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In One Piece
The Health System will remain part of the University. By Judith Rodin

To remain or not to remain an integrated health system under the Penn banner: That was the question that a special joint committee of medical faculty and University trustees intensely pondered over the last few months. In numerous meetings, committee members sought input from key stakeholders, pored over the prior work of other committees that had grappled with the issue, and reviewed a range of options.
   Following much debate and discussion, Penn trustees chose to follow a course of action, recommended by the joint committee, to keep the University of Pennsylvania Health System in one piece. After carefully weighing our options, including the sale of Penn’s hospitals to one of several for-profit suitors, I believe this decision will best uphold the central academic mission of our School of Medicine and Health System: to translate teaching and research into practical benefits for humanity.
   In short, our trustees simply are not willing to put a selling price on the enormous teaching, research, and life-saving capacity of Penn’s cutting-edge Health System. Consequently, one of the finest medical centers in the world will remain in the hands of a University committed to the very best in education, teaching, and patient care.
   At the same time, we continue to live in the real world of balance sheets, rising costs, declining reimbursement payments, and nursing shortages. Faced with these challenges every day, the Health System has made great progress toward financial recovery. Not only has the whole team, headed by interim CEO Robert Martin and Health System Board Chair Russ Palmer, pulled together to stanch the hemorrhaging of red ink; it has rallied to post a positive return for the first half of the 2001 fiscal year.
   But the Health System shoulders a very sizeable debt burden, and it will need additional capital over the next several years to support our academic and clinical missions, reinvest in our fixed assets, and cover debt service. Given the uncertainties of a volatile health-care marketplace, Penn’s Health System must continue charting a prudent path to financial recovery to ensure the long-term viability needed to pursue its academic mission.
   University trustees have devised a clear course of action that includes the following principles and measures:
The University is committed to maintaining an integrated health system.
The trustees will review and approve terms worked out by special committees to establish a new, not-for-profit entity 501(c)(3) for the Health System that would remain wholly owned by the University. With its own CEO and governing board, the new organization will have the flexibility and autonomy it needs to compete and respond swiftly and strategically to changes in a challenging and often unpredictable marketplace.
The University will continue to consider joint ventures on capital projects and potential alliances with partners who share our commitment to academic medicine and our vision of an integrated commitment to teaching, research, and patient care.
   These steps strengthen the Health System’s position. They preserve the School of Medicine’s access to a full array of clinical settings for teaching and research—an invaluable component of Penn’s academic mission—and they allow UPHS to compete aggressively in the commercial marketplace.
   Most important, patients will continue to receive superior care, whether they visit a Penn physician, or come to any one of Penn’s hospitals or treatment centers.
   We should not lose sight of the Health System’s many formidable strengths that have made it so attractive to medical students and faculty, not to mention the for-profit sector. The School of Medicine is ranked among the top four medical schools in the nation and is the second leading recipient of funds from the National Institutes of Health. The Hospital of the University of Pennsylvania is perennially listed by U.S. News and World Report as one of the best hospitals in the nation. And the Health System continues to garner numerous national awards and honors for excellence.
   While we still must navigate through choppy waters to reach safe harbor, the Health System is blessed with a strong fleet of facilities and a stellar crew of health-care professionals, faculty, and students. In the meantime, we look forward to completing our search to appoint an innovative and energetic executive vice president/dean with a vision to chart a future course for continued excellence.
   All told, our Health System crew will have the support and direction both to keep our first-rate academic medical center on the cutting edge of education, research and patient care, and to uphold the School of Medicine’s standing as one of the top medical schools in the country.

Copyright 2001 The Pennsylvania Gazette Last modified 5/2/01