University Of Maryland Medical System:

Success and Failures of A Corporate Giant

Taina Hogu

Health Care Administration HCAD 600 Section 9041
Professor Arthur Reynolds MA, MHA, JD
Fall 2008

UMMS Snapshot
The University of Maryland Medical System (UMMS) is a corporate giant. UMMS generates $3.5 billion in revenue and employs approximately 14,800 people. UMMS is the third largest healthcare employer in the state of Maryland (Maryland Department of Business and Economic Development, 2007). With billions of dollars at stake, UMMS faces major infighting for control of the system. Recently, nine of the 27-person board at UMMS turned in their resignations due to Governor Martin O’Malley growing influence (Schultz, 2008). Despite infighting and takeover threats by the State, UMMS has survived, providing quality care and expanding services throughout Maryland.
For example, the trauma center at UMMC (a division of UMMS) provides a great service to the community. Baltimore is plagued with violent crimes which claim the lives of many victims on a daily basis. The R Adams Cowley Shock Trauma Center at UMMC treated several of these victims last year (7,500) and 97% of patients survived. UMMS also serves patients with chronic ailments like cancer. The Marlene and Stewart Greenbaum Cancer Center sees thousands of patients every year (UMMS, 2008). Overall, UMMS consists of eight member hospitals. The member hospitals are: University of Maryland Medical Center, Baltimore Washington Medical Center, Maryland General Hospital, Kernan Hospital, University Specialty Hospital, Mt. Washington Pediatric Hospital, Shore Health System, and Chester River Health System. Operating all these systems present various challenges. Such challenges as well as organizational factors are discussed elsewhere.
UMMS Organizational Chart and Structure
As shown in the attached organizational chart, Governor Martin J. O’Malley oversees the entire UMMS Corporation (Maryland State Archives, 2008). Michael E. Busch reports directly to Governor O’Malley and serves as Interim Chair on the Board of Directors (Smitherman, 2008). According to Smitherman (2008), former chairman John Erickson reluctantly resigned making way for Busch who remains speaker of the Maryland House of Delegates. Under auspicious conditions, Robert A. Chrencik stepped in as the Interim President and CEO of UMMS. John P. McDaniel former director of Med Star Health was originally offered the CEO position (Smitherman, 2008). Hiring Busch instead of McDaniel created some tension, but UMMS did so in hopes of getting the system back on track.
Robert A. Chrencik who Governor O’Malley endorsed, supervises all the hospital chief executive officers (CEO). These CEOs include Karen E. Olscamp of Baltimore Washington Medical Center, Jeffrey L. Johnson at Chester River Health, James E. Ross at Kernan Hospital, Sylvia Smith Johnson at Maryland General Hospital, Joseph P. Ross at Shore Health, Jeffrey A. Rivest at UMMC, and James L. Warner at University Specialty Hospital. In addition, Chrencik oversees various departments at corporate headquarters. These departments include Ambulatory Care headed by Trent C. Smith, Clinical Information Technology directed by Mark Keleman, Corporate Finance, Corporate Operations headed by Michael C. Mullane, External Affairs directed by Mark L. Wasserman, Regulatory Affairs headed by Donna L. Jacobs, Facilities overseen by Rick E. Dunning, Information Technology directed by Jon P. Burns, Legal Affairs headed by Megan M. Arthur, and Network Development overseen by John W. Ashworth the III. UMMS is a huge organization, comprised of many entities and operations. Due to extensive clinical expansion, UMMS struggles to expand its’ acute care initiatives while adhering to goals originally established in conjunction with the University of Maryland School of Medicine (SOM).
UMMS Historical Overview
Historically, UMMS and SOM worked in symbiosis. The physicians who taught at SOM practiced at UMMS and some even sat on the latter’s board. Over time, UMMS became more of a business than a not-for-profit medical system. Such a “bottom-line approach” (Smitherman, 2008) created a rift between UMMS and SOM. Moreover, UMMS established in 1984 is run by a private board, whereas SOM is run by the State’s Board of Regents (Schultz, 2008). Competing agendas threatens the future status of UMMS and the core values originally set by the State. UMMS privatized back in 1984 when the then State-run hospital faced serious financial trouble (Smitherman, 2008).
UMMS now free of all “bureaucratic restraints” began operating more efficiently (Smitherman, 2008). Since 1984, several hospitals joined UMMS. Baltimore Washington Center along with Mt. Washington Pediatric joined UMMS in 1996, Chester River Health recently joined in July 2008, Kernan Orthopedic Hospital joined back in 1985, Maryland General joined in 1999, UMMC (flagship hospital) joined in 1984, Shore Health came on board in 2006, and University Specialty was purchased in 1996. These various hospitals work synergistically; providing patients with the best care possible.
UMMS Mission and Vision
UMMS’ mission is to provide tertiary care to Maryland and neighboring areas (Chasse, 2007). The system seeks to deliver comprehensive care to patients while serving as a premier health research center in the community (Chasse, 2007). UMMS’ operating plan addresses five key strategies for achieving the above mission. The first strategy or pillar is to enhance workforce communications and communication (UMMC, 2008). All constituencies do so by improving employee survey scores in key areas like: physical work environment, resource utilization, and better communication with leadership. The second strategy for success involves retaining qualified clinical staff. All too often, clinicians or administrators who are competent leave due to political strife and internal division. UMMS hopes to decrease turnover rates by implementing the “Nursing Professional Advancement Model” (UMMC, 2008). With this strategy, competent nurses are promoted and given more responsibility within the organization.
The third and fourth pillars involve educating staff and expanding leadership development. Since UMMS has key competitors like John Hopkins, the system hopes to retain and re-admit patients through service excellence. Service excellence has to do with patient satisfaction which includes: overall satisfaction, likelihood to recommend services, and quietness at night. Some constituencies like UMMC do well with percentile rankings of 84 (likelihood to recommend), but others like Maryland General Hospital (MGH) scores very poorly (1 percentile ranking). UMMS as a whole is implementing a “Service Recovery Program” which entails getting patient feedback while they are still on hospital floors. System board members meet periodically with constituent leadership to ensure that these five strategies for success are addressed and monitored closely.
UMMS Budget and Expenditures
