Detroit Medical Center has made another offer to acquire Detroit-based Wayne State University School of Medicine's more than 500-member faculty practice, University Physician Group, according to Crain's Detroit Business.
Crain's learned of the offer in a letter from DMC CEO Joe Mullany to Jack Sobel, MD, dean of Wayne State's school of medicine. This is not the first time DMC has offered to acquire UPG — it has made several offers over the years, but has always been denied, according to Crain's.
However, the need for a new clinical services contract and the medical school's ailing financial position could make the offer more appealing this time around.
DMC and Wayne State are currently renegotiating a long-term clinical services agreement that expired March 31 and is currently on a month-to-month extension, according to the report. Mr. Mullany wrote that UPG could consider full employment, a professional services agreement or a joint venture to "free us from the constraints of our current contractual model," according to the report.
On top of that, the medical school is currently in significant financial distress. Wayne State announced last December it planned to implement a financial turnaround after posting a $29 million loss for fiscal year 2015. In early March, faculty members received a letter that between 60 and 80 of them had been deemed unproductive and needed to boost research products and patient volume.
"We are at a critical juncture that will determine the future success of DMC and the long-term viability of UPG. This is our time to redefine our relationship and allow [the medical school] to focus on academic and research excellence," Mr. Mullany said to Dr. Sobel in the letter, according to the report.
Despite these factors, WSU spokesman Matt Lockwood told Crain's UPG is not for sale. The entities have not agreed to an acquisition in the past because WSU officials want higher payments than DMC says is allowed under the Stark Law. DMC reasons that the faculty is not large enough to qualify for the law's academic medical center exception, according to the report. David Hefner, vice president for health affairs of Wayne State, told Crain's he does not think Stark Law applies.
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