MUSC Responds to State Inspector General Report Confirming No Wrongdoing by Board of Trustees

Contact: Sheila Champlin

Jan. 12, 2017

CHARLESTON, SC – The Medical University of South Carolina (MUSC) has received a final report from the State Inspector General (SIG) concerning the travel and meal expense reimbursements for members of its Board of Trustees.

“As anticipated, the SIG’s report clearly affirms the MUSC/MUHA Board of Trustees has at all times acted lawfully, and that there has been no wrongdoing in adherence to the policies that cover reimbursements for Board member travel and meal expenses,” said Donald R. Johnson II, M.D., who serves as chairman for both the MUSC Board and the Medical University Hospital Authority Board. “The MUSC Board Review Council will take the SIG recommendations under advisement and, after thorough discussion, the council will make recommendations to the MUSC/MUHA Board.”

“MUSC is appreciative of the long-term commitment and strategic guidance demonstrated by the talented men and women who serve on our Board of Trustees,” said David J. Cole, M.D., FACS, MUSC president. “The Board plays a pivotal role in moving this institution forward to better serve the people of this region, state and beyond.”

It should be noted that the Post & Courier’s assertion that private dollars in support of the Board of Trustees activities have a direct and meaningful impact on reducing student tuition is incorrect when one considers the actual numbers involved and the private source of clinically generated monies. Funds from UMA used for the benefit of MUSC and MUHA, including to provide support for the Board of Trustees, are private funds. They remain private funds. UMA has never received any state appropriations or public dollars. The ability of UMA to cover some of the costs of the Board of Trustees allows public funds to continue to be channeled towards their highest and best use within the public entities of MUSC and MUHA. The statement that any change in Board of Trustees expenses paid by the UMA would impact tuition and fees is not accurate.

MUSC issued the following statement in response to the SIG report, requesting that the statement also be posted on the SIG’s website.

January 12, 2017

Medical University of South Carolina Statement

In Response to the State Inspector General’s Report

The Medical University of South Carolina (MUSC) appreciates the State Inspector General’s (SIG) observations that, by all measures, MUSC is nationally recognized as a leading health care organization that educates and trains well-respected health care professionals, operates a top-tier medical school, and is consistently identified as the State’s No. 1 hospital. MUSC is grateful for the service of the MUSC/MUHA[1]Board of Trustees (BOT) who continue to work diligently, positioning this institution to achieve these remarkable results. 

MUSC welcomes confirmation by the SIG that the BOT has at all times acted lawfully; that there has been no wrongdoing and that the BOT met all statutory and other legal requirements, and did so without expending state appropriated dollars. In fact, the BOT took deliberate steps to follow the statutory structure from the General Assembly and to pay for expenses with private funds. The P&C articles that gave rise to the Commission on Higher Education’s audit request was based on the newspaper’s assertion that UMA[2] revenues are “public money.” This assertion was wrong.

Funds from UMA used for the benefit of MUSC and MUHA, including to provide support for the BOT, are private funds. UMA has never received any state appropriations or public dollars. The ability of UMA to cover some of the costs of the BOT allows public funds to continue to be put towards their highest and best use within the public entities of MUSC and MUHA.

The BOT serves by state law as two Boards, for the University’s education and research enterprises; and for the hospital authority. There are, by statute, 16 BOT members and six mandated meetings per year. Since MUSC and MUHA business has to be conducted separately, with distinct committees, agendas, reporting and meetings, most BOT meetings cover three days. The BOT is responsible for the operations of MUSC and MUHA statewide, which means they oversee a $2.3 billion enterprise that has a $3.8 billion economic impact in the Charleston area alone. Currently, state appropriations represent only 4 percent of the combined operating budget of MUSC/MUHA. 

The BOT are elected by the General Assembly with very definite qualification requirements for half of the members. BOT members are not state or federal employees, and do not draw salaries, benefits or retirement at the expense of the taxpayers. The state and federal employee travel policies expressly do not apply and better benchmarks are available. The expenditures by the BOT may be more appropriately reviewed in comparison to the compensation paid to the Board members of other State Authorities who receive salaried compensation in addition to payments for mileage and subsistence.

