A decade after the arrival of Donna E. Shalala as its president, the University of Miami can be seen in two distinctly different ways.
One is suggested by its Coral Gables campus, in a manicured oasis of exclusive golf resorts and red-tiled mansions. The other view is suggested by its downtown medical school, nested in a concrete snarl of highway ramps and weed-filled lots where a bail-bond office with bulletproof glass sits near a main entrance of the school.
Just eight miles apart, the two scenes are both elements of Ms. Shalala’s aggressive push to bring the University of Miami into the ranks of the nation’s elite research universities.
The former U.S. secretary of health and human services has made that push largely by expanding the medical school, including the purchase of the 560-bed University of Miami Hospital. But five years into one of the nation’s worst economic downturns, the expansion is looking overambitious to some. A few money-making practices are now prompting complaints and even legal investigations. And the citizens of one of the nation’s poorest cities, many of whom rely on the university’s doctors as their sole source of health care, are feared to be paying part of the price.
Few people with inside knowledge want to talk publicly about the situation, and even fewer will do so with their names attached. But documents and data depict a university that has seen its total budget more than double in 10 years, operating margins turn to losses, highly recruited faculty members leave, and patient-care ratings decline at Jackson Memorial Hospital, the 1,500-bed public hospital on the campus, for which the university for decades has supplied most doctors.
Some observers, such as Viviene Dixon-Shim, president of Local 1363 of the American Federation of State, County, and Municipal Employees, which represents support workers at Jackson, can describe only a general feeling. “The university is not really working with us in a unified way,” she says.
Others, including several current and former faculty members, outline their complaints in far more detail. But they do so anonymously, saying they don’t want to tangle head-on with such a politically powerful president. They describe a university that promised too much and is now hustling to cover costs, even if it means taking from the poverty-plagued population it pledged to serve.
Among the examples: At least two federal agencies are investigating allegations that university researchers enrolled Jackson patients in medical studies without the hospital’s knowledge. The practice, according to statements by Jackson officials and records obtained by The Chronicle, may have cost local and federal taxpayers $10-million to $20-million a year in patient-care costs that should have been paid by the university out of the research money it gets from the federal government and private companies.
Another set of problems, cited by current and former university faculty and Jackson staff members, stems from the 2007 takeover of a facility that became the University of Miami Hospital, across the street from Jackson. The purchase has greatly expanded the university’s ability to direct many of the area’s most profitable patients and procedures to the new facility and to other university-owned hospitals, further worsening Jackson’s own considerable budget woes.
Strategic Plan
Ms. Shalala sees things much differently. Sitting inside the president’s office in Coral Gables, where her walls are cheerfully blanketed with personal awards, plaques, and UM sports memorabilia, she can tick off a list of successes:
The University of Miami is now ranked 47th nationwide on the U.S. News & World Report‘s list of “best colleges,” up from 67th when Ms. Shalala arrived. She led a fund-raising campaign that surpassed $1-billion in four years. And the university just had a record 28,000 applications for 2,000 openings in its freshman class.
“We have had,” Ms. Shalala says, “a very disciplined strategic plan to make this place much, much better, to move into the top ranks of American universities.”
She came here after turning down various other opportunities, including the presidency of Brown University, which she felt “wasn’t messy enough for me.”
Miami hired her, she says, to create a culture that emphasizes top-quality research across the institution. The medical school is now ranked 45th in the nation by U.S. News, up from 56th in 2007, with faculty handling more than $200-million in external grants and contracts. Those who gripe, she says, are doctors who for years were happy to provide their patients with nothing more than standard clinical care.
“At any university I’ve been at,” says Ms. Shalala, who was previously president of Hunter College of the City University of New York and chancellor of the University of Wisconsin at Madison, “you can find those people complaining that they want to live their little lives without being researchers.”
Rather than cutting service for Miami citizens who rely on Jackson, the expansion of University of Miami research is already saving lives, Ms. Shalala says. She cites cases such as that of Encarnacion Miranda, a 59-year-old car salesman who was near death from liver cancer in October 2009 when he was sent to see Jolly N. Varki, a university oncologist working at Jackson.
Dr. Varki shepherded him through a series of experimental procedures that shrank his tumor enough to make him eligible for a liver transplant. He is now recovered and back at work. “She never gave up on me,” Mr. Miranda said. “Other doctors were already referring me to hospice. In other words, they said there was nothing they could do.”
The university also points with pride to its work after the January 2010 earthquake in Haiti, when it rushed a team of doctors, nurses, and staff members to Port-au-Prince. “We are trying to do something important here,” says the medical school’s dean, Pascal J. Goldschmidt, who dismisses critics as disgruntled former employees. “We are trying to take care of our human fellows, and, believe it or not, I take that very seriously.”
