MUSC still pondering hospital relationship; Cobb-Hunter concerned about RMC responsiveness

The Medical University of South Carolina may not decide whether to proceed with its partnership with the Regional Medical Center until later this year or early in 2023.

“Our enterprise-wide team, representing education, research and clinical care, are in the midst of a comprehensive due diligence process concerning this potential partnership,” MUSC Director of Public Affairs, Media Relations and Presidential Communications Heather M. Woolwine said in a prepared statement.

“There are several phases to this due diligence, which will be followed by a full review by the MUSC Board of Trustees,” she said.

“The board will not be able to make a decision about the proposed partnership until this process is complete and the details of a potential structure and fiduciary responsibilities have been determined,” Woolwine said. “A conservative estimate on timeline for this process would place a board review and vote on whether to proceed with the partnership in late 2022 or early 2023.”

MUSC is “honored to be engaged by the state to participate in these discussions in the early stages” given its “statewide mission and commitment to serving all of South Carolina’s citizens.”

A proviso in the South Carolina budget allows a partnership between RMC and MUSC. RMC is owned by Orangeburg and Calhoun counties.

Orangeburg and Calhoun county councils and the Orangeburg County Legislative Delegation successfully made the Oct. 1 deadline to appoint an 11-member board that will help oversee the transition process with MUSC.

This process will include the anticipated signing of a lease agreement.

With the exception of fiscal matters, the new board has assumed all the duties and responsibilities of the previous RMC Board.

“The new board will be in place to do just that,” said Rep. Gilda Cobb-Hunter, D-Orangeburg. “MUSC, as is true in any case involving this type of transaction, is required to undertake a due diligence process and they are about a third of the way through it.”

RMC Chief Financial Officer Dennis Pettigrew said what happens going forward will be revealed to employees and the public at the appropriate time. He said the information RMC administration is aware of is what has been made known publicly in meetings.

He said hospital administration has been told that MUSC officials will come to the hospital and inform employees about the transition process.

“We are going through open enrollment,” Pettigrew said. “We are going through the normal process.”

While specific details of when certain benchmarks or milestones will be reached are unknown, Pettigrew said what is known is that “nobody is going to lose anything.”

“What you’ve got, you have,” he said.

“As due diligence gets done, that will form the basis for the agreement,” Pettigrew said. “We don’t expect any surprises in due diligence.”

Highlights of what the partnership with MUSC would look like include:

• MUSC would enter into a 99-year lease with RMC.

• MUSC would commit to a multi-year investment in RMC.

• The Medical University Hospital Authority Board, the governing body of MUSC, would oversee RMC’s finances.

• RMC would be responsible for quality oversight, medical staff accreditation and community engagement.

• All employees at RMC would be retained.

• All employee physician contracts would remain the same as long as they are within fair market range.

• RMC employees would become employees of the Medical University Hospital Authority/Medical University of South Carolina.

• Contract providers that currently provide services to RMC will most likely remain the same unless their contracts expire and the hospital renews them.

• The name could change to MUSC Health Orangeburg-Calhoun.

Cobb-Hunter

cites concerns,

RMC answers

Cobb-Hunter has concerns about how RMC has responded through the transition process.

She cited the “current administration’s failure to submit all of the requested financial information in a timely manner,” noting she does not want “MUSC agreeing to take on a pig in a poke.”

She is also concerned about other actions taken by the hospital leadership.

“I have encouraged MUSC to intensify their level of diligence since the current administration’s decisions on raises, new contracts, travel and other kinds of spending have taken place since this partnership was announced,” Cobb-Hunter said. “This new spending on raises and other things have been done in spite of instructions from the leadership of both Orangeburg and Calhoun counties to not spend any money or enter into new contracts.”

“It is not fair to them to take on RMC and all of its red ink made worse by the administration’s uncontrolled spending that is happening,” Cobb-Hunter said.

Pettigrew denied that the hospital has done anything wrong or out of line during the process.

