Independent report on University of Maryland Medical System cites lax oversight of board member deals

A consulting firm's assessment of the governance of the University of Maryland Medical System board of directors found that the board did not always fully examine deals involving board members before system management executed them.

"In some cases, these transactions did not appear to have been presented to the board or an appropriate committee of the board, despite requirements in existing UMMS policies," wrote Santa Barbara, Calif.-based consulting firm Nygren Consulting, which was hired by the Baltimore-based medical system.

The firm said it also found "varying degrees of potential conflicts of interests" presented by financial relationships it reviewed involving the medical system and nine members of the UMMS board of directors.

Overall, the report showed seven of nine transactions were executed without competitive bids, and board members were not properly notified of the business relationships in four instances, according to The Baltimore Sun.

The report looked at various financial relationships, including a $500,000 book deal former Baltimore Mayor Catherine Pugh had with the medical system while she was a member of its board of directors.

Other focuses of the review reportedly included John W. Dillon, who received $892,000 for providing "healthcare consulting services," and Scott Rifkin, MD, a former board member who runs a healthcare software company.

The health system hired Nygren to do the report after The Baltimore Sun revealed many board members' companies profited from deals with UMMS while board members. After the investigation, seven board members resigned, and four went on voluntary leave.

A UMMS news release says the consulting firm found that management as well as board members are responsible "for the lack of transparency and strong, modern governance policies that resulted in improper relationships."

Interim CEO John Ashworth said he fully accepts  findings and recommendations in the report.

"This report serves as a road map — not only to increase accountability among leaders and establish a more effective board structure — but to make progress toward real, lasting cultural change. Policies and procedures are not worth the paper they’re written on without an integrity-based culture to enforce them," he said.

"I am committed to rebuilding that culture and restoring the trust of those that depend on our leadership," he added.

The medical system has already adopted or will adopt various recommendations. For example, the board approved a new conflict-of-interest policy for its members.


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