UM Hospital chairman voids his firm's contract

March 13, 1993|By Patricia Meisol | Patricia Meisol,Staff Writer

The chairman of the board of the University of Maryland Medical System has voluntarily canceled his company's $4.2 million contract to operate a pharmacy in the hospital.

Roger C. Lipitz, an owner, director, and chairman of Meridian Health Care Inc., a privately held nursing home company based in Towson, said he took the action because of questions about the contract by political leaders.

In a March 9 letter to the directors of the medical system, Mr. Lipitz maintained the contract was appropriatedly bid and awarded but said he nevertheless was pulling out.

"We have concluded that the only way to put an end to the discussion and innuendoes is for UMMS to rebid the pharmacy contract," he wrote.

Joan S. Shnipper, a medical system spokeswoman, said the university was "re-evaluating its options" with regard to the future operation of the pharmacy.

The pharmacy, which opened in October, remains open.

The University of Maryland Medical System, which operates the teaching hospital used by University of Maryland doctors and medical students, became part of a private medical system in 1984.

Its policy allows directors on its board to do business with the hospital or related entities under certain conditions, including abstaining from votes on contracts in which they have a stake. Mr. Lipitz said he did not discuss or vote on the pharmacy contract.

The board awarded the contract to Hallmark Healthcare, a wholly owned subsidiary of Meridian, six months ago. Under its terms, the university automatically received 20 percent of the gross revenues, retained control over all employees except a manager, and continued to control the purchase of drugs and supplies. Hallmark received the remaining 80 percent, from which it had to pay employees' salaries and drug suppliers before it could take a profit.

In this 80-20 arrangement, Hallmark originally was to receive estimated annual earnings of $317,044. That figure was reduced because manufacturers raised prices and because of lower-than-anticipated volume in the pharmacy's first few months. Hospital officials said Hallmark could earn about

$220,000 annually.

At least several directors raised questions about the winning bid when the pharmacy opened last fall, and medical system officers presented the entire matter to the full medical system board in December.

Information about whether other contracts have been awarded to companies owned in part by members of the board was not available yesterday, Ms. Shnipper said.

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