Ms. Shalala and Dr. Goldschmidt don’t dispute that they have other motives. The university, says the dean, is especially interested in ranking high according to the criteria set by the Association of American Universities for judging the quality of research institutions.
The association, in a system that recently has led some outside institutions to question its fairness, bases its membership decisions largely on a university’s total competitive research dollars and its share of faculty members who belong to the National Academies.
To that end, the university’s budget has doubled in size under Ms. Shalala, from $1-billion a decade ago to more than $2.2-billion now. The expansion has included hundreds of new hires, led by faculty-recruitment packages that in many cases near or exceed $1-million apiece.
It’s all been bolstered by a fund-raising campaign that collected $1.4-billion by the time it ended, in December 2007, and by annual gift revenue since then that exceeds $100-million. One of the most high-profile gifts was the 2004 pledge of $100-million to the school of medicine by the family of Leonard M. Miller, founder and chairman of the Lennar Corporation, a home-construction company, who died in 2002. The university later named its medical school after Mr. Miller, and Ms. Shalala served on Lennar’s board.
The school already has more than 500,000 square feet of research space, with two million more coming in the planned new UM Life Science & Technology Park. The school’s top rankings include that of the Bascom Palmer Eye Institute, which U.S. News has called the nation’s leading ophthalmological hospital for seven years in a row.
“It was a deliberate strategy by the trustees to move the university to be one of the top universities in the country,” Ms. Shalala says. “That’s why they hired me, that’s why we hired Pascal Goldschmidt, that’s why we attracted basically over $1-billion worth of gifts—to focus on that strategy.”
Budget Problems
But not all has gone according to plan. Moody’s Investors Service, the bond-rating agency, last year downgraded the University of Miami’s debt, saying it appeared financially stressed as a result of its heavy reliance on medical revenues from a system now encompassing three university-owned hospitals and more than 900 physicians. Nearly half of the university’s revenue is now derived from patient care, Moody’s reported. The university had an operating deficit of 1.2 percent in the 2009 fiscal year, compared with a surplus of 6.5 percent three years earlier, Moody’s noted. And several top faculty recruits, particularly from Harvard University and the Mount Sinai Medical Center in Miami Beach, have left after staying only a few months.
The university bought the former Cedars Medical Center from the Hospital Corporation of America after the chain had been involved in the largest-ever fraud settlement with the federal government. As a rule, universities over the past couple of decades have been selling off their hospitals, finding the risks and operational complexities incompatible, rather than buying them, says John C. Nelson, managing director for health care and higher education at Moody’s.
University officials say the location of the hospital—it became the University of Miami Hospital—right on the medical school’s campus, made the purchase attractive. Critics deride the deal as an opportunity, made even more useful by the university’s aggressive expansion campaign, to take advantage of both the city and Jackson Memorial. For the past 50 years, the university has provided the bulk of the doctors at Jackson, the nation’s largest public hospital, as a training ground for its medical students. The hospital is owned by Miami-Dade County, which uses the proceeds of a 0.5-percent sales tax to cover about half of the $700-million that Jackson needs each year to care for local residents with no other health-care alternative.
Jackson, however, is facing severe service cutbacks, having lost an estimated $330-million during the past two years, with an additional $100-million loss expected this fiscal year. Even its harshest critics don’t blame the university for most of the troubles plaguing Jackson. But, some of the critics say, the university is making conditions much worse. Even some top Jackson officials may not have been aware of the extent of the problems.
A grand-jury investigation began last year after Jackson’s leadership admitted to a deficit exceeding $240-million in 2009, more than five times what had been expected. Though the grand jury didn’t mention the university, documents obtained by The Chronicle through a public-records request show that midlevel hospital administrators had been warning for years that the system was bleeding cash.
The university’s patient-enrollment practices were part of the problem. The inspector general of the U.S. Department of Health and Human Services and the U.S. Attorney’s Office for the Southern District of Florida are looking into the question of whether university doctors routinely enrolled Jackson patients in research projects without telling the hospital.
In a 2008 letter from Jackson officials to university leaders, Nathan Anspach, who was vice president for physician services at the hospital, described a series of failed efforts “to stop new clandestine research” at Jackson by university doctors.
Meetings with university officials aimed at stopping the practice “went badly,” Mr. Anspach wrote, and Dr. Goldschmidt, the medical-school dean, was “outwardly annoyed” by Jackson’s requests for information that would help it identify research patients in the building.
Ms. Shalala was copied on at least some of the correspondence, including a 2006 letter in which Marvin O’Quinn, then-president and chief executive of the Jackson Health System, which runs Jackson Memorial, warned Dr. Goldschmidt about the legal risks of submitting claims for patient care that should be covered by a medical study.
