At twice the price, UMC still saves $230,000

By Tony Cook

Friday, Feb. 22, 2008 | 2 a.m.

Here’s the latest math and economics lesson from University Medical Center.

A physicians group offers to do a job for $60,000 annually, but after getting the contract, realizes it can’t perform part of the work. So the hospital gives that job to a separate doctor for another $60,000 a year — without reducing the amount of the first contract.

That’s $120,000 for work that was supposed to be performed for $60,000. But rather than seeing that as paying twice as much, top hospital and county officials think it adds up to a great deal.

UMC requested proposals last year from doctors interested in directing its oncology and hematology department. A three-year contract was awarded in November to Nevada Cancer Institute, which agreed to do the work for $60,000 annually.

That’s a bargain compared with the $350,000 a year the hospital had been paying Dr. John Ellerton, UMC’s chief of staff. Ellerton originally got $120,000 to direct the department, but in a little-known deal with former hospital Chief Executive Lacy Thomas he received an additional $230,000 to be the hospitalwide medical director.

Many saw the deal as an attempt by Thomas, who was indicted on 10 unrelated public corruption charges Wednesday, to curry favor with the chief of staff. It also was a conflict of interest, because the chief of staff is supposed to represent the needs of patients and doctors in dealing with the administration, but as medical director, Ellerton was part of the administration.

Ellerton maintains he never was an administrator and that he got the pay boost solely for his oncology/hematology services.

After the Sun disclosed the arrangement in January 2007, interim Chief Executive Kathy Silver put out a request for proposals, hoping to find a better deal. Ellerton continued to ask for $350,000. Another group, Nevada Cancer Centers, offered to do it for $150,000, hospital officials said. Nevada Cancer Institute beat both with an asking price of $60,000.

When that contract was approved, Nevada Cancer Institute thought it could cover UMC’s benign hematology outpatient clinic, which had been part of the oncology/hematology contract. The plan was to use one of the group’s pathologists at the clinic, although pathologists don’t typically provide direct patient care, UMC officials said.

That plan hit a wall, however, when the company with which the hospital contracts for pathology services would not go along, hospital officials said.

Sandra Murdock, president and chief operating officer of the Nevada Cancer Institute, said her group wasn’t really interested in running the benign hematology outpatient clinic. She said the group’s focus is on cancer, and the outpatient hematology clinic primarily deals with patients with benign rather than malignant illnesses.

“I think it’s better for the patients this way,” Murdock said. “It allows us to focus on cancer-related patients.”

So on Tuesday, UMC administrators asked Clark County commissioners, who oversee the hospital, to sign off on an additional $60,000-a-year deal with Ellerton for that work.

Silver said the hospital decided not to reduce its payments to Nevada Cancer Institute, even though the group will be doing less work than expected. She said the deal with the institute was so good that it was still worth $60,000 a year. Hospital officials anticipate the arrangement with the institute will bring prestige to the hospital and attract more paying patients.

Nevada Cancer Institute Chief Executive Heather Murren stressed Thursday that the removal of the benign hematology outpatient clinic from the group’s responsibilities doesn’t really result in less work for the group. Its main job is providing a medical director for the clinic, which requires a certain commitment of time regardless of patient volume, she said.

Silver pledged last year to award UMC contracts through a competitive process, which didn’t always happen under Thomas.

But the new contract with Ellerton was awarded without a broad call for competing proposals. UMC turned only to Ellerton and Nevada Cancer Centers, the two other respondents to the original request that ultimately went to Nevada Cancer Institute.

Silver said she didn’t open the contract bids to all doctors because the hospital was facing a lapse in service if it didn’t sign a new provider quickly.

Before county commissioners unanimously approved the Ellerton contract Tuesday, Commissioner Chris Giunchigliani asked that Nevada Cancer Institute try to hire a doctor who could handle the outpatient hematology clinic within a year so the county won’t have to continue to pay Ellerton for the work.

Commissioner Bruce Woodbury defended the contract with Ellerton, noting that even when it’s added to the Nevada Cancer Institute contract, the hospital is still getting oncology/hematology services for about a third of what it had been paying previously.