Wayne State payments scrutinized amid stalled Henry Ford deal

Wayne State University paid $7.5 million over 3 1/2 years to executives and consultants who worked on a now-stalled partnership deal between the university's medical school and Henry Ford Health System, according to documents obtained by The Detroit News.

Two WSU executives and three consultants, one making as much as $1.1 million a year, played significant roles in negotiating a deal recently declared "dead in the water" by a four-member bloc of the university's Board of Governors.

The spending on four individuals and a consulting firm has emerged as a point of contention between President M. Roy Wilson and the bipartisan board faction after negotiations stopped last month on a tentative agreement that aimed to make Henry Ford the university's primary medical education partner.

The board members pushing back on the spending are asking why the team worked part-time, didn't include key WSU stakeholders and delivered what critics say is a faulty work product.

"This is about three things: It's about transparency, accountability and a bad deal for Wayne State University,” said board member Michael Busuito, a physician.

"As far as I know, all eight board members are just doing their job," he continued. "We are campaigning for what we think is right. It's not personal."

The questions that some board members have asked about spending on the team have divided the governors and stalled Wayne State's efforts to deepen its partnership with Henry Ford — which proponents say would bring in millions of dollars and transform local medical care. The dispute also almost prompted Wilson to leave the university, he said.

Sandra Hughes O'Brien, a board member and immediate past chair of the board, said the issue is simple.  

"We hired a consultant, that consultant hired three additional consultants, they've all worked for us for three and a half years," said Hughes O'Brien, a lawyer.

"They did not collaborate and include with the Henry Ford deal anybody of importance at Wayne State ... labor didn't have a seat at the table, so our faculty didn't have a seat at the table; the medical school leadership didn't have a seat at the table," she said. "The medical school division chairs did not have a seat at the table, which is why it resulted in the deal that we got, which was a very flawed work product."

But Wilson vigorously defended the team's work, saying that portraying it as a part-time endeavor is a "disservice" and minimizes a complex negotiation that was still evolving with the input of scores of WSU leaders.

"To say that it was an inferior work product is really disingenuous when they are the ones who torpedoed it," Wilson said during a telephone interview while in Italy. "They voted for it September then all of a sudden in December, find all these things.

"It hasn't changed, he said. "They find all these things they want to take issue with, sabotage it and then blame it on the consultants. That is nonsensical."

He said that general funds — made of state funding and student tuition — were only used to cover 26 percent of the $7.5 million salaries and contractual costs, or about $2 million. 

Wilson said the amounts paid to the team members are in line with the average salaries paid to individuals doing the same jobs at other universities the size of Wayne State. 

In addition, he said the team's work extended beyond the Henry Ford negotiations. According to Wilson, members helped erase a $32 million deficit in the medical school, overhauled its curriculum, freed up more than $8 million by weeding out underperforming faculty and fixed deficiencies in areas such as medical student diversity that threatened to cost the school its accreditation.

"I feel that some of this is very personal and I’ve never been in a situation like this, so I am at a loss," Wilson said. "When you look at how the university is performing, it is hitting on all cylinders. Every aspect is among the best it's every been."

The divisions among Wayne State's leadership emerged December, when the Board of Governors extended Wilson's contract in a 5-3 vote — with two lame-duck members among those voting yes.

Asked if he had any plans to leave the Wayne State in the wake of the dispute, Wilson said he considered it. He said some of the issues have been mixed up with issues that are also "very personal."

"There are a lot of people in the university, all the way from my cabinet to faculty members to people in the community, even students, who have been writing and expressing their support and wanting me to stay the course," he said.

"For them, I am going to stay the course and do what has to be done because I am committed to them."

David Nicholson — a former board member who was defeated for re-election in November — said he was involved over the years and regards the potential deal between Wayne State and Henry Ford as a good opportunity to align two nonprofits for the community.

He said he also read the letter of intent several times, and it does maintain Wayne State's control over the medical school.

As for the team that was brought in, he said they uncovered the debt within the medical school system.

"Those consultants really helped clean things up," said Nicholson, who is president and CEO of PVS Chemicals. "I think we got multiples of our money back, and got our reputation back and got back on firm footing because of their work. Were they expensive? Yes. But everything in medicine is expensive ... For their field and what they did, they were a very good investment for the university."

'It's a tragedy'

At stake in the stalled negotiations with Henry Ford are numerous, complicated issues including the financial stability of the medical school, the future of medical education in Detroit and the school's aspirations to be a leader in research, clinical care and education.

David Hefner, WSU's former vice president for health affairs who led the talks with the health system, said he hopes the board members can find common ground due to the magnitude of the issues at stake.

"It’s a tragedy," Hefner said in a phone interview. "You have people not very well informed that should be informed ... I don’t think that there is a good understanding about the precarious nature of the medical school and the university and its financial footing, and strategic options that it has available, and no other plan of substance has been offered."

