Just after presstime for the May 25 issue of Almanac, the Penn Health System issued the following statement about impending cutbacks:

PRESS STATEMENT from the Penn Health System

May 25, 1999


To achieve a balanced budget in Fiscal Year 2000, the University of Pennsylvania Health System today reduced its expenses and overhead by eliminating 1,100 positions--which represents nine percent of the health services workforce of 13,000. (The Health System's total workforce--including its education and research components--is 18,000.) Of those 1,100 positions, 450 employees will be displaced, and the remaining 650 are positions that are vacant. The workforce reduction is the result of increasing financial pressures on all hospitals due to reduced reimbursements, increasing denials and slow payments by HMOs, reductions in Medicare reimbursements due to the Balanced Budget Act of 1997, and increasing numbers of uninsured patients.

"This is a very sad day for all of us at the University of Pennsylvania Health System," said William N. Kelley, MD, CEO of the Health System and Dean of the School of Medicine. "The combination of government cutbacks; denied, delayed or reduced payments from insurers; and increased amounts of uncompensated care is crippling hospitals and health systems nationwide. "While we have been forced to eliminate positions and programs that we would prefer to keep, we remain confident that the reductions will not have a negative impact on the quality of our patient care," continued Dr. Kelley. "To lessen the impact on staff, we have, wherever possible, eliminated positions that were already vacant. Nonetheless, some valued employees have lost their jobs, and we are committed to supporting those individuals and helping them through the transition process." A significant number of affected employees are in corporate or administrative positions--in areas such as marketing and public relations, corporate finance, facilities management, human resources, and information services." In addition to workforce reductions, Penn Health System is taking other steps to cut costs. These include vacating leased corporate space at the Triad Building in King of Prussia; delaying the opening of Penn Medicine at Limerick; re-negotiating vendor contracts; delaying some space renovation and building projects previously planned; and further product standardization.

"It is somewhat ironic that we're experiencing record volume of patients during these financially-turbulent times," added Dr. Kelley. "Indeed, despite the problems of getting appropriate and/or timely payments from both governmental agencies and insurers, our patients know they will receive only the highest-quality of care from Penn physicians and other members of our healthcare team. Our commitment and dedication to high-quality patient care remains strong indeed."

The University of Pennsylvania Health System was established in 1993 as the nation's first fully-integrated academic health system. It includes Penn School of Medicine; four owned hospitals (Hospital of the University of Pennsylvania (HUP), Pennsylvania Hospital, Presbyterian Medical Center, and Phoenixville Hospital); 12 network hospitals; 12 educationally-affiliated hospitals, Penn Medicine at Radnor (a multispecialty medical facility); Clinical Care Associates (a primary-care provider network); Franklin Specialty Physicians (subspecialty networks throughout the region); as well as home health care, hospice, and long-term care.

Posted 5/25/99