The current director of compliance at Jackson Health System, Diana Salinas, said the allegations are a matter of investigation by the two federal agencies. Ms. Shalala and Dr. Goldschmidt told The Chronicle that they were unfamiliar with the matter. “This must not be a very big issue,” Ms. Shalala said, “because none of the Jackson senior leadership has ever brought it up with me.”
Ms. Shalala also denies that doctors at the medical school have begun using the University of Miami Hospital to take money from the county by scheduling Jackson patients for appointments at their hospital if the patients are found capable of paying their bills through insurance.
“People just say it because we’re next door,” she says. “But there’s absolutely no evidence, and we very carefully made sure that that didn’t happen.”
Others call the practice of patient relocation routine. The hospitals don’t have long-term data, but recent numbers on cardiac catheterization—one of the most lucrative medical procedures—show a 29-percent decline at Jackson from 2009 to 2010.
And the departing chief executive of the Jackson Health System, Eneida O. Roldan, whose appointment two years ago was supported by the university, said medical-school officials made clear from the start “that they were going to take cardiology across the street.”
Ms. Dixon-Shim, of the support-workers’ union, is among those who say they’ve seen it happen. “Most of the indigent patients, they’re staying at Jackson,” she says. “But most of the private patients, the physicians are taking them over to their area” at the university-owned hospitals.
Debates over ethical boundaries are not new to those involved in the university’s growth surge. Ms. Shalala was on the compensation committee of the board of the health insurer UnitedHealth Group when it was caught in one of the nation’s largest-ever stock-options scandals. She also received low-cost loans in 2002 as part of a favors-for-politicians scandal at Countrywide Financial Corporation.
Both Ms. Shalala and Dr. Goldschmidt have served on the boards of companies directly or indirectly affected by the university’s business decisions. The university had $30-million in annual business with UnitedHealth Group when Ms. Shalala was on its board.
Dr. Goldschmidt did not initially report all the income from such corporate associations on the medical school’s financial-disclosure Web site, even while promoting the site as evidence of his faculty’s commitment to openness. He also brought to Miami a repeat violator of financial-conflict-of-interest standards, Charles B. Nemeroff, to serve as a professor and chairman of the department of psychiatry and behavioral sciences (see related article).
The University of Miami Hospital is led by Anthony Degina Jr., who was chief executive of a separate Hospital Corporation of America facility in Miami that the Justice Department ordered to be sold off as part of the company’s fraud settlement.
Oversight Coming?
David A. Kessler, a Republican appointee who ran the Food and Drug Administration under Ms. Shalala for most of the time she served in the Clinton administration, says he is confident in the quality of her leadership.
He recalls with gratitude her standing with him in his battle to toughen regulations on cigarettes. If Ms. Shalala gets herself into partnerships that look unflattering, he argues, it’s only because she “engages fully in the world,” exposing herself to a wide range of personal and business associations. In all those dealings, “if she knew there were problems, she’d be the first to get rid of them,” he says.
Jackson Memorial, in any event, has clearly been suffering, with the effects now showing up in patient care. HealthGrades, a company that rates hospitals and other health-care providers, shows Jackson has had four straight years of declines in quality, based on patient-outcome data.
And if Miami’s medical school is draining resources from Jackson, that won’t help the university in the long run, experts say. “The best scenario is for both partners to be strong,” says Joanne M. Conroy, chief health-care officer at the Association of American Medical Colleges. “Most institutions of that size would say it’s very important to have a strong clinical and a strong research and a strong educational enterprise, and they’re of the size and scope that they should be able to pull that off. So it helps when everybody is strong, and it’s hard when one of the parties is weak.”
The questions surrounding the University of Miami’s relationship with Jackson Memorial also could mean greater federal oversight for the several hundred sets of relationships between medical schools and local hospitals.
The inspector general of the Department of Health and Human Services is the largest such investigative agency in the federal government, with the majority of its resources used to check for fraud in Medicare and Medicaid. So far the inspectors at Ms. Shalala’s former agency haven’t been studying the possibility of fraud involving universities using research programs, says Donald B. White, a spokesman for the inspector general’s office. The situation, however, could change.
Upon being told about the situation at Jackson Memorial and the University of Miami, Mr. White responds, “That is something that we would want to put into our work plan at some point in the future.”
Clarification (7/6): This article originally mischaracterized how Pascal J. Goldschmidt, dean of Miami’s medical school, underreported income from his corporate-board service. The Web site at the University of Miami where Mr. Goldschmidt reported his outside income did not initially allow for reporting unexercised share options. When the Web site was changed to allow such reporting, Mr. Goldschmidt completed his report, although he did not put a dollar value on those unexercised share options. The article has been updated to reflect this clarification.
