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COUNCIL State of the University

Proposal to Create Penn Medicine

by Judith Rodin, President

I'll move on, then, and talk about the Health System. Those of you who have been around for a while know that Penn, over the past five or six years, has had a meteoric rise and fall of the finances of its health services. We were able to build all of the infrastructure that I just mentioned--the research space and the new hospital space--and to acquire a number of hospitals to create the Health System, but then we have spent the last three years trying to recover from some terrible losses. The good news is that we have turned the Health System around. We reported the audited financials to the Trustees at the meeting last week. The Health System is several million dollars in the black and will continue to be positive for the next several years unless there are extraordinary, unforeseen circumstances. But the days of generating huge dollars from patient revenues, given the change in academic medical reimbursement, is probably gone. We have been spending a great deal of time over the last year in many, many committees and much conversation about the future of Penn Medicine, thinking about whether we should sell the Health Services component or spin it off into a separate entity and try to manage it as a more distant relative of the University of Pennsylvania.

I mentioned to Council at its last session that we had recruited Dr. Arthur Rubenstein to become the new executive vice president and dean. His conversation with department chairs and many members of the faculty and trustees and others has led to what we think is very good and very interesting for the next phase of our medical endeavors.

We have in the School of Medicine (slide 1 below) a single entity--that was governed as our other schools have been--with a Board of Overseers and then the clinical components called the Health System, which is governed by its own board. What we're proposing instead of that is to create a new entity called Penn Medicine. It would replace both the current Health System Trustee Board and the School of Medicine Overseers. That structure was approved by the Trustees at its board meeting last week. Then we would have a more relaxed time to begin to work on any further restructuring that we wish to accomplish. The Penn Medicine board would be about 30 or 40 people. It would have committees, as our Trustee Board does, an executive committee, finance, compensation, research and teaching committees as well, and would be structured to prevent unnecessary overlap with the general Trustee Board. The clinical components would continue to interact, but in a much more creative way with the School of Medicine. The only entity within the Health System universe that is not a separate 501 (c) (3) is HUP (the Hospital of the University of Pennsylvania) and unless there are regulatory issues to prevent us from doing so, we will create a separate 501 (c) (3), which is a separate entity.

This is the previous Health System governance structure (below) and when you look at it, you can understand perhaps why we got into trouble. Here are the Trustees sitting over the Health system Trustee Board. The squares are corporate entities, the ovals are entities but without corporate governance capacity. So the Trustees sat over the Health System board, the Health System board had an executive committee; it had some committees but not a full array of committees. In addition, there was a Medical Center board that sat over a separate board for HUP. That board sat over a board called the Board of Women Visitors. The School of Medicine had its own Board of Overseers sitting over the School of Medicine and someone--I think, this board--had responsibility for our separate clinical entities, the hospitals and all of the other clinical entities. Going to 14 meetings a month of these various boards certainly didn't use our time wisely, but that is what we did.

This is the new organization that we are proposing (slide 2 below). The Trustees sit over an entity called Penn Medicine, it's an umbrella governance structure for everything, meaning the School of Medicine and the Health System, the clinical components and this entity has responsibility for everything for CPUP which is our faculty clinical practice plan and for all the hospitals and other entities. There is only one meeting site and that is the Penn Medicine site and there is a very significant amount of overlap between the Trustees and the members of the Penn Medicine board now by statute. So the chairman of the board of Penn Medicine is a University Trustee, the chairman of the University Trustees sits on the Penn Medicine board. There are overlaps between the Trustee and the Penn Medicine audit committee membership and the budget and finance membership and it moves research and student affairs to new board status in this committee. What had happened, and those of you who are in medicine will know this well, is the power resided in the Health System board. That's were the resources were and that it had the opportunity to make a variety of decisions with regard to the future of Penn Medicine the Board of Overseers over the Medical School was fairly perfunctory. Now with a unified board, no decisions will be made about the clinical component that aren't in the interest of or tested against the importance of those decisions for the Medical School in this overall entity. That entity reports to the Trustees, so there is a very significant amount of interaction.

In this model the CEO of the Health Services component reports to the dean and EVP, who sits up in the Penn Medicine box as a member of that board. We have gone through a number of processes to get to this point and a variety of touchstones. The dean has been meeting with Medical School faculty and leadership throughout this period and will be continuing now to flesh this out and engage in a Penn Medicine strategic planning process that we will be hearing about over the next several months.

I think that this is a significant and important outcome for the University. It provides a fully integrated Health System and Penn Medicine system that provides efficiencies, economies of scale and references every decision about health service delivery through its impact on and its benefit for the School of Medicine, which is why we are running health services in the first place.

Almanac, Vol. 48, No. 12, November 13, 2001


November 13, 2001
Volume 48 Number 12

A 25-year-old CIS doctoral student in SEAS disappeared on November 2.
Three professors named to Goldstone Endowed Term Chairs for Philosophy, Politics and Economics.
Lindback Award nominations are due November 30.
Community Involvement Recognition Award nominations are due on December 7.
The University community is invited to speak at the University Council's Open Forum; topics must be submitted to the Office of the Secretary by November 27.

The State of the University: an update on the strategic planning process.

The State of the University: a proposal to create Penn Medicine.

Fluent in Spanish? A resident director for an academic program in Seville is sought for next year
OF RECORD: Policy on Deployment, Operation and Registration Requirements for Wireless Access Points on PennNet.

OF RECORD: Policy on Requirements for Authenticated Access at Public Jacks, Public Kiosks, Wireless Networks and Lab Computers on PennNet.

Thanksgiving Break: Special checks/safety and security tips
125 Years of Women at Penn Celebration: portraits and pavers preserve accomplishments of generations of women.