Travis County taps legal help to comb through Central Health, Dell Med contract

AUSTIN (KXAN) -- Is Travis County's hospital district, Central Health, giving millions of dollars to Dell Medical School in violation of state law? Travis County Commissioners wonder if that's the case, a sticking point in their approval of Central Health's budget Tuesday.

What is Central Health?

Two decades ago, voters in Travis County approved the creation of a hospital district, which taxes you just like the county or city does. That passed with roughly 54% of the vote.

Central Health's mission is to provide healthcare for people who can't afford it.

In 2012, voters approved a tax rate increase for the hospital district, the ballot language said in-part: "funds will be used for improved healthcare in Travis County, including support for a new medical school consistent with the mission of Central Health."

That last part is where some local leaders, including Travis County Commissioners and Central Health board members, have concerns.

The legal question

Central Health pays Dell Medical School $35 million annually and have since you passed the tax rate increase in 2012. Travis County Commissioners are asking whether or not that's legal -- as it's unclear how the medical school directly helps indigent people, the mission and legal obligation of Central Health.

"I think my colleague, Commissioner [Jeff] Travillion, said it best -- if you're giving somebody $35 million and they don't have to tell you what they're doing with it, that's when people end up in jail, in my experience," Commissioner Brigid Shea said.

While Travis County Commissioners unanimously voted to pass Central Health's budget Tuesday, they also voted to bring on outside legal counsel to take a look at the agreement between the hospital district and Central Health.

That's also the focus of an ongoing lawsuit brought forward by Attorney Fred Lewis, by the way.

"I think that is a great step," Lewis said of the commissioner's move to bring in legal help. "I think they will be told that it is illegal, then their duty, because they have financial control, oversight of Central Health and they set their financial policies, is to say you can't pay money to anyone, including UT without specific deliverables of healthcare and records."

A communication problem

Those concerns were also discussed at Wednesday's Central Health board meeting. Ultimately, the president and CEO of Central Health, Dr. Pat Lee, said this partnership hugely benefits the community Central Health serves. Lee was hired late last year and inherited the contract.

"When I listen to the county commissioners and our city leaders and community leaders, there's a broad understanding actually that there's a lot of value here," Lee said. "Having a medical school, bringing in these doctors, bringing in these services, training local students and having them stay and practice and everyone understand that's valuable. I think the opportunity here is to communicate better."

A spokesperson for Dell Medical School at the University of Texas at Austin added to that sentiment saying in-part:

In its first decade, Dell Med has trained nearly 600 residents and fellows in medical specialties like cardiology and neurology, graduated more than 230 medical students and attracted over $100 million in health research funding. At the same time, we are committed to expanding access to high-quality, integrated, person-centered care for everyone in our community. Since 2014, we have recruited nearly 450 faculty physicians to Austin. Most of the care provided by these faculty physicians, our residents and our fellows — over a million hours each year — occurs at clinical sites operated by partners across Travis and surrounding counties. In addition, Dell Med’s clinical practice treated more than 12,000 patients in 2023-2024, with 38% covered by MAP, Medicare or Medicaid.

Our care capacity will be further enhanced over the next five years with the construction of a new specialty care hospital and an MD Anderson Cancer Center, both on the UT campus, in addition to significant expansion of our outpatient clinics.

At the very least, Travis County Commissioners and even some Central Health board members say they want to know exactly where the hundreds of millions in dollars in taxpayer funds are going -- a full breakdown, legal or not.

"We want to see documentation of how that $35 million is being spent, and if it's being spent for healthcare for the poor," Shea said.

What a Travis County audit tells us

Travis County Commissioners brought Mazars USA on to audit the contract between Central Health and Dell Medical School. The results came out this year.

"Dell Med’s use of the funds is consistent with the affiliation agreement terms, as confirmed by the independent performance audit of Central Health by Mazars USA," the university spokesperson wrote.

But commissioners say that's not what's in question here. Shea said the agreement expressly states the opposite of where commissioners hope to see the money go. Ultimately, commissioners want to know whether the affiliation agreement itself breaks the law, something Lewis says -- is not within the purview of Mazars USA.

"Non-lawyers cannot give a legal opinion about whether something is violating the law...They're getting paid, but not to provide legal services."