Tuesday, October 27, 2009

Rice Merging With Baylor? Rice Faculty Say No!

That's the subtext to the "Interim Report of the Rice University Faculty Merger Review Committee." This report was completed in late August but only made public recently. The faculty on the committee come from a wide variety of academic departments. I only know one of them, Duane Windsor, who teaches the ethics and csr class for the Jones School.

Right from the very start, they express frustration with the lack of specifics about the merger.
The Faculty Merger Review Committee (FMRC) intended to make a full-scale report to the faculty at the start of the semester, but that has not been possible. Merger discussions have been going slowly, and many key decisions have not yet been made: the disposition of the incomplete hospital and its debt; the resolution of a clinical plan for Baylor College of Medicine (BCM); arrangements with participating hospitals, especially adult care hospitals; securing adequate philanthropic commitments; a reliable estimate of the expenses necessary to implement the merger; the amount of investment available for program enhancement and its allocation between Rice and Baylor; and plans for additional fundraising to make possible maximum academic benefits to Rice from a merger without starving existing or future non-medical related programs at Rice. Absent the resolution of these issues, it is impossible for the FMRC to fully assess the risks and benefits of a merger.
Am I reading to much into this if I say that there is a hint that the faculty are feeling they are being kept in the dark about certain things?  That would be my big worry--secret negotians and a plan presented as a fait accompli.Another frustration they state is that there is some information that has been devulged to the committee that the committee is not allowed to include in its reports.
For example: if a Rice/Baylor merger goes forward, Rice will make a substantial one-time investment to support the merger. The committee has been told the planned size of this investment. Because it is still subject to negotiations, the FMRC cannot disclose the amount. Therefore our ability to report to the faculty on the financial costs, including opportunity costs, of a merger is severely constrained. Part of Rice’s one-time investment will be in academic enhancement at BCM and Rice. An important issue for Rice faculty is the academic benefits that would flow from the portion of enhancement funds spent at Rice.
Then, constrained as they are, they make a list of risks and benefits. They're all worth reading, but I want to highlight the risks.
1. The merger would create one of the most unbalanced academic institutions in the US, with a very small university attached to a large medical school. This imbalance could impact Rice’s academic mission, culture, and its finances.
2. The financial risks to Rice of merging with BCM are significant and are amplified by the large size differential between the two institutions. The annual operating budget at BCM, for example, is almost three times the size of Rice's budget. Consequently, small fractional changes in total revenue of the combined institution could have a large impact on funds available for Rice’s traditional mission.
3. By joining with BCM, Rice will be acquiring a large exposure to a volatile industry with changing economics. Over time, e.g., NIH budgets may decline and the nation’s system of payments for medical services is likely to change.
4. The recent situation at BCM has led some of its staff to leave and others to contemplate leaving. It is possible that the BCM with which Rice would merge would be significantly weaker than the BCM of a few years ago.
5. Inadequate execution could limit anticipated benefits. (See Condition 6 below.)
6. Because BCM is in a turnaround situation, its financial future and the future of its institutional relationships are less predictable.
In short, Rice could end up stuck with a money-sucking white elephant that would everwhelm the university.

They, as faculty at Rice, are understandably afraid of becoming second bananas in an unequal partnership. And they are right to worry about that. It is critically important that Rice remain a strong, independent university, with its primary mission being to educate undergraduate and graduate students. If this merger causes this to become a secondary mission to, say, running a hospital, then it should not be permitted to go forward.

(See also this and this.)

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3 Comments:

Anonymous Anonymous said...

So, it's kinda like a double star system, one a red giant, the other a neutron star. Right?

I don't know squat about the merger, or the politics of the thing. I do know that BCM been berry, berry good to me. And I've always respected the quality of education available at Rice.

Why put them together? Can they not continue as before?

jd

6:29 AM  
Blogger Robert Boyd said...

The whole reason that this merger is being considered is that BCM managed to get itself into some serious financial problems due to some very bad structural decisions made in recent years. BCM needs a white knight. But the Rice faculty is rightly concerned that BCM is so big, that it may be too much for Rice to swallow. Even if Rice doesn't merge with BCM, BCM still needs help from somewhere. If I seem to identify more with the risks to Rice, it's because I'm an alumnus. I would be very interested to know what the faculty and staff at BCM think as well.

6:53 AM  
Anonymous Anonymous said...

See Public Lecture at http://www.cs.rice.edu/~vardi/merger/.

9:56 AM  

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