Leaders of the Maryland legislature reacted with alarm to a report that nearly a dozen members of the University of Maryland Medical System’s board of directors have lucrative business deals with the institution.
Many of the deals run into six figures, and a lawmaker who has introduced conflict of interest legislation said there is no evidence that the contracts were competitively bid.
“Board members are supposed to be motivated by a desire to serve the interests of the patients of Baltimore City and the state,” Sen. Jill P. Carter (D-Baltimore) told the Senate Finance Committee. “Unfortunately, this does not appear to be the case.”
Carter’s bill, Senate Bill 619, would prohibit board members from having a financial interest in a business that has, or is negotiating, a contract with the system. It would also bar a member of the UMMS board from “intentionally using the prestige of office for private gain or the gain of another.”
Her proposal had its hearing one day after The Baltimore Sun reported that nine of the medical system’s 30 board members — including Baltimore Mayor Catherine Pugh — have financial arrangements with UMMS.
According the Sun, former state senator Francis X. Kelly, who owns an insurance company, Kelly & Associates Insurance Group, reported receiving more than $1.6 million in revenue from system contracts in 2017 and $2.8 million last year.
Pugh reported $100,000 on her 2017 financial disclosure forms from the sale of 20,000 copies of her children’s book, “Healthy Holly,” to the system.
Other arrangements included:
- A bank executive whose firm had eight deals with the system, resulting in more than $4 million in revenue in 2018;
- A health care consultant whose firm generated more than $150,000 a year through a contract with the system for a “capital campaign and strategic planning;”
- An ambulance company official who took in more than $100,000 annually through a contract with the system; and
- A technology executive who reported in 2017 that his firms pulled in more than $150,000 through system contracts, including more than $108,000 in pay for himself.
Carter described her proposal as “a step toward transparency and accountability for the University of Maryland Medical System.”
In an interview with reporters, Senate President Thomas V. Mike Miller Jr. (D-Calvert) called for an audit to restore public confidence in the contracts awarded by the $4.5 billion, taxpayer-supported medical system.
“They need to make certain that they’re above board, that it’s honest, and that there are bids for these projects, not any in-house deals,” Miller said. “Now that we know about it, I think there’s got to be — not an investigation — but there’s got to be a self-evaluation. They’ve got to look at it.”
Robert A. Chrencik, president and CEO of the University of Maryland Medical System, defended the board’s handling of its financial relationships with its members.
“There is no intent to do something that’s inappropriate [or] that doesn’t comply with the rules and regulations of [the Health Services Cost Review Commission],” he told reporters after testifying before the committee.
“These contracts passed through our audit and compliance committee and then reviewed in aggregate at one of our full board meetings,” Chrencik said.
He said the board would lose valuable board members if Carter’s measure is adopted. “If we cannot access the business community for board members, we’re competitively harmed.”
He bristled when a reporter referred to the system’s contracts with its board members as “deals.”
“That is a bad word,” he said, wagging his finger. “It implies that there is some kind of misadventure here. These are business relationships between a trustee and an organization.”
The University of Maryland Medical System is a 501(c)(3) that oversees 11 hospitals and employs 30,000 people. Chrencik said the system is about to institute a $500 million improvement plan.
“It’s all about reducing costs, improving efficiency and improving quality,” he said. “And we will lean on the best resources we can find.”
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