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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
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ISSUE HIGHLIGHTS:
Tuesday,
November 13, 2001
Volume 48 Number 12
www.upenn.edu/almanac/
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