The core missions and opportunity costs were factored into the analysis by the BOT in adopting the travel policy and events policy limits. With only 4 percent of the operating budget being supported by state allocations, the sources of MUSC’s operations are dependent on the monies generated by MUHA, UMA, and on monies received from donors. Key to this success is the recruitment and retention of excellent health care professionals and faculty and the generation of a vibrant donor base. Without those, the school would not have sufficient resources to remain competitive among top-tier academic medical centers that include both public and private sector entities.

An additional practical consideration of the travel policy is to provide safe lodging accommodations in close proximity to the campus. This concern was for BOT members, Board of Visitors (BOV) members, and other distinguished guests and candidates being recruited to MUSC. This management consideration is consistent with the mission to promote service as volunteer ambassadors for MUSC throughout the state and region, to facilitate charitable fundraising and to recruit excellent health care professionals and faculty. MUSC, MUHA and UMA have to remain competitive to be able to fulfill their missions. The travel and event policies facilitate the competitiveness of the organizations.

Section 59-101-187 exempts funds generated by the Practice Plan (UMA) for any “events” which, “recognize academic and research excellence and noteworthy accomplishments of the faculty and staff, students and distinguished guests of the institution.” This statute is directly applicable to the Board of Visitors events, graduations, retirement functions, and all fundraising events. The significance of these events towards the mission of MUSC cannot be overstated. The return on investment of the BOT and events expenses can be expressed as simply as: the expenses for the BOT were less than $700,000 over the course of the five-year review period and the resulting donations from the BOT and BOV was $16 million. This is a substantial accomplishment and result towards supporting the education, research and patient care mission of MUSC. This number only represents the direct donations and not the impact on philanthropic fundraising overall (which currently averages approximately $70 million). None of the state universities can operate without sourcing financial support over and above tuition and appropriations.

The health care delivery capability of the MUSC Academic Medical Center (AMC) continues to grow both its capacity and reputation, not only in the community, but in the state, region and nation. The tri-partite mission of MUSC, MUHA and UMA is to promote world class Health care delivery to patients, to educate physicians, dentists, and other allied health professionals, and to engage in scientific medical research, to improve the health, and well-being of our citizens.

Going forward, the BOT Review Council will convene to discuss the SIG report and recommendations. The Review Council will then make its own recommendations to the Board. The BOT will determine whether changes to its travel and event policy are needed and act accordingly.

Founded in 1824 in Charleston, MUSC is the oldest medical school in the South, as well as the state’s only integrated, academic health sciences center with a unique charge to serve the state through education, research and patient care. Each year, MUSC educates and trains more than 3,000 students and more than 850 residents in six colleges: Dental Medicine, Graduate Studies, Health Professions, Medicine, Nursing and Pharmacy. With $298 million in research funding in fiscal year 2022, the collaboration between faculty, staff, students, and our partners accelerates the movement of scientific discoveries that improve lives. Find out more about our academic programs.

As the clinical health system of the Medical University of South Carolina, MUSC Health is dedicated to delivering the highest quality and safe patient care while training generations of compassionate, competent health care providers to serve the people of South Carolina and beyond. Close to 25,000 care team members provide care for patients at 14 hospitals with approximately 2,500 beds and 5 additional hospital locations in development, more than 300 telehealth sites and nearly 750 care locations situated in the Lowcountry, Midlands, Pee Dee and Upstate regions of South Carolina. In 2022, for the eighth consecutive year, U.S. News & World Report named MUSC Health the No. 1 hospital in South Carolina. Learn more about clinical patient services.

MUSC and its affiliates have collective annual budgets of $4.4 billion. The nearly 25,000 MUSC team members include world-class faculty, physicians, specialty providers and scientists who deliver groundbreaking education, research, technology and patient care.