Wednesday, May 26, 2010By Steve Twedt, Pittsburgh Post-Gazette
The University of Pittsburgh Medical Center's near-$7 million infusion to prop up an Irish hospital has raised the ire of some local residents still fuming about the giant health system's decision to close its hospital in Braddock.
The Irish Independent newspaper recently reported that majority owner UPMC provided the money to Beacon Hospital in Dublin "as a buffer to cumulative losses racked up by the end of last June."
Meanwhile, UPMC had paid a near-$95 million subsidy to the hospital last year to pay off creditors, a move that made it a 66 percent owner of the facility, now called UPMC Beacon.
With that kind of funding, "The Braddock hospital could have stayed open for 10 years and, who knows, the whole region could have turned around in 10 years," said Tony Buba, chairman of the Save Our Community Hospitals citizens group organized after the health system announced plans to close UPMC Braddock.
The health system has agreed to pay $5 million for planned demolition of the Braddock facility, which will be replaced by multi-use buildings.
UPMC spokeswoman Wendy Zellner said the two hospitals face very different circumstances. The Irish facility is at or above capacity and there are plans for expansion, she said.
"Braddock, as we have explained, was an underutilized facility. The people in Braddock were already choosing other hospitals. And we have hospitals nearby that are offering services that we think will meet the needs of the community," she said.
Mr. Buba takes issue with that last point.
"People are spending so much time going out to [UPMC McKeesport] now and, if you don't have a car, the bus travel is very difficult," he said.
The Irish Independent article began circulating in Braddock this week.
Coming on the heels of tax documents for the health system that listed nearly 20 executives and physicians earning million dollar salaries, blood relatives on the payroll and business deals with board members, it was a bitter pill to swallow.
The article reported that UPMC's Ireland operation lost about $7 million in fiscal 2009. It said UPMC also has agreed to provide about $12 million more to expand Beacon.
Charles Bogosta, president of UPMC's International and Commercial Services Division, said since UPMC took majority control of the Irish hospital, it has been doing much better financially and should make a profit this year.
"Beacon will turn around," he said. "Beacon really had only been under our control since last June. We're a little behind on our projections on cash flow because insurance companies reduced their rates. So, for what's under our control, we're very proud of how we're doing there."
Mr. Buba, a Braddock Hills resident, said the steering committee for Save Our Community Hospitals has decided to meet Thursday to discuss the latest disclosures about UPMC finances.
"We hadn't planned to have any [demonstrations] in the next couple of weeks, but maybe that will change," he said. "We know they're not going to reopen the hospital, but why can't this money be used to pay for emergency care in Braddock?"
Experts say UPMC's financial dealings with insiders seem 'cozy'
By Walter F. Roche Jr.
Some experts question the propriety of UPMC's business deals with board members' companies and the hiring of relatives, which federal tax returns reveal cost the health care giant more than $10 million last year.
"It seems a little cozy and is probably not in the best interests of the organization," said attorney Thomas Bakewell of St. Louis, who advises nonprofits. "Conflict of interest is a real issue."
Tax records released last week detailed the payments for the first time, thanks to new federal reporting requirements. Tax records detailed more than $5 million in transactions between businesses connected to board members for West Penn Allegheny and its affiliated nonprofits.
Officials of both health care firms say they adhere to strict disclosure and conflict-of-interest guidelines and that board members never vote or take official action on matters affecting their own financial interests.
"Transactions involving any organization or entity UPMC has a relationship with are negotiated at arm's length, at fair market value and competitively bid. We have stringent policies, procedures and oversight in place to manage this," UPMC spokesman Paul Wood said in an e-mail.
He said UPMC, one of Pennsylvania's largest employers, exceeded IRS requirements.
Patricia Mogan of the Pennsylvania Association of Nonprofit Organizations said the number and type of potential conflicts listed by UPMC raise concerns.
