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October 21, 2014

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Hospital defends its $1 million deal

Some county officials critical of easy approval

University Medical Center officials and some Clark County leaders continued Wednesday to defend a pricey hospital contract awarded last year to Dr. Dipak Desai, whose clinics are at the center of an unprecedented infectious disease crisis.

Other county officials, though, criticized the deal, which UMC canceled Tuesday, saying hospital administrators should not have caved in to Desai’s request for a hefty pay increase. One local doctor called the deal a byproduct of UMC’s short-term business mind-set.

“If nobody asks a question, then we just go along,” said Commissioner Chris Giunchigliani. “Shame on us. Shame on me.”

Still, most commissioners backed the decision to grant the contract to Desai, saying there weren’t other options.

Desai and UMC agreed to cancel the contract Tuesday. The hospital wanted out of the deal after health inspectors found that unsafe medical practices at Desai’s Endoscopy Center of Southern Nevada had led to six patients’ contracting hepatitis C at the clinic. Another 40,000 have been notified that they should be tested for infectious diseases.

The contract cancellation, however, raised questions about why Desai and his group got nearly $1 million annually to direct the hospital’s gastroenterology department — more than quadruple the $210,000 they had received for the same work at UMC in 2006.

Hospital officials said Desai and his colleagues unexpectedly pulled out of their former contracts — supposed to run through January 2009 — ostensibly to force a better deal. That left UMC in a bind.

“I felt they were taking advantage of us,” acting UMC Chief Executive Kathy Silver said. “We were in a box.”

Desai had more doctors

The hospital advertised the job, but had only two takers — Desai’s group and another company, Digestive Disease Specialists. Although Desai’s offer was nearly twice as expensive, both proposals cost vastly more than previous contracts. The hospital decided Desai’s proposal was better because the other group would have had to hire additional doctors, which could have taken several months.

Desai initially wanted $1.85 million a year, more than eight times what he and his group had been making, but the hospital negotiated the price down to about $1 million a year. Commissioners approved the deal without discussion in October on their consent agenda, a list of dozens of items passed in a single vote.

A doctor associated with UMC said Desai’s contract illustrates a weakness in the hospital’s practice of signing exclusive contracts with physician groups. UMC gets the coverage it needs, the doctor said, but then all other physicians in the same specialty are shut out and build their practices around other hospitals.

The doctor, who spoke on condition of anonymity because he feared his critique could hurt his career, said the hospital set the stage for Desai’s pay increase when it awarded a cardiology contract in December 2006: The hospital went from a $1 million-a-year deal with one group to a $5 million-a-year contract with Nevada Heart and Vascular, a contract Silver has defended repeatedly.

That sizable jump led other specialists who contract with UMC to realize they, too, could get substantially more money from the hospital, the doctor said.

Though the doctors are simply making shrewd business moves, the agreements are short-term fixes not in the hospital’s best interests, the physician said.

Hospital officials, however, say UMC has little choice because it’s responsible for providing care to those without insurance. Most doctors won’t see such patients without additional compensation, officials say.

Las Vegas gastroenterologist Dr. Frank Nemec looked at Desai’s new contract and said: “He was asking for more because he could.”

More money, same deal

The new contract appears no different from the one for the work Desai’s group was already doing at UMC, Nemec said. But it was difficult for other groups to compete with Desai, because almost every new gastroenterologist who came to Las Vegas would join him. Desai’s practice was making more money — apparently through the same efficiencies that got him into trouble — so he could pay more, Nemec said.

That made his practice the largest in Las Vegas, and only a big group could handle the UMC contract, Nemec said.

Nemec said UMC probably could have hired two full-time gastroenterologists in-house for the amount it was paying Desai’s group — and kept the billing as well. The problem is, it’s difficult to recruit a gastroenterologist, he said.

Silver said the gastroenterology contract required about 2.5 full-time physicians to staff the department. Noting that many gastroenterologists earn $350,000 to $400,000 annually, she said in-house staffing, at that rate, would cost $875,000 to $1 million, about what Desai and his group were being paid.

But after canceling the deal Tuesday, UMC is now in exactly the situation hospital officials paid so much to avoid last year.

Silver said the hospital is scrambling to set up a temporary call schedule to cover gastroenterology needs at UMC and is seeking help from the University of Nevada School of Medicine.

The hospital plans to discuss covering the workload with physicians who worked for Desai’s company, Silver said. Some physicians who have not been implicated in any wrongdoing and practiced at UMC under Desai’s contract are likely looking for jobs and might be willing to provide the services for less money, she said.

“We are going to try to tap as many resources as we can,” Silver said.

Ultimately, the hospital will likely issue another formal request for proposals, she said.

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