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A  Review of the Medical University of South Carolina and University Medical Associates
May 1999

REPORT (PDF)     SUMMARY (PDF)

As requested by members of the General Assembly, we conducted an audit of the Medical University of South Carolina (MUSC) and University Medical Associates (UMA), the practice plan for faculty in the College of Medicine. Our findings raise questions about the degree of independence of UMA and address issues relating to MUSC's accountability for the expenditure of public funds.

  • We reviewed the relationship between MUSC and UMA and found that it is not clear whether UMA could legally be considered as acting separately from MUSC. The two organizations have a blended relationship which allows MUSC to use UMA to advance its mission. However, it also allows MUSC to avoid accountability for the use of public funds. If UMA acts for the state, it would be subject to some state restrictions on spending and limitations on its corporate structure.
  • Even though a 1997 MUSC internal audit questioned whether many MUSC discretionary fund expenditures were appropriate, we found no evidence that MUSC changed its spending practices in response to this review. Our sample of over $262,000 in expenditures from January to June 1998 showed many expenditures that may be in violation of state law. For example, MUSC regularly buys meals and funds social events for small groups of employees, students, and alumni. Many of these expenditures may not be perceived by taxpayers as a prudent use of resources. They are an inappropriate use of public funds.
  • Our review of MUSC's and UMA's contributions to outside organizations revealed that both organizations made contributions. Some of MUSC's contributions were not appropriate expenditures of public funds because they were made to organizations that are religious or sectarian in nature, or to civic organizations whose benefits extend only to members. Also, some contributions did not appear to relate directly to MUSC's mission. We also found that MUSC and UMA officials requested political contributions to be made through one of UMA's subsidiary companies. These political contributions present the appearance of impropriety.
  • We found that UMA's major source of revenue (85%) is services provided to patients, and the majority of its expenditures are for salaries. We also sampled some of UMA's expenditures for meetings, conferences, dinners, travel, recruitment, and gifts. According to a UMA official, MUSC increasingly channels its expenditures through UMA in these categories. If UMA acts for the state, many of these expenditures would be an inappropriate use of public funds.
  • The compensation of most MUSC faculty is composed of a state salary and an incentive amount from UMA. We found that MUSC uses national norms to set salaries for faculty. MUSC was generally in compliance with state requirements and its own policies. However, only half of MUSC employees reported their salary supplements to the Budget and Control Board, as required by law. The General Assembly now requires MUSC, rather than the employees, to report supplements.
  • MUSC owns one aircraft (MedAir) that is used to provide transportation to outreach clinics and for administrative travel. We did not find evidence of improper use of MedAir. However, we noted that MedAir is expensive for MUSC to operate and recommended that the university consider using less expensive alternatives to meet its transportation needs.
  • As required by appropriations act provisos, MUSC has offered discounts on hospital services to all state employees. MUSC and UMA also provide discounts to other groups of employees and students. For FY 96-97 and FY 97-98, these discounts were more than $3 million. We found that the discounts that MUSC offers to all state employees are used primarily by employees who reside in the Charleston area. Also, MUSC needs to improve controls to ensure that members of the General Assembly do not receive discounts that are prohibited by law.
  • We did not find evidence of a significant nepotism problem at MUSC. However, the blended nature of MUSC and UMA can result in situations that violate the intent of state nepotism guidelines.