"We would want to see some assurance that there is a mechanism in place for the full disclosure and review of all these arrangements," Mogan said. "We really encourage the full board to review the entire" tax return.
UPMC's tax returns revealed that relatives of CEO Jeffrey A. Romoff collected about $3 million in salaries and contracts during fiscal 2009. Romoff was paid more than $5 million in salary during that period.
One of those was his brother, Douglas Romoff, who headed The Paradiso Group. That advertising company was paid $2.48 million.
In a telephone interview, Douglas Romoff said his UPMC contract was terminated nine months ahead of time "with a half-paragraph letter from a lawyer."
He said he was never given a reason for the termination and has not spoken to his brother in some time.
"It didn't help our relationship, but he's still my brother and I love him," he said.
Wood, in an e-mail response, said Paradiso's contract was terminated in October 2008 because of economic conditions.
"It speaks volumes for UPMC that when these difficult decisions were needed, they were done thoughtfully to preserve jobs and patient care and no one — not even Mr. Romoff's brother — was immune," Wood wrote.
Douglas Romoff, who has relocated to Florida, is working on a television production about Napa Valley winegrowers. He said he was forced to shut down The Paradiso Group after losing the UPMC contract.
"It basically finished my business," he said. "I love Pittsburgh. It certainly wasn't my wish to leave. I'll be forever proud of the work we did."
He said that he got the UPMC contract legitimately and lost it the same way.
"But I know my last name helped me get it," he said.
Bakewell, who has authored articles on corporate governance and conflicts of interest, said the disclosures about UPMC raise serious questions.
"It's not a pretty picture. The real question is what is in the best interests of the organization. It certainly suggests a lot of coziness. It seems like a cozy little family affair," he said.
UPMC's filings show two Downtown law firms connected to board members were paid more than $1.1 million in legal fees.
West Penn reported that it paid a little over $5 million to a laundry company headed by a board member of one of its foundations.
Douglas Romoff, who ran UPMC's advertising efforts for seven years, said he has no bad feelings.
"Life goes on. I decided to leave the scene of the crime."
Code blue at UPMC: Tainted spending calls for emergency PR
PITTSBURGH TRIBUNE-REVIEWBy Eric Heyl
Where are all of those photogenic Haitian orphans when you need them?
The question has to be reverberating through the Downtown headquarters of UPMC, the giant health care conglomerate once again in desperate need of the public relations equivalent of a defibrillator.
In January, the part of the paddles was played by 54 parentless kids in earthquake-ravaged Haiti. UPMC's participation in their rescue helped restore a pulse to a local image that had flatlined after the callous decision to shutter its hospital in struggling Braddock.
UPMC could use a few more orphans to parade before the cameras following the revelation it paid more than $10 million last year to companies and individuals with close ties to its directors and top executives.
That information, gleaned from Internal Revenue Service filings, first was reported in Friday's Trib.
Let's put that $10 million figure in perspective.
UPMC decided to close the Braddock hospital, the community's largest employer and only medical facility, because it was losing a staggering amount of money — an average of $4.5 million a year over the past several years.
That's less than half the amount UPMC found under its couch cushions just last year to dole out to family members of some of its highest-ranking officials — including CEO Jeffrey Romoff, chief counsel Robert Cindrich and board member Anne V. Lewis.
UPMC vice president of evasive explanations and excuses Paul Wood attempted the old statistical inevitability argument in defending the familial hiring practices.
Wood noted that because UPMC is Pittsburgh's largest employer, some of its employees naturally are going to be related to others on the UPMC payroll.
What he didn't note, perhaps because it was so obvious, is that the relatives of some UPMC employees are compensated at a significantly higher rate than the relatives of others.
For example, the data-entry clerk brother of the custodian who cleans the commodes at UPMC Presbyterian didn't get that $2.5 million advertising contract. That went to Romoff's brother.
