Michigan court rules University Pediatricians can't make new affiliation deal until March
Wayne County Circuit Court ruled Wednesday that University Pediatricians, the primary medical practice serving DMC Children's Hospital of Michigan, cannot negotiate or sign an affiliation agreement with other universities until March 20, six months after UP gave notice it would terminate its affiliation with Wayne State University, WSU officials said.
Crain's reported last month that Detroit-based University Pediatricians physicians group has held affiliation talks with the University of Michigan amid a dispute with UP's longtime academic partner Wayne State University. It has also talked with Michigan State University.
"We understand that there continues to be much confusion and consternation surrounding any next steps between the School of Medicine and UP and we want to continue to do all we can to help dispel falsehoods and provide facts to help inform your decisions moving forward," Jack Sobel, M.D., dean of the WSU School of Medicine, said in a Wednesday email to pediatric faculty.
"A recent Crain's article that cited a number of anonymous sources suggested future UP affiliation with the University of Michigan," Sobel said. "However, yesterday's decision by the Wayne County Circuit Court legally prevents conversations about such an agreement from taking place until after March 20, 2018."
Sobel said he still hopes WSU can resolve outstanding differences with UP leadership. "Regardless of the outcome of these negotiations, we hope to keep our valued pediatricians within the WSU family for many years to come," he said.
UP and DMC spokesman John Truscott, principal of Lansing-based PR firm Truscott Rossman, said UP would comply with the court ruling and would soon issue a full statement. UP is represented by attorney Bill Horton with Giarmarco Mullins & Horton P.C. in Troy.
Elizabeth Secord, M.D., one of three WSU pediatricians who filed the original lawsuit against UP, told Crain's in an email that she is pleased the court upheld the implementation agreement. Secord also is a member of UP.
"We now need to work to resolve the issues that led to this situation and maintain an atmosphere where we can keep the patients (always first) and trainees at the top of our priorities," Secord said. "Wayne State University is a vital part of this solution."
Under the current agreement between the 220-physician UP and Wayne State, either party must give six months' notice to end the relationship. In late September, UP gave WSU notice it would be talking with other universities, according to a Wayne State official who requested anonymity.
In September, the Michigan Court of Claims ruled in a lawsuit filed by three WSU pediatricians that UP must follow the medical school dean's guidelines under a 2003 implementation agreement it signed with Wayne State.
UP was unsuccessful in filing a counter-lawsuit that asked the court to declare that a 2006 affiliation agreement it signed superseded the earlier agreement and that it was not bound to follow the dean's guidelines, which all of the medical school's 20-plus clinical affiliates must follow.
In a meeting last month with WSU faculty, UP President Mary Lu Angellili announced that UM had agreed to the talks and that they were free to discuss it with fellow physicians. UM has repeatedly declined to comment. Angellili didn't respond to an interview request.
The dispute between UP and WSU is part of a yearlong running battle that began last fall when UP signed a teaching agreement directly with DMC. WSU said the agreement violated the 2003 implementation agreement because WSU wasn't a party to the DMC agreement.
M. Roy Wilson, M.D., WSU's president, in August called the contract with DMC an "existential threat" to the university.
DMC is a for-profit hospital system owned by Dallas-based Tenet Healthcare Corp., one of the nation's largest investor-owned hospital chains.
For more than two years, Tenet has been losing money and cutting expenses at the corporate and local hospital level. In the third quarter ended Oct. 31, Tenet's reported a net loss of $367 million on revenues of $4.59 billion. That loss is up over the same period of 2016, when the company recorded a net loss of $8 million on revenues of $4.85 billion.
Over the past several years, the UP board has been trying to become more independent of Wayne State and closer to the DMC, moves that DMC's leadership has encouraged, two sources with knowledge of the matter have told Crain's.
MSU College of Osteopathic Medicine Dean William Strampel confirmed to Crain's last month that he has listened to UP officials about the possibility of MSU taking over for WSU. Michigan State has a major campus in downtown Detroit that serves DMC and Authority Health, the former Detroit Wayne Health Authority, with resident physicians and osteopathic medical students.
But Strampel said he made it clear to UP that he would enter into serious discussions about an affiliation only if "there was a complete dissolution of the relationship" between WSU and UP.
"MSU is not interested in damaging a sister institution in the state of Michigan and would never go out of our way to intentionally hurt the University of Michigan, Oakland University or Wayne State," Strampel said.
UP officials have told Crain's the exploratory talks were necessary with other universities because WSU has notified UP that it would terminate a Medicaid enhanced payment arrangement by Oct. 31. Wayne State manages the state-funded Medicaid payments for the faculty doctors who see uninsured and Medicaid beneficiaries.
But WSU recently rescinded that termination and UP continues to receive the enhanced Medicaid payments, which amount to about $10 million per year.
However, UP also has withheld paying WSU more than $5 million as part of its longstanding salary reimbursement agreement, which is one of the two outstanding agreements that UP hasn't signed. Wayne State cuts paychecks for UP physicians that include clinical, teaching and education payments and UP is supposed to reimburse WSU for the clinical services portion of the paycheck.
A WSU official said the university continues to discuss the problem with UP.
While the current disagreement is between UP and Wayne State, a larger dispute involves the future relationship between Wayne State and DMC.
Last year, the two longtime academic partners tried to negotiate a long-term "transformational" teaching, clinical services and administrative contract. They settled for an 18-month agreement for clinical services and administration that left both sides unhappy. Wayne State officials have said they are trying to negotiate a new affiliation deal with other health systems.
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