Ohio Attorney General Dave Yost on Wednesday pledged to sue ProMedica if it does not pay the University of Toledo at least $3.8 million under a medical education agreement the two organizations struck in 2015.
"It's simply unacceptable that ProMedica has unilaterally decided that they are going to forego their contractual obligations," Mr. Yost said at a Toledo news conference, adding he is involved in the dispute because his office represents all state universities.
The attorney general said he met with ProMedica executives Wednesday morning and asked them to make a payment within seven days covering at least one of the two recent monthly payments the organization skipped.
He said he hoped the two sides would quickly "get on a track to resolution."
ProMedica spokesman Tausha Moore said the Toledo-based health system only withheld the payments in order to "recoup the money owed to us" by UT. She said it was forced to withhold the payments because UT had not engaged in a financial "reconciliation process," as the two sides had in the past.
ProMedica missed the August and September payments to UT's College of Medicine & Life Sciences — totaling $7.6 million — under an affiliation agreement signed in 2015. The deal called for ProMedica to pay the university tens of millions of dollars each year, and in return, UT would make the health care organization its exclusive clinical education partner with the college of medicine.
UT officials say without the latest payments they will be forced to slash the College of Medicine & Life Sciences' budget.
Under the agreement, UT agreed to send medical students and residents to ProMedica Toledo Hospital and Toledo Children's Hospital to train, which would help raise the facility's profile as a premier academic medical center.
But ProMedica, which has recently been dealing with financial problems, stopped making the payments over the last two months. Annual payments under the 50-year agreement are anticipated to be in the $50 million range.
Ms. Moore said ProMedica would make the next payment, for October, and planned to request a meeting with UT officials to "discuss this matter and mutually work on a budget pursuant to our agreement."
"Additionally, we are requesting more transparency to better understand how ProMedica’s Academic Affiliation payments are being used and to ensure they are only supporting the UT COM&LS," she said. "ProMedica has demonstrated that it is ready and willing to work to resolve this matter."
Mr. Yost labeled ProMedica's argument — that it withheld the payments as an offset for money owed by UT — as "hogwash." He said UT owes ProMedica somewhere in the $300,000 range, so withholding $7.6 million doesn't make sense.
"There are different elements of the contract for maintenance of faculty, and smaller pieces of the contract where money flows in both directions," he said. "They are arguing there's an offset there [owed by UT]. But whatever offset there is, as far as I can tell looking at the numbers, is miniscule compared to the amount of money they're not paying."
Ms. Moore said the reimbursements meant to flow from UT to ProMedica are supposed to be monthly, and cover items including physician faculty stipends, lease payments, research efforts, and other administrative and programmatic support costs. She added that ProMedica continues to pay the residents and fellows involved in the program.
Mr. Yost said it's possible the 2015 agreement is renegotiated in the future, but added such negotiations would need to be in "good faith, where both sides are living up to the agreement in the meantime."
The Republican AG claimed ProMedica has told university officials that it won’t make any future payments until the affiliation agreement is revised or replaced, though Ms. Moore said that statement was “blatantly false.”
"I am not going to permit ProMedica to use its financial weight to starve the University of Toledo into submission," Mr. Yost said. "We're very hopeful this valuable, productive, efficient agreement is maintained and improved going into the future."
The dispute over missed payments first became publicly known earlier this week, when The Blade obtained a letter from UT's medical college dean to faculty and staff explaining that ProMedica's "financial woes" and inability to pay meant UT would need to slash its College of Medicine and Life Sciences' operating budget by $15 million by Oct. 1, a cut of almost 15 percent. The dean, Chris Cooper, wrote he did not anticipate layoffs or pay reductions.
In a letter directly to ProMedica's top executives, he warned of the coming budget cuts, and added that UT would be "putting our payments to ProMedica that depend on the affiliation payments, items such as lease payments and faculty stipends, into a restricted account until such time as this matter is resolved."
Dawn Buskey, ProMedica's president of acute care, sent a response to Dr. Cooper the next day, saying his letter to faculty had contained "inaccurate and misleading information."
She said ProMedica's current financial situation had "no bearing" on its halting payments to UT, rather it was meant to recoup funds owed by UT "for various expenses and payments in support of the Academic Affiliation."
"This has been previously communicated by ProMedica's finance team to UT's finance team for several months without progress," Ms. Buskey wrote.
Earlier Wednesday, the community organization Save UTMC held a news conference calling on ProMedica to catch up on its payments. The hospital struggled in recent years, facing a deep budget deficit in 2020, though it has since rebounded.
UTMC is the former Medical College of Ohio hospital.
Critics of the affiliation agreement with ProMedica have argued the deal was bad for UTMC as a whole — siphoning faculty and resident talent from the teaching hospital to ProMedica and contributing to the facility's financial woes. While UTMC — the former Medical College of Ohio Hospital — has recovered, the Save UTMC group on Wednesday said it is again concerned after the missed payments and proposed cuts to the medical school.
"It's really simple — ProMedica and UT have entered into an affiliation agreement, and if one party is not adhering to the terms and conditions of that agreement, then that's a breach," said Randy Desposito, president of American Federation of State, County, and Municipal Employees Local 2415. "So what we are asking the UT administration to do is to stand up and hold ProMedica accountable for the monies that is alleged that they owe to the University of Toledo."
Former Toledo Mayor Carty Finkbeiner, a leader of the Save UTMC group, said the affiliation agreement "has been disrespected and recently totally disregarded, walked away from, by ProMedica.”
"We want ProMedica to be successful," he added. "We do not wish them to be as challenged financially as they are at the moment. But that does not give the right to ProMedica to walk away from an agreement with UT and UTMC."
First Published September 21, 2022, 8:45 p.m.