The X-ray technician sister of the woman who inventories all of the medical waste bags? UPMC didn't pay her $264,000. That amount went to Romoff's daughter.
I could go on, but you get the idea.
Here's the bottom line: UPMC no longer wanted to come up with the money to maintain a badly needed medical facility in a distressed community. Yet UPMC had no difficulty locating $10 million to funnel directly to those closely tied to the people who run it.
People long have believed UPMC is an acronym for the University of Pittsburgh Medical Center. But with the information contained in those IRS filings, it might better stand for Ugly Profiteering via Multiple Conflicts.
The health care giant's image is flatlining again. No doubt someone at UPMC is working the phones at this very moment, frantically searching for a Haitian orphan who isn't camera shy.
UPMC reports its hiring can be a relative matterSaturday, May 22, 2010By Steve Twedt, Pittsburgh Post-Gazette
For the region's largest employer, relativity is not always just a theory.
With 50,000 people on the payroll, it may not be surprising that the University of Pittsburgh Medical Center staff includes relatives or that key directors and administrators hold business connections with firms contracted by UPMC.
But in some cases those links go right to the executive offices.
Rebecca Kaul, executive director of the Technology Development Center and daughter of UPMC president and CEO Jeffrey Romoff, was paid $264,274 for her services in fiscal 2009, according to the tax documents filed by UPMC.
Spokesman Paul Wood said that while UPMC paid her salary, the health system billed subcontractor A-Life Hospital Coding LLC for the cost.
Ms. Kaul's former husband, Scott Gilstrap, was paid $259,488, in a job in which Mr. Wood said he "led UPMC's efforts to compete for federal applied research grants and services contracts, primarily from the U.S. Department of Defense." He added that Mr. Gilstrap, who left UPMC in 2009, "was a longtime director-level employee prior to becoming Mr. Romoff's son-in-law."
Mr. Romoff's brother, Doug, is president and creative director of the Pittsburgh advertising agency Paradiso Group Inc., which was paid $2,484,036 for advertising services in fiscal 2009. That contract was not renewed last year, and Mr. Wood said Doug Romoff "is not working for UPMC in any capacity nor is he employed by any company on contract with UPMC."
And Scott Cindrich, son of UPMC's chief legal officer Robert Cindrich, was paid $141,599 in compensation. Mr. Wood said Scott Cindrich joined UPMC in 1996 as a staff auditor and is now an associate counsel assisting human relations. Robert Cindrich, a former federal judge, joined UPMC in 2004.
Under tough new reporting rules for nonprofit organizations, entities such as UPMC must report business and, in some cases, personal relationships between the organization and key people.
So, while many local firms may purchase Steelers tickets for business reasons, UPMC had to report that a for-profit subsidiary spent $139,495 for Steelers games because John McGinley and the Robert Paul, UPMC board members, also own a portion of the football team. Mr. McGinley also is a junior shareholder and board member for Eckert Seamans Cherin and Mellott LLC, which was paid $804,414 for legal services.
UPMC board member Anne Lewis is board chair for Oxford Development Co., which UPMC paid $4,845,289 for property development services, according to the filing. She also has stakes in two other companies contracted by UPMC: Central Securities Services LLC, paid $201,198 for building security; and Central Property Services Inc., paid $457,051 for building maintenance.
Other board member business relationships listed include: $204,215 to Igate Mastech, whose chairman and co-founder Sunil Wadhwani is a UPMC board member; $348,616 to Pietragallo Bosick & Gordon for legal services -- board member William Pietragallo is managing director for the firm; and $103,521 to JJ Gumberg Co., in which board member Ira Gumberg holds a stake, for space rental.
"Given that UPMC is the largest employer in Pittsburgh and attracts talent from across the world, it's easy to understand why there are hundreds of employees with family members who also work at UPMC," said Mr. Wood. "We seek to hire the best and brightest in every position, regardless of family relationships, and take appropriate steps to manage any conflicts that those relationships might entail."