ANNAPOLIS — University of Maryland Medical System officials told lawmakers Friday they are committed to “evolving” how they do business.
As the legislature is quickly moving legislation to force the system to make changes, leaders of the $4 billion medical system said they are working to determine how some board of directors or their businesses may have been awarded contracts and if there were any ethical or legal breaches.
Donna Jacobs, senior vice president of government affairs for the medical system, told members of the House Health and Government Operations Committee Friday, that the hospital system is hiring an outside firm to audit its business relationships with members of its board. And while some directors have resigned and others have taken voluntary leaves of absence, she cautioned lawmakers to not predetermine the results of the audit.
“Not everything is automatically a conflict of interest nor illegal,” said Jacobs. “So, where and how do we draw the line for best practices for businesses and nonprofit hospitals?”
The medical system, which receives state funds but is not a state agency, has come under fire from lawmakers and Gov. Larry Hogan following reports that some board members or their businesses benefited from contract with the system. Some of the contracts, including $500,000 in payments to Baltimore Mayor Catherine Pugh, who wrote a series of illustrated children’s books on health about a character named “Healthy Holly,” were not competitively bid.
In the last week three board members, including Pugh, have resigned. Four others, and Robert Chrencik, the president and CEO of the system, have been placed on voluntary leave.
The committee met Friday to hear legislation proposed by House Speaker Michael Busch that would alter the function of the board and impose new reporting requirements.
“He has not parsed his words in his disappointment with some of the allegations that have come forward, particularly given that he was chair of the board at a time of chaos of the system in 2008 and helped put Bob Chrencik in place as chief executive officer,” said Alexandra Hughes, Busch’s chief of staff.
Busch was not present Friday as his legislation received a committee hearing just a day after being introduced in the waning days of the 90-day session. The bill is expected to be amended and voted out of committee next week. The legislation appears to have strong bipartisan support.
“I was completely shook by the news that we’ve all seen,” said Del. Nicholaus Kipke, R-Anne Arundel and House minority leader. “I know that everyone here is terribly concerned about it. Our constituents are as well, and I appreciate the opportunity to stand with the speaker, who immediately responded to this shameful thing that we’ve all witnessed.”
Kipke said individual board members and the medical system “let us down and they need to do better.”
The speaker’s bill incorporates prohibitions on contracts for board members contained in a Senate bill filed earlier. The board would also be prohibited from using sole-source contracts.
Additionally, it reduces the size of the voting membership from 30 members to 25 — though an amendment is expected to give the board flexibility if the system expands with new affiliate hospitals; gives the governor, Senate president and speaker of the House one appointment each; and requires that all board appointments be approved by the Senate.
Directors also would be required to provide financial disclosure statements to the State Health Services Cost Review Commission. Elected and most public officials typically file those annual statements with the Maryland State Ethics Commission.
The disclosures would be available to the public, under Busch’s proposal, and the legislature and governor would be provided annual summaries of those disclosures.
Medical system board Chairman Stephen Burch, in a statement Jacobs read to the committee, said the board was committed to addressing the concerns raised by “growing concerns about board members.”
“The board and I are firmly committed to evolving our decision-making process and operating with even more transparency,” Burch wrote in his statement. “I cannot overemphasize the importance, and sense of urgency I feel, regarding the system’s reputation — it is simply not negotiable.”
Also Friday, a UMMS spokesman declined to make public copies of the contract with Pugh or invoices from her company, Healthy Holly LLC.