Watchdog charges $105M going to Dell Med School lacks crucial records

Community advocates call for more transparency in med school spending (KXAN Photo)
Community advocates call for more transparency in med school spending (KXAN Photo)

AUSTIN (KXAN) — Community advocates came together Monday, fighting for more oversight for your money spent on health care. A city watchdog says there are no records indicating $105 million Central Health gave to UT Dell Medical School is actually going to improve healthcare for the poor.

Healthcare advocates want Travis County commissioners to call for an independent audit of UT and Central Health to learn where the money is going. Keep in mind, it was in 2012 voters decided to increase property taxes to fund a medical school. That ballot language indicated funds will be used for improved healthcare, including support for a new medical school consistent with the mission of Central Health. It also said that support could include education and specialty medicine, as well as to obtain federal matching funds. Monday’s gathering was to address Central Health’s core mission, helping indigent people receive healthcare.

Attorney Fred Lewis, who’s been working to determine how the money is being spent, says if Travis County commissioners don’t call for an audit, he hasn’t taken a lawsuit off the table. In a report released Monday, Lewis says says the medical school, in conjunction with Central Health, appears to have:

  • “Failed to keep state required financial and accounting records relating to CH’s $105 million in payments to UT Dell for health care for the poor,
  • Improperly commingled CH’s restricted funds for the poor’s health care with unrestricted, unrelated UT Dell funds, and
  • Misspent these funds intended for the poor on medical school operations, administration and education unrelated to providing the poor with health care.”

“I don’t think the indigent would think that governmental affairs department and communications and fundraisers are indigent healthcare. Maybe some people think it is. I can’t go there,” Lewis said. “UT Dell Medical School is a wonderful thing. Central Health is a wonderful thing. They need to make sure the money goes for what it was intended to go for.”

Julian Jose Olivarez was among those standing beside Lewis and other healthcare professionals in support of an audit. He and his father utilize Central Health resources.

“My biggest fear is that people will lose their lives. Because we’re not talking about colds. We’re not talking about flus. We’re talking about serious, serious issues that I wouldn’t even want to think of naming. I wouldn’t want to think of the people going through this, the families going through this. The heartbreak that will come through it,” Olivarez told KXAN.

Dr. Clay Johnston, inaugural dean of the Dell Medical School, defended the spending, saying the allegations “aren’t real.”

“We can easily show we don’t commingle any funds. The funds we get from Central Health are kept separate from all of our other funds and we’re fully in compliance with the affiliation agreement in terms of how we use those funds,” he said. “I have to trust that this group is trying to be a good watchdog for the public, to make sure that the public’s interests are being met. But hell, that’s what we’re here to do. We want to get to work. We have real work to do.”

Dr. Johnston told us the return on investment will be substantial. “If it’s not multi-fold, then take the money back. It will be multi-fold and we’ll be able to show that,” he said.

Dean Johnston issued the following statement regarding financial issues:

Transparency is a core value of the Dell Medical School, and it has been since voters created the school in 2012. Our finances are completely open to the public, in full compliance with policies and procedures of The University of Texas at Austin and the UT System. We also are working with Central Health on additional financial reviews regarding these funds.

In light of false information that has recently been distributed to the news media, some points need to be clarified:

• Funds that Dell Med receives from Central Health are segregated, kept separate and not co-mingled with unrestricted funds from other sources. This is in accordance with the school’s Affiliation Agreement with Central Health, and is administered by UT Austin and subject to the university’s internal and external audit procedures.

• Most of the funds Dell Med has received from Central Health have not been spent. Through our startup period, we have been careful to only utilize this money when appropriate, and not to use it in a way that might compromise its effectiveness improving health in the community, specifically among low-income and uninsured residents. Our agreement with Central Health acknowledges this start-up period and provides five years to utilize these resources.

• Pursuant to the Affiliation Agreement with Central Health, the school is expressly permitted to use funds received from Central Health for “direct operating support . . . to facilitate and enhance (i) development, accreditation, and on-going operation of the UT Austin Dell Medical School and its administrative infrastructure, (ii) recruitment, retention, and work of the UT Austin Dell Medical School Faculty, Residents, Medical Students, researchers, administrators, staff, and other clinicians.” The medical school, UT Austin, the UT System and Central Health are quite confident that this is a legal arrangement under state law.

• The Dell Medical School has no government affairs function. The school’s use of Central Health funding, provided for purposes such as student admissions, faculty and staff salaries, is lawful and consistent with both the Affiliation Agreement and current law.

• Proposition 1, approved by Travis County voters in 2012 with nearly 55 percent of the vote, expressly stated that “funds will be used for improved healthcare in Travis County, including support for a new medical school consistent with the mission of Central Health”. We are quite proud to have this opportunity and responsibility to fulfill the will of the voters.

The mission of the Dell Medical School is to revolutionize the way people get and stay healthy. We are working hard to fulfill this mission, and especially to help the county’s most vulnerable residents. Even in our startup phase, this work is starting to bear fruit. We look forward to continuing to openly — and transparently — working with everyone across Austin and Travis County to help make this a model healthy city.

Central Health CEO Patricia A. Young Brown sent the following statement to KXAN: 

We’re confident the money is being spent the way voters intended when they passed a ballot referendum to transform healthcare in our community and create and fund a new medical school at UT. Central Health’s investment in the medical school is already improving, and redesigning, health care services delivered to patients in our network of providers around orthopedics, and obstetrical and women’s health services. The medical school is increasing the number of medical residents working in our community health clinics and is creating the next generation of doctors to care for our safety net population.” provides commenting to allow for constructive discussion on the stories we cover. In order to comment here, you acknowledge you have read and agreed to our Terms of Service. Users who violate these terms, including use of vulgar language or racial slurs, will be banned. If you see an inappropriate comment, please flag it for our moderators to review.

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