Accountability first at East Carolina University's Brody School of Medicine | Eastern North Carolina Now

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    The author of this post is R.E. Smith, Jr.

    In early March, North Carolina Governor Pat McCrory visited the East Carolina Heart Institute at the Brody School of Medicine (BSOM)-not to receive medical treatment-but to "stabilize the financial challenges" at Brody. In fiscal 2013, BSOM had operating losses of $14.4 million.

    McCrory responded by adding $16 million for BSOM over the next two years in his proposed budget. UNC administrators originally requested an additional $30 million.

    But isn't it reasonable, before throwing money at the problem, to find out where the school is hemorrhaging cash and apply spending and revenue tourniquets? While BSOM has lost tens of millions of dollars in each of the past several years, the UNC medical school at Chapel Hill made a $114 million profit in fiscal 2013. Rather than reflexively bleeding state taxpayers for more money, shouldn't there be some sort of investigation from outside the system?

    Actually, there already has been one. Hunter Partners, LLC, a healthcare industries consulting firm based in California, conducted just such an analysis in 2013 at the request of the school. Hunter discovered such egregious instances of waste as "the current ECUP [ECU Physicians] payroll appears to be funding approximately 177.6 FTE [full-time employees] more than a reasonable benchmark would support. These FTE have an approximate yearly cost of $8.5M."

    Hunter also found that "non-labor operating expenses...exceed a reasonable benchmark," with a potential $1.1 million in yearly savings. Furthermore, by changing revenue procedures, ECUP could increase income between $3.5 and $7.0 million annually. Building and occupancy costs are excessive; another $360,000 could be saved yearly.

    But waste and inefficiency are likely not the only reasons for excessive costs. For one thing, while State and tuition funding have steadily increased at Brody over the past five years-$55 to almost $65 million and $2.3 to $6.4 million respectively-grants and contracts have dramatically decreased, from $28.4 to $17.6 million between 2007 and 2012.

    Furthermore, there appears to a considerable "mission creep" that is inflating costs as well. The Brody School of Medicine was established at East Carolina University by the N.C. legislature in 1974. It was given three missions: "to increase the supply of primary care physicians to serve the state"; "to improve the health status of citizens in eastern North Carolina"; "to enhance the access of minority and disadvantaged students to a medical education."

    Only 55 percent of Brody's graduates entered primary care specialties in 2012-14, less than UNC-Chapel Hill's 63 percent. Jenna Ashley Robinson, president of the Pope Center for Higher Education Policy, recently wrote that "over the past 10 years, nearly sixty percent of its graduates have left the state for their residencies" and that "this is particularly acute in highly specialized fields like anesthesiology, neurology, and pathology...of ECU's 2014 class, no students specializing in those fields stayed in North Carolina for their residencies."

    Such expansion from the original mission to produce primary care physicians is proving wasteful, yet Governor McCrory seems oblivious to the problem. In an article on the ECU website, he said that the school "has continued to deliver on the mission our legislature set forth for it"-in fact, inexplicably, he said the proposed additional money will help to "expand" Brody's mission.

    To be fair, BSOM was given a difficult task with its second mission, "to improve the health status of citizens in eastern North Carolina." The medical school has essentially become a regional free health care provider for the poor-a social services agency as well as a school. This overreach accounts for a large part of BSOM's fiscal woes: Dr. Paul Cunningham, dean of the BSOM, told the Raleigh News & Observer in February 2015 that "about 150,000 of the 500,000 patient appointments the school's practitioners handle each year are either uncompensated or the patients pay only a small co-pay and lack insurance to pay the rest."

    In the past, BSOM was able to recover a fair amount of its unpaid charges by having the state attorney general collect some of them. But this is no longer allowed in many situations, according to the News & Observer article, because private hospitals claimed this was "an unfair advantage." As a result, collections using the attorney general dropped from $5.5 million to $1.5 million last year.

    The inability to collect much of the money it is owed-80 percent of the school's revenues comes from operating clinics and work done by its providers at nearby Vidant Medical Hospital-makes BSOM's current operations unsustainable.

    One more possible indication that BSOM's problems go deeper than the need for an infusion of cash comes from recent "Best Medical School" ratings by U.S. News & World Report. In 2012 Brody was ranked #31 in Primary Care; in 2014 it was given "unranked" status because of "not qualifying or data issues."

    With all of these red flags waving, it's time to demand accountability. It is highly likely that the fiscal woes of ECU's Brody School of Medicine can be stabilized without adding more challenges to state taxpayers. Sixteen million dollars is a lot to hand over without attempting to solve obvious problems first.