This article has been updated with new information since its initial publication online.
Former Baltimore mayor Catherine Pugh and her colleagues on the University of Maryland Medical System board were not the only ones who profited from business deals with the hospitals they oversaw.
At least two dozen people who sit on boards of smaller, affiliated institutions in the massive system had contracts with those institutions, in some cases worth hundreds of thousands of dollars annually, according to financial disclosures.
The contracts show the pervasiveness of the kinds of deals that led to Pugh’s resignation as mayor this month and, lawmakers say, point to challenges that remain as they grapple with how to make the system more accountable.
Among those who had deals with hospitals they oversaw were a Harford County veterinarian who has made nearly $3 million since 2013 from rental leases; a vascular surgeon whose Bel Air practice made $2.4 million since 2013; and the former president of an ambulance company whose contracts were worth at least $1.3 million since 2010.
Michael Schwartzberg, a spokesman for UMMS, said those relationships are “all appropriate and consistent with fair market value.” Some of the contracts predated members’ service on the boards, he said; others were signed after members joined their respective boards. He said some deals were competitively bid and did not provide information about others.
UMMS, which began in 1823 as a single hospital and was privatized in 1984, now includes 13 hospitals and has nine local affiliate boards. The Maryland Health Services Cost Review Commission provided financial disclosures for those boards from the past five years in response to a request from The Washington Post. The forms are not available online.
There were at least two dozen local board members who had contracts with the hospitals they oversaw, according to the disclosure forms, which in some cases listed the specific amount their contracts were worth but in others required a range, such as “greater than $100,000.” The commission said it was missing forms from UM Rehabilitation & Orthopaedic Institute.
New reforms and disclosure requirements in a law passed by the Maryland General Assembly this year apply only to the UMMS board, not the subsidiary boards.
Lawmakers rushed to pass the legislation after the Baltimore Sun reported in March on lucrative contracts held by UMMS board members, including $500,000 paid to Pugh for her Healthy Holly series.
Schwartzberg said the California-based auditing company hired by UMMS in the wake of those revelations is focused on the main board, although the best practices that it identifies will be shared with affiliate boards. A separate review, by the state’s Office of Legislative Audits, also will examine only the main board.
Pugh and five other members of that board have resigned, as did the board chair and Robert A. Chrencik, president and chief executive of the hospital system. Four members of the board, whose 25 members served without pay, have been placed on leave.
House Minority Leader Nicholaus R. Kipke (R-Anne Arundel), who helped shepherd the UMMS bill, said lawmakers will probably consider next year whether to expand the law to apply to other boards as well. The legislation dissolves the main UMMS board in stages and bars board members from holding single-source contracts.
“We were reacting to the scandal in front of us,” Kipke said.
The broader question the legislature faces is how to make all nonprofit organizations that receive state and federal funding more accountable, Kipke said. UMMS received nearly $25 million in state funding in the past two years.
“There has got to be a way to root out the corruption,” Kipke said. “The question is how far do we go?”
Mike Ricci, a spokesman for Gov. Larry Hogan (R), said the governor “expects that the new UMMS board will introduce tougher ethics standards, and extend those standards to affiliate hospitals.”
“These are nonprofit institutions that were founded for the public good, not for personal enrichment,” Ricci said.
Richard Streett, a veterinarian who sits on the Upper Chesapeake Medical Center board, reported on disclosure forms that his real estate company had deals with the hospital system totaling $2.98 million from 2013 through 2018 for marketing and accounting space, and for physician office space in Havre de Grace.
Streett is a 50 percent partner in Rock Glenn Commercial LLC, which was paid $614,870 by the hospital system last year, the forms show. The company began making deals with the system after Streett joined the board, Schwartzberg said.
“The contract terms are at fair market value and benchmarked on a regular basis,” Schwartzberg said. “Dr. Streett’s partner handled all business dealings — all disclosures and recusal protocols were followed.”
Streett did not respond to requests for comment.
Also on the Upper Chesapeake Medical Center board, Roger E. Schneider, a managing partner at Vascular Surgery Associates, reported that his company made $485,798 last year from a deal with the hospital and has made $2.39 million since 2013.
Schneider reported that his company provided emergency department vascular surgery on-call services at Harford Memorial Hospital and Upper Chesapeake Medical Center, and that his partner provided surgical director services at both hospitals.
Schwartzberg said deals with Schneider’s practice were not made until after Schneider joined the board. But Schneider , in a phone interview after this article was initially published online, said the contracts predated his 1992 arrival on the board, although he was not paid for the calls until more recently, in accordance with changing national norms. Schwartzberg could not immediately explain the discrepancy between what Schneider said in the interview and the information he was provided by the hospital. He also did not say whether the deals were competitively bid.
Other Upper Chesapeake board members also had deals with the system, including a pulmonary care doctor whose practice made $1.01 million in 2016 and a business owner whose family construction company made $1.9 million in 2016 from work on the hospital system. But both of those deals predated members’ service on the board, Schwartzberg said.
Wayne L. Gardner Sr., who sits on the UMMS and Shore Regional Health boards, reported that the ambulance company he led until this year has made at least $1.3 million since 2010 for providing ambulance services for Shore Regional Health.
Gardner did not respond to requests for comment. Schwartzberg said Gardner’s contract predates his time serving on either board and that the contract with Shore Regional Health was “reviewed annually to ensure that standards for quality and performance were being met.”
Gardner’s company, Best Care Ambulance, was acquired by Butler Medical Transport in March.
He was chairman of the Chester River Health System’s board when it approved a controversial merger with UMMS in 2008, which led to debate in the community and among medical staff about whether affiliating with the University of Maryland System was worth the loss of independence.
Gardner is the only member of the UMMS board who had a contract with the system who has not resigned or been placed on leave.
Rep. Andy Harris (R-Md.), an anesthesiologist who is on the board of the University of Maryland St. Joseph Medical Center, reported working as a part-time staff anesthesiologist with another hospital in the UMMS system. Harris said he was paid between $5,000 and $10,000 by Tidewater Anesthesia Associates at Memorial Hospital in Easton in 2017, and $6,000 in 2016. His office did not respond to requests for comment.
Whiting Turner executive Frank Palmer, who joined the St. Joseph Board in 2016, reported that the company had contracts worth more than $100,000 with the hospital system. But Schwartzberg said Palmer was never involved with decisions at St. Joseph’s regarding construction and that Whiting Turning, a national construction company, has a “long-standing business relationship with the hospital.”
Ovetta Wiggins contributed to this report.