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Here’s a recap of the top story for the week of June 7, 2024:
State review of failed development calls for changes at VCU Health, less influence from VCU
Reported by Richmond Bizsense’s Jonathan Spiers
A year after a Richmond BizSense report revealed that backing out of an ill-fated downtown development cost VCU Health $80 million and counting, a state review is calling for significant changes to the health system’s leadership structure.
At a meeting Wednesday of the Joint Legislative Audit & Review Commission, the oversight agency of the Virginia General Assembly, JLARC staff presented the findings and recommendations from a monthslong study of VCU Health aimed at improving the health system’s governance and process for reviewing and approving capital projects.
The recommendations include eliminating the VCU Health president position currently held by Virginia Commonwealth University President Michael Rao, and changing state law to limit the university president’s role on the health system board, which Rao leads as chairman in accordance with VCU Health’s bylaws.
JLARC also recommends that VCU Health retain its “authority” structure and remain separate from the university, going counter to the findings of a consultant hired by VCU and VCU Health that suggestedthe health system become a subsidiary of the university.
Other recommendations include development of a 10-year strategic capital plan for the health system, addition of director-level positions overseeing construction and real estate functions, policy changes requiring use of outside experts on high-dollar or high-risk projects, and creation of a joint committee of the VCU and VCU Health boards to ensure effective communication and collaboration between the two legally separate but related agencies.
The review, which JLARC OK’d in November, stemmed from what is known as the “Clay Street project.” The aborted redevelopmentof Richmond’s old Public Safety Building ended with VCU Health paying $73 million to back out of its lease, along with additional costs that continue to add up.
While the review did not focus on the multibuilding high-rise office complex, it found that the project “highlighted shortcomings” in VCU Health’s capital projects review process and “raised questions” about influence from university leadership over health system decisions.
The review also found that VCU Health “lacks sufficient leadership and staff capacity in key functions related to capital projects” and “has relied on VCU staff to fill staffing gaps.” It additionally described Rao’s roles as health system president and board chairman as having “enabled VCU to have too much influence over” VCU Health.
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