posted on thu, mar. 14, 2002
$100 million gift for penn health system
the grant money, left over after allegheny's purchase of the graduate system, is for financial stability.
by josh goldstein
inquirer staff writer
the university of pennsylvania is getting a $100 million gift - the third largest in its history - to provide financial stability to its prominent but struggling health system.
the grant, to be announced monday, comes from the philadelphia health care trust, a charitable foundation created with money left in the graduate health system after that network's five hospitals were acquired by the allegheny health system in 1996.
the trust will give penn part of its interest income for the next seven years, and will transfer all its assets in 2009.
the gift will be used to endow patient care, research and educational programs of penn medicine, which encompasses the medical school and the health system.
"this gift is a significant milestone in helping to create a healthier financial structure for penn medicine," said david l. cohen, the center city lawyer who was mayor edward g. rendell's chief of staff and is chairman of the penn medicine board.
the $100 million gift can be seen as a return of assets to penn, said bernard j. korman, chairman of the trust. graduate hospital separated from the ivy league university in 1977 under korman's direction. the center city hospital, now part of tenet healthcare corp., grew through the early 1990s with its acquisition of community hospitals and the creation of its own health maintenance organization.
"we built a new hospital," korman said yesterday. "and now, 25 years later, we are recycling some $100 million back to the university."
korman, an alumnus of penn and its law school, joined the penn medicine board as vice chairman last month and will head the board's finance committee.
"bernie korman's involvement is quite important," penn president judith s. rodin said yesterday. "we feel that having him on the board is going to be very important in our efforts to continue to recover."
after four years, with total operating losses of $400 million, the penn health system made $25 million in the fiscal year that ended june 30.
because of the past financial problems, rodin has led an effort to create an organizational structure that could insulate the university from the fiscal problems of the health system.
in october, penn announced that it was reorganizing the governing structure of its health system and medical school to create a single board overseeing both academic and clinical operations. at that time, cohen took charge of the newly created penn medicine board.
the reorganization gives the hospital network the dexterity to adjust its strategy in a competitive, fast-changing marketplace.
the system includes the hospital of the university of pennsylvania, pennsylvania hospital, phoenixville hospital, and presbyterian medical center.
arthur h. rubenstein, the dean of the medical school and executive vice president of the health system, said he hoped to pursue "great things" with the income generated by the gift.
"whether it is used to recruit an outstanding person or build an outstanding program that might emerge in the next few years as being absolutely key to our future, we will use this gift to push the university to greater heights and be sure that it really makes a difference," rubenstein said.
for the next seven years, the trust will contribute an increasing amount of its investment income each year to penn medicine. the trust has made grants to other organizations that will end by 2009. then the trust's principal will be transferred to penn, pending court approval.
korman, a health-care entrepreneur, said that he will continue to receive a $100,000 annual salary as trust chairman over the next seven years.
when asked if he had considered giving the trust's assets to the city's other nonprofit health systems - temple univerity or thomas jefferson - korman said he weighed "various options" before deciding on penn.
contact josh goldstein
at 215-854-4733 or email@example.com
let me get this right.
bernard j. korman, chairman of the trust....graduate hospital separated from the ivy league university in 1977 under korman's direction...now giving $100 million trust back to penn....as chairman of the trust bernard gets $100.000/year to manage it for the next 7 years = $700,000...so trust actually looses almost 3/4 of million.
gee as rn and past treasurer of many organizations, for free...i'd only charge them $25,000/ yr. karen