Long before the University of Miami announced in May that its Miller School of Medicine had financial problems big enough to force layoffs of about 900 full-time and part-time workers, there were signs of serious trouble.
As far back as October, billionaire car dealer Norman Braman wrote in a memo to fellow UM trustees that he and colleagues had been receiving anonymous letters for months “outlining a host of wrongdoings, mostly at the medical school.” Braman and others closely tied to the school warned UM officials the medical school was spending too much, too fast in the push to build a world-class medical center.
The expansion was occurring just as healthcare revenue — the foundation for much of the medical school’s expansion — was starting to dry up, with lower rates of reimbursement from insurers and cuts in federal and state funding.
The medical school also had major problems of its own. According to internal documents, the school suffered from bloated staffing, a faulty billing system and prices that sometimes ran much higher than at other South Florida hospitals. Internal controls apparently were weak at best: A whopping $14 million in expensive cancer drugs disappeared from a UM pharmacy over three years before an employee was charged with theft in June 2011.
The medical school’s difficulties even began to impede its relationship with the ailing, taxpayer-financed Jackson Health System, endangering a decades-long partnership with the public hospital system.
By the time the layoffs were announced May 8, rumors had been swirling for weeks. UM President Donna Shalala insisted the medical school problems were caused by factors beyond her control. “We live in a world in healthcare in which our flows of funds are unpredictable,” Shalala told the Herald in May, adding that she had responded as quickly as possible to the problems once they became apparent.
The medical school, she said, would emerge as a “much stronger healthcare system of a much higher quality.”
In the past five years, Shalala has presided over major initiatives designed to reshape UM’s medical school and propel it to the top tier. Hiring more than 100 high-profile researchers and creating a biotech research park boosted the school’s national profile. Purchasing a hospital — the old Cedars Medical Center, now University of Miami Hospital — cemented the school’s status as a leading healthcare provider. Reinventing the relationship between UM and Jackson allowed the medical school to launch new — potentially competing — roles.
Together, the ambitious moves vaulted UM’s medical school to the national stage — but they may also have seriously damaged it. Layoffs weren’t part of the plan, leaving critics and community leaders to wonder whether Shalala, who earns $1 million a year at UM and was for eight years the nation’s No. 1 health official as secretary of the U.S. Department of Health and Human Services during the Clinton administration, simply failed to heed the warning signs in her quest to make UM a national powerhouse.
“Ultimately, Donna Shalala has to bear the responsibility for this failed strategy,” says Stephen Dresnick, a Miami-Dade physician-entrepreneur. He points out that during the 1990s, when she led HHS, she battled to keep down soaring healthcare costs. “Reducing the spending on Medicare, that was her goal — first reducing payments to hospitals, then to doctors. And now she sits there and says, ‘Gee, these are factors outside our control.’ ”