Fresh Healthy Body

On November 22, 2006, the Detroit Medical Center (“DMC”) and Wayne State University (“WSU”) announced a temporizing resolution to a long-standing contractual dispute.  This dispute threatened both the future of the DMC/WSU jointly sponsored residency programs and patient access to quality care in Michigan.  The resolution, in the form of a legally binding “Memorandum of Understanding,” provided basic provisions to serve as the framework for a final, definitive agreement between the parties in the future.  This article will address the dispute between DMC and WSU from the perspective of resident training (also known as “graduate medical education”); the current status of the DMC/WSU jointly-sponsored residency programs as defined by the Memorandum of Understanding; and the residents’ role in effectuating a resolution of the dispute between DMC and WSU.

The Dispute and Effect on Resident Training

DMC and WSU, working in partnership, have enjoyed a rich tradition of providing physician training for decades.  Roughly 1000 residents in nearly 70 accredited specialty and subspecialty training programs have the opportunity to receive university-based residency training from the renowned faculty of WSU, while providing clinical services to meet the challenging medical needs of the patient community seen in the Detroit DMC hospitals.  This DMC/WSU resident workforce provides a significant contribution to primary healthcare within Detroit and plays a vital role in the health care safety net for the uninsured and underinsured.

While partnership has clear benefits for medical education and clinical service, disputes between DMC and WSU arose surrounding multiple issues.  Areas of disagreement included the payment structure for medical training and clinical care provided by WSU physicians, the ability of the parties to work together under non-exclusive arrangements, and control of various resident training programs which have historically been co-sponsored between the institutions.

Casualties of this conflict were first announced in April 2006, when inability to achieve contractual agreement at that time resulted in a nine month contract extension.  This extension was unable to rectify core differences between the parties, which led to the discontinuation of the orthopedic surgery residency program.  This program was the second largest orthopedic residency in the Midwest and had received national recognition for their contribution to trauma surgical care.  At the DMC’s discretion, the state and federal funding paid to them for resident training was not released to follow these residents to new programs, despite Michigan State Medical Society and the American Medical Association positions urging such temporary transfer of funds upon residency program closure.  As a result, twenty-four DMC/WSU orthopedic residents were forced to seek other accredited programs that would be also willing to incur the cost of their training, and relocate by July 2006.  These residents, who initially chose to pursue their medical training in Detroit in good faith, were ultimately dispersed throughout the state and country.

Several months later, it became clear that there was little progress in contract negotiations, jeopardizing the remaining residents who relied on both sponsors for their continued resident training.  This was recognized by the accrediting body for graduate medical education, the Accreditation Council for Graduate Medical Education (“ACGME”), which mandates that all residency programs demonstrate adequate institutional support for resident training in an environment conducive to medical education and clinical care.

Throughout months of interaction, the ACGME requested documentation detailing how resident education and well-being was to be preserved, and held an onsite review of the institution to evaluate the long term stability of the institutional agreements to date.  If these conditions were not satisfactory, the ACGME was empowered to withdrawal accreditation at special meeting held in the end of November 2006.  Had the DMC/WSU institution lost ACGME accreditation, all DMC/WSU residency programs likely would have been discontinued, resulting in the mass relocation of nearly 20 percent of Michigan’s resident workforce out of a single health system.  This relocation would have been at the personal, professional, and financial expense of each individual resident.  However, there would have been a higher cost to the community, which is comprised of many who are already medically underserved and depend on the DMC for provision of care.

The Resolution

The fear of the termination of DMC/WSU partnership and their cosponsored residency programs invoked active involvement from numerous parties, including the Wayne State University Board of Governors, the Detroit Medical Center Board of Trustees, DMC/WSU residents, WSU School of Medicine students, medical societies representing both Wayne County and the State of Michigan, Detroit Mayor Kwame Kilpatrick, and Michigan Governor Jennifer Granholm, among others.  David Fink was appointed by Governor Granholm to mediate the negotiations in early November.

The outcome of this concerted effort was realized at a press conference called by Governor Granholm on November 22, 2006, where DMC and WSU announced that they finally had reached agreement in the form of a binding Memorandum of Understanding, which became effective January 1, 2007.  This document provided an outline of the main provisions that the parties would finalize at a later date in an executed final contract.

Pursuant to the Memorandum of Understanding, which addresses the teaching, clinical, and administrative arrangements between DMC and WSU, the initial term of the agreement between DMC and WSU is for 3-1/2 years.  Following this 3-1/2 year initial term, the contract will be automatically extended for an additional year, unless either party gives 18 months’ notice of intent not to renew.  Other key provisions of the agreement include the following:

DMC will allocate and pay to WSU $76 million per year for clinical, teaching and administrative services.  All of the 68 current graduate medical residency programs will be continued until at least 2009.  Notably, however, not all of these residency programs will remain jointly sponsored by both DMC and WSU.  A small number of the residency programs will be solely sponsored by either DMC or WSU, provided the new solely sponsored programs are able to obtain ACGME accreditation.  Additionally, after June 30, 2008, either DMC or WSU may apply for sole sponsorship of a number of residency programs not strictly tied to the Hospital sites.  DMC will pay WSU up to $8.8 million in performance bonuses and recruitment support. DMC and WSU agree to focus on their partnership for 18 months, and not “pursue new competitive activities that would disrupt the partnership.”  However, the WSU Physician Group is permitted to partner with Oakwood Health System to open an ambulatory care center in Troy, Michigan.  See Memorandum of Understanding, DMC/WSU 2006.