As mentioned earlier, UMMS generates 3.5 billion dollars in revenue. The system brings in more than $2 billion every year (Smitherman, 2008). Gross patient revenues alone amount to $2 billion (UMMS, 2008). Patient revenues come from Medicare, Medicaid, private insurance, and self-pay monies. Aside from private sources, UMMS gets almost a billion dollars in state funding (Maryland State Archives, 2008). UMMS gets direct State support for Montebello Rehabilitation Center at Kernan, and the R Adams Cowley Shock Trauma Center at UMMC (Chasse, 2007). About 3 million dollars goes to Montebello and 6 million goes to Shock Trauma. In addition, UMMS has access to an “Operating Reserve Fund” set up by the State should it need any financial assistance (Chasse, 2007).
It takes roughly 1.9 billion dollars to keep UMMS afloat (UMMS, 2008). Another $738 million is spent on supplies and services. UMMS pays its 28,200 employees (direct and indirect) 1.5 billion dollars who in turn pay $54 million in state taxes (UMMS, 2008). Future expenditures may include purchasing Prince George’s County Hospital (Chasse, 2007). UMMS would purchase Prince George using ORF funds not private monies. Such an alliance is in the works but not official. Overall, UMMS brings in tons of revenue from both private and public sectors.
UMMS Community Services
UMMS today seems more like a business than anything else. However, the system does provide preventative care free of charge, to millions of people living in Baltimore. In 2007, UMMS provided over 173 million dollars in community benefits (UMMS, 2007). Twenty-four million dollars went towards health education and outreach, screenings, support groups, as well as community clinics. According to the 2007 Community Benefits Report by UMMS, another $93 million targeted health education for physician, nurses, and allied health professionals. UMMS spent another $58 million on charity care and community donations. The system provided community services to well over 300,000 people.
UMMS has a charity policy ensuring that all patients will be seen regardless of ability to pay (UMMS, 2007). However, the care given depends on ability to pay. UMMS like so many other healthcare corporations is still a business. Experience shows that if a patient does not have any insurance, he or she will wait much longer than one who does. Hence, UMMS is correct in stating that all will be seen. However, the policy fails to mention that indigent patients get less than optimal care.
UMMS Future Goals and Limitations
In recent weeks, UMMS and the University School of Medicine (SOM) released a shared vision statement outlining future goals and commitments. The shared vision focuses on healthcare quality, sustaining financial gains, while educating physicians for future practice. Notebaert the ex-CEO was criticized for focusing too much on financial gains and not enough on physician training. Under Notebaert, the system grew from a mid-sized hospital to a huge corporation. UMMS grew financially, meanwhile Notebaert cut back on malpractice coverage for physicians practicing outside of the system (Smitherman, 2008). Needless to say, this action caused a huge rift between SOM doctors and the UMMS board. For this reason, Dr. Reece (VP of Medical Affairs) and Chrencik (CEO) are working together to dispel any fears physicians may have about their future at UMMS.
The new shared vision emphasizes more HIV/AIDS research in the United States and abroad (Chrencik and Reese, 2008). For example, SOM doctors lend a helping hand in Malawi where 40% of the population is infected with HIV/AIDS. Research in general seems to be at the forefront. UMMS and SOM will invest more in minimally invasive surgery, genomic sciences, vaccine development, stem cell biology and therapy (Chrencik and Reese, 2008). UMMS is moving towards more personalized medicine as discussed by Dr. Reynolds in Health Care Administration and Management. The UK is investing a lot in personalized medicine. However, the UK has a public healthcare system where everything is funded by the government. UMMS is a private system, offering such services may drive up cost which private insurance companies may not cover. On the other hand, tailoring individual therapy may satisfy patients a great deal which may ultimately give UMMS the competitive edge it needs against Hopkins and Med star.
Investing in cell therapy will surely take dollars away from future expansion. This may explain why UMMS gave 50% control of Mt. Washington Hospital to John Hopkins Hospital (Zibel, 2006). UMMS also gave up its’ plan to build a tower at UMMC downtown worth $375 million. Investing in genetic research is costly and may force UMMS to forego further expansion. For now, Chrencik and Reese are trying to appease physicians and board members alike. However, faced with increasing State control, a decrease in hospital charge rates (Scultz, 2007), and friction between board members, UMMS may want to re-think its mission.
The new mission is very broad and with competing agendas on the table, UMMS may be heading for disaster. UMMS may need to sit down with Hopkins to see how the latter expands while still focusing on research. Notebaert sacrificed research for expansion. He wanted UMMS to build a tower downtown, keep 100% control of Mt. Washington Pediatric and buy Prince George’s County. However, SOM physicians disagreed wanting more research activities bringing in more federal dollars and notoriety. Who wins? That depends on one’s philosophical view of healthcare. Is healthcare all business and no medicine, or all medicine and no business? UMMS wants to be all medicine and part business. Under Notebaert, UMMS was all business and maybe some medicine. For example, UMMS grew taking in Shore Health, Chester, Maryland General and now possibly Prince George. From a business perspective, this is phenomenal. However, quality-wise, UMMS has failed on many levels.
Constituent hospitals like Maryland General Hospital (MGH) performed poorly for many years. MGH experienced serious political strife, quality issues, and financial instability. UMMS brought in Colleen Daniels a few years back to clean up the HIV/AIDS and Hepatitis laboratory result scandal. Colleen brought in new technology, leadership, and hired experts known for getting the job done. After bringing MGH out of the “red zone” financially, UMMS dismisses her under auspicious conditions. MGH fired every single person Colleen hired to get the hospital back on track. UMMS needs to retain qualified personnel instead of hiring “yes” people. UMMS needs to collaborate more with constituent hospitals in adopting technology and strategies that UMMC implemented long ago. According to the Maryland Quality Improvement Indicator Project, MGH has one of the worst “ED Wait Times” in the State. UMMS should have a peer to peer hospital mentoring program. A top-notch hospital like UMMC can partner with a poor performing peer hospital in the system. This action can help bolster UMMS’ image at constituent hospitals and in the local community.
In conclusion, UMMS went from being a run-down State hospital to a mega-corporation. UMMS includes a premier academic healthcare facility that rivals the likes of Med Star. Some constituent hospitals are top performers while others are barely struggling. Future success depends on prioritizing competing agendas, keeping the State out as much as possible while supporting constituencies. With this formula, UMMS may just beat out Hopkins as the best healthcare system in Maryland.

