A report from the oversight board of Detroit Medical Center raises concerns about quality and capital spending at the private for-profit system, as well as whether it is meeting its research obligations, according to the Detroit Free Press.
The report, by the Legacy DMC board, comes after DMC hospitals failed safety and quality inspections in 2018 and this year.
"These negative outcomes received extensive media coverage. In addition, several former senior physicians at DMC have raised questions about quality of care issues and alleged that unfavorable medical outcomes were resulting from DMC's staffing reductions over the last several years," the board wrote.
CMS scheduled termination of Medicare funding at Harper University Hospital, Detroit Receiving Hospital and Sinai-Grace Hospital after inspections, according to The Detroit News. Harper and Receiving passed subsequent inspections and have retained Medicare funding, while Sinai-Grace has until Aug. 31 to pass, the report states.
The board expressed other concerns as well.
"Less public concerns include inadequate support of research activities, which, over time, will jeopardize DMC's ranking as an academic medical center. Importantly, Legacy has frequently requested DMC to demonstrate its financial support of research, and DMC has not presented a credible case that it is in compliance with the commitment to support research," the board's report says.
Regarding capital expenditures, the board wrote, "As noted in previous reports, DMC's annual capital investment since 2015 remains at or below the low end of the acceptable range for the existing hospitals, jeopardizing the progress from initial facility and equipment improvements."
The board oversees capital investment commitments associated with the 2011 sale of the system to private for-profit Nashville, Tenn.-based Vanguard Health Systems.
Under the 2011 deal, Vanguard committed millions in capital improvements for DMC. Vanguard also made other commitments involving spending, care quality and support for medical education for the first decade post-sale, according to the Free Press.
Dallas-based Tenet Healthcare purchased Vanguard Health Systems, including its subsidiary, VHS of Michigan, in 2013, and the for-profit hospital operator is responsible for ensuring the commitments established with the initial sale to Vanguard are fulfilled. Each year, the Legacy DMC Board provides a report to the Michigan Department of Attorney General regarding the status of these commitments.
In response to the most recent report — which covers the status of the commitments as of the end of 2018 — DMC CEO Anthony Tedeschi, MD, sent an email to staff June 10 disputing its findings, according to the Free Press.
"While we respect the Legacy board and its interest in assuring that the DMC continues to deliver the service that the people of Detroit deserve, the Legacy board report does not accurately reflect the DMC's achievements, including the fact that the DMC has met or greatly exceeded all obligations under the agreement in connection with the acquisition," Dr. Tedeschi said in the letter.
"Our investments have been focused in areas where the dollars can make the most difference to front-line patient care and to the construction, expansion and renovation of our hospital facilities and are targeted to benefit our patients and dedicated health teams."
He told Becker's DMC has invested more than $850 million in new hospital construction, expansion and renovation, including the new Children's Hospital of Michigan Specialty Tower,and the DMC Heart Hospital.
Additionally, Dr. Tedeschi noted that Children's Hospital of Michigan is among the best nationwide in five pediatric specialties, according to the latest U.S. News & World Report rankings for children's hospitals.
The board backed its concerns, according to a letter from the board chairman.
Still. the Michigan attorney general's office and board chairman, Richard Widgren, said they were pleased overall with Tenet and the DMC satisfying their commitments, according to Crain's Detroit Business.
Kelly Rossman-McKinney, a spokesperson with the attorney general's office, told the publication: "The (Legacy) DMC annual report monitors DMC's compliance with 15 commitments made as part of the sale of DMC to Vanguard in 2010. The most recent report raises some issues that cause concern. While the Office of the Attorney General may share some of these concerns, it does not appear at this time that there is any actionable breach of the covenants reflected in the report."
Editor's note: This story was updated on June 19.