SALT LAKE CITY — The University of Utah will hire an independent auditor to review the "complex financial relationship" between the university and the Huntsman Cancer Foundation ahead of negotiations over the future of the Huntsman Cancer Institute, a lawyer representing the university announced Wednesday.
Alan Sullivan, an attorney with Snell & Wilmer retained by the University of Utah to assist in the negotiations, said the audit will analyze the funds flowing into the Huntsman Cancer Institute and how the institute is using those funds.
In a conference call with reporters, Sullivan said university administrators and trustees "believe strongly that an independent financial review needs to be done that will be transparent to both sides" so that negotiations can be built on "sound, factual understanding."
The Huntsman Cancer Foundation — a nonprofit organization formed by the Huntsman family solely to support the Huntsman Cancer Institute — has renegotiated contracts with the University of Utah over the governance of the Huntsman Cancer Institute several times over the past 20 years. The foundation donates roughly between $20 million to $30 million per year to the cancer institute.
A Deseret News investigation last month revealed that ongoing negotiations over the autonomy of the Huntsman Cancer Institute were at the heart of a tumultuous few weeks in which the institute’s popular director and CEO, Mary Beckerle, was abruptly dismissed and reinstated.
The university has not yet publicly explained why U. President David Pershing, senior vice president of health sciences Dr. Vivian Lee and the board of trustees dismissed Beckerle by email on April 17.
In the conference call, Sullivan emphasized that "the time for bickering and contention is over.”
"Public statements intended to disparage the university and its people and the institution are really counter-productive to the shared objectives of the university and the Huntsman Cancer Foundation,” Sullivan said. "The university health system is not failing, nor is it bloated or mismanaged."
Sullivan appeared to be referencing accusations made by Jon Huntsman Sr., the billionaire philanthropist who helped found the Huntsman Cancer Institute in 1993.
Huntsman, who serves as chairman of the board of the Huntsman Cancer Foundation, roundly criticized the university in the days after administrators fired Beckerle, and continued to do so after she was reinstated and Lee resigned.
On Monday, Huntsman announced that he plans to take out advertisements in both Salt Lake newspapers to give a full accounting of funds poured into the Huntsman Cancer Institute, including what he has estimated to be between $500 million and $550 million out of his family’s own fortune. Those ads are scheduled later this week.
In the interview, Huntsman also criticized the university health care system as disorganized and "badly in need" financially.
Huntsman did not return calls for comment Wednesday evening.
In an email to the university's health sciences division sent out Wednesday evening, Pershing echoed Sullivan’s insistence that the university's health care system was running smoothly.
“Many of you have voiced concerns about the way the University of Utah’s reputation, competency of our leadership and the financial strength of our health system is being questioned in the media in relationship to recent events regarding the Huntsman Cancer Institute,” Pershing wrote.
Acknowledging that university administrators may have been “uncomfortably quiet” in the past few weeks, Pershing said that was “because we believe we have a process in place — at the negotiation table with outside counsel and neutral third parties — that will produce the best result for all stakeholders, and most importantly — our patients."
During the next several weeks, the university will be working "to strike a balance between (the Huntsman Cancer Institute's) autonomy as a self-directed research institute and its collaboration and integration with our entire health system," Pershing wrote.
Also on Wednesday, the university released a previously unseen report about the performance of the Huntsman Cancer Institute in response to a public records request by the Deseret News.
The report, which was given by Lee to representatives of the Huntsman Cancer Foundation in December, appeared to raise questions about how the institute was performing when it came to winning National Institutes of Health grant funding.
Compared to departments like biochemistry and human genetics, the Huntsman Cancer Institute appeared to be winning far less grant money based on how much the university health care system was investing in its research program, according to the report.
But Susan Sheehan, the chief operating officer of the Huntsman Cancer Foundation, has previously accused the report's creators of using erroneous methodology and blamed the report, at least partially, for why Pershing fired Beckerle.
Neither Sheehan nor the Huntsman Cancer Foundation’s CEO Peter Huntsman responded to requests for comment Wednesday evening.
Among other things, the report also showed that the Huntsman Cancer hospital generated significant operating margins last year of about $63 million, based on $348 million in operating revenue minus $285 million in operating expenses.
Those earnings accounted for about 40 percent of the approximately $160 million in operating income generated by the university’s hospitals and clinics last year, according to financial reports.
Based on contracts currently in place between the university and the Huntsman Cancer Foundation, the cancer center re-invests three-quarters of its profits back into the institute for cancer research and cancer care. The university health system keeps one-quarter, which last year would have amounted to roughly $15.8 million.
Sullivan said he is in the process of selecting and retaining the independent auditor.
"We would like to work closely with Huntsman Cancer Foundation in shaping the questions and the procedures put to the auditor as we go forward," he said.