The Memorandum of Understanding was a critical step, which was recognized by the ACGME, which subsequently granted a two-year institutional reaccreditation.  While this secures some degree of stability for the DMC/WSU residency programs, it should be noted that the typical renewal of accreditation occurs every four to five years.  Also, the ACGME issued several citations and identified issues that needed to be addressed in a progress report by DMC/WSU, including a statement of institutional commitment to the residency programs.  This report has been submitted and will be evaluated in April 2007.  If the progress report is inadequate, or if other additional areas of concern evolve, the DMC/WSU residency programs may be subject to an additional ACGME review before the scheduled timeframe, with accreditation again placed at risk.

While the Memorandum of Understanding does demonstrate progress, it does have noticeable shortcomings.  This document, which is thirteen pages (including signatures and attachments), does not articulate many of the details of the anticipated final contract.  As in the interpretation of any contract, DMC and WSU could interpret its provisions differently, which may impede negotiations as the parties make efforts to enter into a formal final agreement.  As of this writing, no finalized contract between DMC and WSU exists.

DMC/WSU Residents Played A Key Role in Effectuating a Resolution

As noted above, achieving the temporizing agreement in the Memorandum of Understanding was the result of influence from multiple parties.  The DMC/WSU residents played a particularly important role in effectuating a resolution to the dispute between their co-sponsors.

Early in the process the DMC/WSU residents realized that they were very important stakeholders in the outcome of the negotiations, as apparent from the potential jeopardy placed on their continued training in an ACGME accredited program.  Notably, the completion of an ACGME-accredited residency program is a condition for medical board eligibility.  However, loss of institutional accreditation would have likely resulted in the discontinuation of DMC/WSU residency programs altogether.  With their training at risk, residents felt that they should be afforded an opportunity for input in the negotiation process.

Once it appeared that contract negotiations between DMC and WSU had stalled, residents employed several means to communicate their positions to DMC and WSU.  This began with formal letters to institutional leadership defining the resident role as a neutral third party in contract negotiations, with support for the continuation of their current co-sponsored graduate medical education.  These correspondences continually emphasized the risk to their own training, as well as to those patients who required their medical services.  They involved the media, had a press release, and held rallies attended by an estimated 400 residents and medical students, to articulate the need for a DMC and WSU agreement to the institution as well as the public.

Additionally, the residents obtained independent legal counsel of Wachler & Associates, P.C.  The residents and their legal counsel provided the Governor’s appointed mediator, Mr. Fink, position papers and additional information regarding the residents’ legal rights afforded to the residents through the resident contract with the DMC/WSU.  Notably, all residents are afforded rights pursuant to their individual residency agreements.  Pursuant to the standard DMC/WSU residency agreement for the 2006-07 academic year, the DMC/WSU institution has a contractual obligation to provide all co-sponsored residents with a jointly sponsored, ACGME-accredited training program.  Breach of the DMC/WSU residency agreements would have resulted in substantial damages to the DMC/WSU residents, potentially including lost wages (both current and future earnings), relocation costs, emotional damages, etc.  Based upon their communications with the negotiation mediator, the DMC/WSU residents were able to lend their insight and concerns to the negotiation process.

Further, the residents’ communications with DMC and WSU leadership ultimately led to the institutional recognition of the residents’ rights.  For example, during and subsequent to the contract negotiations between DMC and WSU, the DMC/WSU residency programs worked to substantially revise the standard residency agreement that the DMC/WSU residency programs routinely entered into with residents.  Although several changes to the standard residency agreement were enacted for the 2007-08 academic year, DMC/WSU reaffirmed their support for residents by expressly including that the institutional responsibilities included providing ACGME-accredited educational training programs.  Thus, DMC/WSU is contractually obligated to the DMC/WSU residents to provide medical education and clinical exposure in substantial compliance with ACGME requirements.

In summary, though the intermediate solution to the dispute between DMC and WSU may be imperfect, the Memorandum of Understanding as adopted by the parties provides a framework for the future relationship between the DMC and WSU.  However, it is essential that the DMC/WSU institution take the necessary steps to provide adequate support to the existing DMC/WSU residency programs, as defined by the ACGME.  To achieve this end, and meet the contractual obligation to its residents, it is imperative that DMC and WSU enter into a final written agreement enacting the terms of the Memorandum of Understanding.