and Health Care Trust
Last March, the University and the Philadelphia Health Care Trust (PHCT) announced an agreement to transfer the trusts assets to Penn Medicine, the governing body of the Universitys Health System, by 2009 [Gazetteer, May/June]. Given that those assets were then estimated to be worth about $100 million, it seemed quite a coup for Penn.
But in December the plan was terminated by mutual agreement.
In a memo to Penns board of trustees, chairman James Riepe W65 WG67 noted that the original agreement was contingent on approval by the Philadelphia Orphans Court within a year of being signed, and that such approval now appears unlikely to occur within the requisite time frame.
After careful thought and consideration, he added, we have concluded that the relationship envisioned by the agreement, whether or not approved by the Orphans Court, does not serve the best interests of Penn Medicine or the Trust.
Two community groupsthe Philadelphia Unemployment Project and the Action Alliance of Senior Citizens of Greater Philadelphiaopposed the agreement, arguing that the funds should be used to serve low-income and uninsured patients. They also raised questions about the trusts investment strategy, noting that the assets market value sank to $58 million on June 30, and has only risen slightly since then.
The decision to dissolve the agreement, said Riepe, will have no impact on the near-term finances of Penn Medicine, since the funds were not to be transferred for seven years and were thus not a factor in its financial planning.
Under the original agreement, PHCT chairman Bernard Korman W52 L55 was appointed vice-chairman of the Penn Medicine board and chairman of its finance committee. Under the terms of the dissolution, Korman has stepped down from those positions.
Penn received a grant of $3.1 million from the trust last year for faculty research projects, and will be able to keep that money.
We were from the beginning aware of the challenges the terms of this unique arrangement posed, but are of course disappointed it will not come to fruition, Riepe added. We appreciate both Mr. Kormans and the PHCTs commitment to Penn Medicine and the future direction of Penns Health System and School of Medicine.