Prescription for success

After years of financial losses, months of temporary remedies and weeks of frenzied speculation, the University has finally decided upon a future for its beleaguered network of hospitals and clinical practices. Friday's announcement -- that Penn will spin off the $1.9 billion Health System into a separate wholly-owned, non-profit organization -- finally sets a new course for overcoming the more than $400 million in losses it has racked up over the last four years. Although the specifics of the arrangement are subject to government approval and further decision-making by University administrators -- a process which may take up to a full year -- the decision appears encouraging for a number of reasons. First, it dispells all other speculation about the future of the Health System -- specifically, whether or not it would be sold to a for-profit corporation. With the UPHS still struggling to overcome its past losses -- despite recent profitability -- a new, clear agenda for change is just what the system needed. Second, the Trustees committee's decision is important in that a non-profit Health System will protect the rest of the University from any further potential losses. While the new, separate Health System will be owned by and affiliated with the University, the two entities will be otherwise financially separate and self-contained. That should make a difference for students and non-medical faculty, who no longer have to worry quite as much about the Health System's University's overall financial situation. Most importantly, the decision ensures that the Health System will maintain the academic function that was paramount in its founding eight years ago, and was threatened by a possible sale. That mission -- as well the UPHS' teaching affiliation to the University -- provide the framework for the Health System's success and have sustained its growth as a center of research. With that framework now apparently protected, the Trustees and the Health System can now go about the business of turning the UPHS back into a profit-generating organization. Certainly, a number of questions still remain unanswered. We still don't know what kind of relationship will be shared between the new governing body and the University Trustees. And we have no idea how this new arrangement will play out should the Health System lose more money. But for now, this new direction appears to be a logical one. And most importantly, it keeps one of the nation's most prestigious health systems in the business of treating and educating -- a business that it knows so well.

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