“The idea was to be stable and not spend anything new but continue to operate as a prudent operating team should do,” Pettigrew said. “We follow the rules.”

With regards to responding to MUSC, Pettigrew said, “Due diligence: It is a big load.”

“We are responding. It just takes a huge amount of time to do it,” Pettigrew said in answer to Cobb-Hunter’s concerns. “We are meeting multiple times per week and supplying information. That is all going into a drop box.”

“We are in full due diligence,” Pettigrew continued “They are asking for everything they could want going back three years.”

Pettigrew said much of the discussion has focused around finances, revenue cycle and compliance. Information technology is also beginning its work.

“The desire was in communications to have the due diligence done by Thanksgiving,” Pettigrew said.

Pettigrew said MUSC has two national firms doing the due diligence: KPMG and ECG.

Pettigrew said, “any salary adjustments that were made were based upon agreements that were already established.”

For example, RMC President and CEO David Southerland received a salary increase from $300,000 to $420,000 effective Sept. 4, 2022. The former RMC board approved the increase.

Pettigrew said Southerland was due an employment evaluation at the end of 2021.

The evaluation started in late November and early December with the assistance of the hospital’s consultant, Pettigrew said.

Southerland “did not ask for this,” Pettigrew said.

At the time of the evaluation, Southerland’s base compensation was in the lower 10 percent of hospital CEOs in the state, Pettigrew said. His salary was increased to bring it closer to other CEOs in the state.

“It was part of his contract to receive an evaluation,” Pettigrew said. “The evaluation normally leads to assessment of compensation. Research was done that said you are in the lower centile. The board then took that and then reacted to it.”

Pettigrew said MUSC asked about the raise during the due diligence process.

“They called, I responded to them … and they said OK, duly noted,” Pettigrew said.

“There have been other transactions that were proposed but have been deferred,” Pettigrew said. “Two of these, such as a chief medical officer and recruiting for a compliance officer, they have been put on hold.”

Pettigrew said travel has occurred since the MUSC and RMC partnership was announced in June.

“There has been travel, there always is, but it is all business related,” Pettigrew said. “It has been fairly small.”

According to hospital records, since June the hospital has spent $61,264 on travel expenses. The hospital has spent about $132,000 in travel for the entire 2021-2022 fiscal year.

“In my experience this is not a large number,” Pettigrew said.

One of the trips taken since June – about $20,861 – was spent for a trip for Washington, D.C. by four hospital administrators as well as representatives from ambulance provider MedTrust. The trip was taken to request pilot federal funding to assist with medical transport for the hospital, Pettigrew said.

Though federal funding was not provided at this time, Pettigrew said officials did recognize the need to enhance transport capabilities.

There was also a trip to Kansas City for about $11,951 to meet with the hospital’s information technology provider – Cerner.

“These were all business expenses,” Pettigrew said. “That is not a large number. It is comparatively conservative amount.”

In answer to Cobb-Hunter’s concern about other expenses, Pettigrew said the board has been meeting more frequently, especially in July and August. The board stipend per trustee is $125 per meeting.

The total spent by the hospital in board stipends from June through August was about $14,478 for all board members, according to hospital documents.

“That is pretty much normal,” Pettigrew said. Over the course of a year, 17 board members, assuming all slots are filled, range from as low as $500 a month and $1,000 a month “depending on how many meetings they have and how many they actually attend.”

Pettigrew said if the trustees do not attend a meeting, they do not get paid. The board members also receive mileage.

Pettigrew said trustees have met more frequently in recent months due in part to the transition process.

Pettigrew said meetings were also held to discuss contracts.

For example, he said the board approved a contract for a new OB/GYN and a new general surgeon.

The hospital also entered into a contract Oct. 1 with Pharm D on Demand, Pettigrew said. The annual management fee is $125,000 and the pharmacy will provide staff.

“It will be a direct pass though without any mark up,” Pettigrew said.

Pettigrew said the Pharm D contract will mean about $100,000 a month decrease in administrative costs.

He did note September committee meetings were postponed.