In July 2015, WSU hired Hefner, whose credentials span a seven-page curriculum vitae. That year, he earned $235,632, documents show, and his pay jumped to $777,937 in 2016 — more than Wilson's current salary of $548,358 a year.

By 2018, Hefner earned two raises that boosted his salary to $809,047.

The struggle over the Henry Ford deal emerged soon after Hefner was phasing out of WSU, in late January. Hughes O'Brien said the board directed Wilson to fire him. But Wilson, along with Hefner, said he was planning to combine Hefner's position with the dean's post.

In 2016, WSU hired Lisa Keane as president and chief operating officer of the Wayne State University Physician Group and vice dean of clinical affairs for the WSU School of Medicine, earning $265,000 a year. She also earned another salary with the UPG, but it was undisclosed. When her contract ended, the university retained her as a consultant on the negotiations with Henry Ford through January 2019.

WSU also hired Dwight Monson, a Utah-based consultant, in 2016 to help turn around the school of medicine and secure a partnership with Henry Ford.

Monson, who was paid $50,000 per month, resigned last month, before his contract ended, saying it was because of Busuito and Hughes O'Brien.

"It is clear to me that Dr. Busuito and Ms. O'Brien are pursuing a personal agenda at odds with the best interests of WSU/School of Medicine," Monson wrote in his resignation letter. "I understand that a President and his/her board can disagree on substantive issues, but the Board should adhere to its legitimate role of governance and not intrude and entangle themselves in management issues." 

In 2016, Wayne State hired Larry Gage, a Washington, D.C.-based attorney working with a firm experienced in developing clinical and academic affiliations between medical schools, faculty practice plans and teaching hospitals. The agreed-upon rate was $650 an hour, a 30 percent discount of his usual rate, documents show.

He continues under contract to WSU and it being used for purposes other than the discussions with Henry Ford, said Philip Van Hulle, a WSU medical school spokesman.  

WSU also hired BDC Advisors, from Sept. 11, 2018, through Jan. 30 to develop a business plan for its partnership with Henry Ford and draft a final agreement, for $1.1 million.

Hughes O'Brien and Busuito said they will be asked soon to set tuition rates — and likely increase them — for scores of low-income and first-generation students who attend WSU. That's why they asked about the millions of dollars spent on team members.

"Are people in the city going to understand, in a town where people make less than $45,000 annually, that a guy from out of state (Monson) — just one — has  already made over $2 million working part-time for us?" Hughes O'Brien said. 

'Dead in the water'

Wayne State's medical school is best known for training future doctors with the Detroit Medical Center, its primary medical partner for decades. But it also trains 1,200 medical school students every year in partnership with half a dozen other medical centers in the region, including Henry Ford Health System, which it has partnered with since the late 1990s.

Wayne State began conversations with Henry Ford in August 2016 to expand its partnership amidst a tumultuous relationship with the DMC. Wayne State leaders say the DMC has steadily pulled back its investment in the partnership, especially after becoming a for-profit health system in the region in 2010.

In September, Wayne State and Henry Ford announced they had signed a nonbinding letter of intent to collaborate on what was expected to be a transformational partnership for patient care, research, community health and education of future doctors.

Hughes O'Brien said the board members were not given long to review the letter of intent before signing, so she asked two questions: Would it jeopardize the university's accreditation, and would public assets be put under private control? She said Hefner and Wilson told her no.

Three months later, Hughes O'Brien said, she obtained the documents that showed her issues she had concerns about, including the authority the board was forfeiting to a private entity. She also said she heard from Busuito about the lack of input from key WSU leaders in the finalized letter of intent.

In February, as the two sides were negotiating to finalize the agreement, Busuito told The News a bipartisan bloc of the board considered the talks with Henry Ford “dead in the water.” 

Buisito, who previously headed the University Physician Group, and Hughes O'Brien were joined by two other board members — Dana Thompson, a lawyer, and Anil Kumar, a physician — who felt the proposed deal with Henry Ford would cede the board's constitutional control the board over the medical school to a private, limited liability company to be formed by the new partnership

Wilson said that three legal opinions were given to the board members by Gage, WSU General Counsel Louis Lessem and WSU Associate General Counsel Laura Johnson. All said the board members misinterpreted the letter of intent.

The president also said that changes were made to who would be included as WSU representatives on the 10-member board of the new LLC, made up of five representatives from WSU and five from Henry Ford. Initially, certain leadership positions in WSU were designated as board members, but that changed so the five seats could potentially be filled by WSU governors, if they wished to serve.

Wilson —  a physician and previous administrator at medical schools before he began leading WSU in 2013 — said he doesn't understand where the pushback is coming from.

Over the past six years, Wilson said Wayne State has improved its student graduation rate and reversed downward trends in research funding and enrollment. 

"All of these things have reversed," Wilson said. "I don't know what more from an objective standpoint you can be expected to do. This is just coming out of left field and I am as confused as anyone."

kkozlowski@detroitnews.com