REFERENCES
Chasse J. B. (2007). University of Maryland Medical System-acquisition of Prince George’s County hospital system (Maryland General Assembly Department of Legislative Services PG 418-07).
Chrencik R. A., & Reece A. E. (2008). University of Maryland Medicine: A shared vision for the future. Message sent to UMMS employees on Microsoft Outlook.
Maryland Department of Business and Economic Development (2007). Survey of major statewide employers in Maryland-2007. Retrieved October 8th, 2008 from, http://www.choosemaryland.org/factsandfigures/businesscommunity/employers.html.
Maryland Government State Archives (2008). University of Maryland Medical System Corporation organizational chart. Retrieved October 8th, 2008 from, http://www.msa.md.gov/msa/mdmanual/25ind/priv/pdf/med.pdf.
Schultz, S. (2007). Md. curbs hospital rate increase. Washington Business Journal. Retrieved September 16th, 2008 from, http://www.bizjournals.com/washington/stories/daily33.html.
Schultz, S. (2008). Erickson: Governor forced me off University of Maryland Medical System board. Baltimore Business Journal. Retrieved September 15th, 2008 from, http://baltimore.bizjournals.com/baltimore/stories/2008/08/18/daily30.html.
Smitherman, L. (2008). Medical system board shake-up: UM chair, 9 others resign over dispute; interim CEO named. Baltimore Sun. Retrieved September 16th, 2008 from, http://www.baltimoresun.com/news/local/balt-te.md.umms21,0,1706946.
Smitherman, L. (2008). Strife eroded UMMS goals: new leaders say they’re not working to move ahead. Baltimore Sun. Retrieved September 16th, 2008 from, http://www.baltimoresun.com/news/education/bal-md.umms22aug22,0,2717201.
University of Maryland Medical Center (2008). Annual operating plan: priorities for Fiscal Year 2009. Retrieved September 16th 2008 from, the umm.edu intranet.
University of Maryland Medical System (2007). Community benefits report. Retrieved October 8th, 2008 from, http://www.umms.org/umms_comm_benefit_07.pdf.
University of Maryland Medical System (2008). University of Maryland Medical System overview. Retrieved October 8th, 2008 from, http://www.umms.org/overview/htm.index.
Zibel, A. (2006). Two medical systems team up in rare union. Baltimore Business Journal. Retrieved September 16th, 2008 from, http://www.bizjournals.com/baltimore/stories/2006/06/12/daily6.html.