at Henry Ford Hospital.

Henry Ford officials did not want to comment on the ongoing discussions between DMC and Wayne State. "We value our relationship with Wayne State," said Brenda Craig, Henry Ford's director of media relations.

Sobel said Wayne State was forced to go to Plan B because he maintains that DMC officials "terminated contract discussions" Tuesday during a two-hour session at the medical school.

"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," said Sobel, adding: "WSUPG was even willing to accept another reduction in the current rate of payment for services."

Sources tell Crain's Detroit Business that the value of the contracts at issue is about $26 million, a large chunk of money for a medical school trying to dig out from a $32 million deficit hole from 2015. Wayne State is on the hook for that money because it must still pay faculty physicians based on its existing contracts with them, sources say.

David Hefner, vice president for health affairs of Wayne State, said earlier this week that officials are trying to reassure UPG physicians that "we will provide them financial futures."

DMC CEO Joe Mullany told Crain's he disagrees strongly with Wayne State's description that DMC unilaterally terminated contract talks. He said he told his negotiating team to halt talks for the day when it was clear that Wayne State officials at the meeting were unprepared to discuss in detail the nonsolicitation issue.

"We didn't terminate. We walked out after (Lisa Keane, UPG's president) said she had no authority to talk about nonsolicitation of doctors," Mullany said. "We feel very strongly about it and said we can't do it (agree not to solicit Wayne State doctors)."

On the single issue that caused all the problems, Keane said Wayne State will continue to push DMC to sign a nonsolicitation clause, which essentially would prohibit DMC from recruiting UPG's physicians to its own employment arrangement.

"This is a legitimate business term," Keane said. "It is close to home. There are negative implications when you don't have that."

Keane told Crain's on Thursday that the university will accept DMC's offer to resume contract talks. "It was never our intention to stop. It is good for patients,” she said.

Wiseman said DMC stands prepared to immediately resume contract negotiations. "We are ready any time for as long as it takes for us to reach agreement," he said.

Thursday, DMC emailed Sobel and the UPG board asking to continue work on the contract.

"We are asking them to give (Keane) authority talk about it (nonsolicitation clause) or leave her out" of negotiations, Mullany said. "This isn't just us talking. It is at the urging of the doctors and the (UPG) chairs. They are outraged."

Matt Lockwood, director of communications for Wayne State, said Friday morning that Sobel had responded to Tenet's offer to resume negotiations directly to Mullany, but no response had yet been received.

"Until he [Sobel] gets a response, we are not moving forward," Lockwood said in an email.

DMC representatives were unavailable to comment Friday.

In an earlier interview with Crain's, Keane and Hefner said it was very clear to them that DMC had terminated negotiations Tuesday after about two hours of successfully addressing other issues.

"We got to the nonsolicitation issue and I told them I was not authorized to negotiate that term," Keane said. "They asked us to caucus and we left the room. We came back in and they said we are leaving. They walked out."

Mullany agreed with that version of the story except he said that during the caucus the DMC negotiators called him for direction.

"We have spent months since the spring talking. This last version, at the last minute, a new clause was added, the nonsolicitation clause. We said we can't agree to that," Mullany said. "Last week, she said she didn't have authority. This week she said the same thing."

Mullany said DMC cannot sign a nonsolicitation agreement. "The (Wayne State) doctors don't want us to sign it. It could put (residency programs) and research at risk," he said.

There is a nonsolicitation clause in the current contract, but the proposed agreement is more specific and DMC objects to that.

What is unusual is that Sobel and Mullany agree that good progress was being made on the contract. Mullany said he believed a contract agreement was one week away from completion.

Hefner said the department medical directors and clinical services contract expires Sept. 30 with UPG. But the teaching contract with DMC for medical students continues for several more years.

For the time being, Wiseman said there have been no changes in the operational relationship between DMC and Wayne State. "We have a contract and we are taking care of patients," he said. "I am not aware that anything has changed."

Crain's Detroit Business reporter Kirk Pinho contributed to this report.

"DMC, Wayne State physicians group have backup plans that could lead to new partnerships" originally appeared on the website of Crain's Detroit Business.