The Health System CEO, fired yesterday, leaves a radically changed landscape from the one he inherited 10 years ago. University President Judith Rodin's decision to relieve Kelley of his duties comes at an appropriate time. The Health System has lost nearly $300 million over the last two fiscal years and its woes have impacted the University's overall financial health. And despite three rounds of layoffs, the Health System is only at the beginning of its financial remediation plan. The hardest work is yet to come. Yesterday's shake-up, however, in no way detracts from all of the good that Kelley did in his 10 1/2 years at the University, as both CEO of the Health System and dean of the Medical School. Prior to his arrival at Penn, Kelley was a star at the University of Michigan, where he literally wrote the book on internal medicine. When he took office at Penn on October 1, 1989, he faced the task of turning around a medical center that lost $28 million and five top administrators over the previous two years. Within a year, Kelley restored the center to profitability. And in 1993, he presided over the creation of the Penn Health System, which now controls a $2 billion budget and 20 percent of the regional health care market. Buoyed by a number of Kelley's superstar faculty recruits, the Medical School's academic reputation is among the finest in the country. And under Kelley's leadership, Penn now ranks second nationally in research funding from the National Institutes of Health. No one can say whether these achievements would have been possible without Kelley's vision and leadership. But the mistakes he made in office eventually overshadowed his successes. In retrospect, Penn overpaid for some of its Health System acquisitions during the boom times of the mid-1990s. And the red ink that first emerged three years ago was not cleaned up quickly enough in the face of a changing market. The Health System's new leadership, then, is left to confront the challenges that ultimately overwhelmed Kelley's tenure. We wish Interim CEO Peter Traber luck in his new role and hope that the search for a new permanent chief moves quickly toward completion.
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