UMC chief of staff’s dual role as administrator questioned

By Marshall Allen

Wednesday, Jan. 24, 2007 | 7:07 a.m.

The chief of staff at University Medical Center is elected to stand up for doctors and patient care when administrators are thinking about the financial bottom line.

The hospital's medical director works on the other side, providing oversight for clinical staff and budgeting resources for the administration.

At UMC, Dr. John Ellerton is paid to hold both positions.

The fact that Ellerton is wearing both hats - seemingly putting him in conflict with himself - has left some doctors incredulous.

"I would never accept a medical directorship for any amount of money if I was (an elected) chief of staff," said Dr. Tony Alamo, chief of staff for St. Rose Dominican Hospitals - San Martin Campus. "You can't play both sides of the fence."

Ellerton has been at UMC since 1979 and is well regarded as chief of staff. But doctors questioned his allegiances after learning that he is paid $230,000 as medical director.

Ellerton, unbeknownst to most of his colleagues, entered into the medical director position through a March 2004 agreement with now-fired Chief Executive Lacy Thomas. Because UMC is a county-owned hospital, Ellerton's contract is a matter of public record, but many of his colleagues were unaware of it until contacted by the Sun.

Outside observers call the agreement unprecedented, saying it points to the need for greater disclosure at UMC. Some described it as an obvious conflict of interest, while others said it raises questions of possible corruption at UMC.

Ellerton insists he's done nothing wrong.

"(The contract) is a responsibility to the patients and to the medical staff," Ellerton said. "I'm always willing to take their side and work with them."

To some, Ellerton's agreement with Thomas heightens concerns about the ousted chief executive 's regime at UMC.

Last week, an audit showed that the hospital lost more than $34 million in fiscal 2006, about $15 million more than Thomas has previously reported.

Fired for financial mismanagement and a lack of disclosure, Thomas now is under criminal investigation for allegedly directing hospital contracts to friends in Chicago.

Dr. Jim Christensen, UMC's vice chief of staff and a good friend of Ellerton's, did not know Ellerton was being paid to function as a member of the administration, and is troubled by the arrangement.

"Going forward I think we're going to have to sit and discuss this," said Christensen, one of about 20 doctors who sit on UMC's Medical Executive Committee, which makes recommendations on contracts.

"UMC needs to be run in a transparent fashion. We are a public hospital. Transparent governance is honest governance."

Dr. Mitch Keamy, former chief of staff at Sunrise Hospital and Medical Center and Southern Hills Hospital and Medical Center, said he has never heard of an arrangement like Ellerton's because many times the interests of the medical staff and those of the hospital are at odds.

"Because of the dual agency there is extra scrutiny required of the chief of staff and his decisions if it's understood he has a fiduciary responsibility to the hospital's interests," Keamy said.

Dr. Leonard Kreisler, who served at UMC from 1973 to 1990 and is a former chief of staff, said Ellerton's role as medical director - and the salary attached - seem superfluous.

He speculated that Thomas was using taxpayer money to curry favor with Ellerton, perhaps thinking: "Maybe this guy can smooth things out with the staff and run interference."

"You give a guy money and he's not going to question much," Kreisler said.

Ellerton runs a private practice called Cancer Consultants and is hired as an independent contractor at UMC. He is paid $120,000 to direct the oncology/hematology department and provide on-call services to the hospital. As chief of staff he gets a $36,000 annual stipend.

The additional $230,000 is for providing "other hospitalwide administrative services as requested by (the) hospital's chief executive officer," according to the contract. The ensuing list of responsibilities includes administrative staff planning for clinical departments, oversight of the clinical recruitment process and budgetary planning for clinical resources.

Everyone who read the contract - including Kathy Silver, UMC's interim chief executive, and UMC's Dr. Dale Carrison, an outspoken supporter of Ellerton - say the contract describes the hospital's medical director position.

Ellerton, though, insists he is not UMC's medical director. He says while he performs some administrative duties related to being department director and chief of staff, all of those tasks focus on patient care.

"I was not hired by the hospital to be the medical director," he said.

Contract language that sounds that way was "written by lawyers," Ellerton said. "There's a lot of legal stuff in it.

"I see it as a contract that increased compensation for doing the hematology/oncology part, and in a small way compensated for the time I thought was important to do the best job as chief of staff. Not to help the administration, but the doctors and patients."

Carrison notes there is no rule against the chief of staff serving as medical director. Ellerton's contract poses no conflict of interest because at all times the chief of staff has represented the needs of patients, Carrison said.

"I do understand I'm too close to it to be objective," Carrison said. "But I do know he represented the medical staff."

Other UMC doctors disagree. One doctor who feared being named publicly said Ellerton's deal with Thomas was unknown and his influence in awarding contracts could be "subtle and very powerful." Ellerton leads the Medical Executive Committee and its subcommittee that reviews contracts.

In the past 19 months, UMC awarded three contracts to provider groups for anesthesiologists, "hospitalists" - in-house doctors - and cardiologists, when less expensive alternatives were available. In each case, Thomas claimed the contracts he chose made more sense, but the decisions have been criticized by some in the medical community.

Dr. Richard Singer, an anesthesiologist, contends his group was unfairly shut out from a contract given to Pacific Anesthesia Consultants, a subsidiary of Sierra Health Services, the state's largest health insurance company.

Singer, who now works at UMC under the Pacific contract, argues that Ellerton's agreement with Thomas corrupted the process because the chief of staff reviews all the contracts and makes recommendations to the Medical Executive Committee.

While the executive committee cannot award contracts, it makes recommendations to the chief executive. It acts as a check and balance, and contracts rejected by the doctors could alert hospital overseers.

"Ellerton without fail appears to have impeccable integrity," Singer said. "(The $230,000 contract) is written proof that Ellerton has pulled the wool over everybody's eyes and is in cahoots with Lacy Thomas."

Hospital administrators and members of the Medical Executive Committee have said there were no problems with how the disputed contracts were awarded.

Minutes of the Medical Executive Committee meetings could shine light on the contract-awarding process. The committee, however, has refused to make them available, despite repeated requests by the Sun since Dec. 7.