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February 21, 2023

Report: UMass Chan suing UMass Memorial for $40M

A view of UMass Chan Medical School from Plantation Street in Worcester. Photo | Timothy Doyle UMass Chan Medical School in Worcester

A legal battle is being fought between UMass Chan Medical School and UMass Memorial Health over millions of dollars from UMass Memorial’s 2019 sale of its stake in Shields Health Solutions to Walgreens Boots Alliance, Inc. 

According to a report from on Sunday, the Worcester medical school is requesting the Worcester-based hospital system pay it $40 million as part of the the cut from the $263-million sale of the pharmacy management firm in August 2019, which provided UMass Memorial Health with a financial boost to turn its books around from a loss to a net gain in revenue that year. MassLive says sources have told it that medical school is adamant the hospital system should pay the university a portion of the sale.

When WBJ reached out for comment on Tuesday morning, both UMass Chan and UMass Memorial spokespeople declined to comment. 

“UMass Chan Medical School does not comment on these sorts of matters,” UMass Chan spokesperson Sarah Wiley said in an email on Monday morning. 

“UMass Memorial will not be commenting on this matter,” Memorial spokesperson Shelly Hazlett said in an email. 

UMass Memorial Health and UMass Chan are two of the four largest employers in Central Massachusetts with 14,600 and 4,811 local employees, respectively, according to data each provided to the WBJ Research Department in 2022.

They have hired influential Boston law firms to fight the legal battle. MassLive reports UMass Memorial Health hired Ropes & Gray, where former First Lady of Massachusetts Diane Patrick was a partner; the medical school hired Foley Hoag, where former Massachusetts Attorney General Martha Coakley worked after leaving her position in 2015.

Shields Health Solutions was a joint venture between Shields Pharmacy, LLC of Quincy and UMass Memorial Health Ventures, an affiliate of Worcester's UMass Memorial Health Care. Shields provided specialty pharmacy management services to hospitals. Shields sold its remaining stake in the company to Illinois-based Walgreens in September 2022 for $1.37 billion.

UMass Chan and UMass Memorial have been affiliated since 1997, and the two entities are still intrinsically intertwined. UMass Memorial is the academic and medical teaching partner of the medical school, and because of this there are contractual financial agreements between the pair of healthcare services.

According to UMass Memorial’s financial filings from 2021, the hospital system pays the medical school for teaching and education services and supports the medical school’s contributions to the delivery of medical care. The healthcare system contracts UMass Chan employees for medical residency, physician, and other services and reimburses the UMass Chan for other common services it needs to purchase and provide. Then there is the annual fee of $12 million plus an inflation adjustment UMass Memorial pays to UMass Chan as long as it continues to operate a medical school with the required number of students and amount of research funding plus a percent of the net combined operating income of Memorial.

The UMass Memorial system is the largest operator of hospitals in Central Massachusetts with locations in Worcester, Marlborough, Leominster, Clinton, and Southbridge.

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