Originally created 01/27/99

Report advises changes



COLUMBIA -- The Medical University of South Carolina should be restructured as a quasi-state agency or freed from state restrictions to help it compete in an evolving health-care market, auditors said Tuesday.

The report was not the usual financial audit, but a performance review, one of several being done to evaluate how state agencies are functioning. The auditors from KPMG Peat Marwick said government bureaucracy was the main stumbling block for MUSC.

"They realize we have to have a change in order to survive," said Tommy Rowland, chairman of the school's board of trustees. Operational costs are expected to exceed revenue in the coming fiscal year, he said.

Mr. Rowland said MUSC officials favor structuring the school as a quasi-state agency, much like the state Ports Authority. A state board would oversee the school, which would continue to operate under some state regulations, but with more flexibility.

Lt. Gov. Bob Peeler, who heads the Performance Audit Steering Committee, appointed a group to suggest how to proceed with the audit's recommendations.

Sen. Ernie Passailaigue, D-Charleston, who wanted the audit, said getting the needed legislation could be slow, but the audit will give lawmakers guidance.

Making MUSC follow state procurement and purchasing policies that favor lowest-cost bids is not always the best for cost-effective business decisions and can lead to poor quality goods and services, the report said.

To compete, the Medical Center, which is the division that runs MUSC's hospitals, needs flexibility to react fast to buy new technology, equipment and facilities, auditors said.

The report also said the Medical Center uses a lot of overtime to meet staffing needs. The auditors recommended a review of those needs and a cutback in available leave time for a possible savings of $4.6 million.

MUSC's proposed deal to lease its teaching hospitals to the for-profit Columbia/HCA chain has stalled in the courts, and the auditors recommended MUSC and the state resolve policy on ownership and management of land, buildings and other property. They also suggested legislation be approved to allow MUSC to engage in public-private partnerships.

The school awaits a state Supreme Court decision on the issue.

Other concerns, the audit said, are that:

Some positions are hard to fill because of salary restrictions. The state pay classification system gives the Medical Center somewhat of a stigma to outside doctors, according to some MUSC physicians.

State personnel policies don't allow drug screening programs for prospective hires, even MUSC employees who have close contact with patients who use controlled substances.

The Medical Center faces pending cutbacks in state and federal reimbursement.

Demand and supply are fast shifting toward increased outpatient, chronic and long-term services with less emphasis on the high-cost acute care MUSC provides.

MUSC has had a strong financial performance during the past five years, but revenue growth has slowed.