Health System looks toward expansion

The health care provider has ties to three major area hospitals. Less than four years after its creation, the University of Pennsylvania Health System already commands respect as a major player in the Philadelphia health care market, as well as a nationally known medical service provider. And the Health System is not slowing down. Instead, it is taking steps to increase its hospital alliances while simultaneously expanding its primary care physician base. Those two levels of health care often complement each other, with the Health System working through a huge network of doctors to fill its hospital beds. But patients often require different kinds of care, forcing the Health System to offer access to hospitals with various specialties. To that end, the University recently completed a deal to bring Philadelphia's Holy Redeemer Hospital into the Health System. "It gives us a broader mix of services," Health System Senior Vice President William Foley explained, noting that Holy Redeemer is renowned for its "strong homecare and long-term care components." Foley added that the city's Pennsylvania Hospital and the University are currently "in the process of finalizing an agreement" to incorporate the hospital into the Health System. When the deal is finalized, Pennsylvania Hospital will join the Hospital of the University of Pennsylvania and Presbyterian Hospital as the Health System's primary hospitals. In addition to its three main hospitals, the Health System is affiliated with five regional hospitals and has educational relationships with several others. At the same time, as hospitals are being incorporated into the Health System, dozens of primary practices are being affiliated to it as "clinical care associates" -- doctors who treat patients in area communities and then send them to one of the system's hospitals when they have serious problems. "We have a lot of specialists here, but we have a distribution problem," Foley said. "We don't have specialists in key areas." He added that the Health System is "developing relationships with community sub-specialists who are not faculty of the University." The national trend forcing hospitals and independent practitioners to join large systems such as the University's stems from the increased prevalence of managed care organizations, which prefer to deal with a small number of large institutions rather than many small ones. Phoenixville Hospital spokesperson Scott Lux noted that financial considerations often force hospitals to seek alliances, adding that Phoenixville's relationship with the University "will allow us to have access to those contract rates and thus allow us to stay competitive and stay in business." Foley explained that Penn, Allegheny University and Jefferson health systems -- the most powerful in the region -- are all attempting to survive managed care by forging alliances and building a large network. He added that other groups -- such as Temple University's health system -- also are also powerful health care providers, although they are more geographically limited. "I think the biggest thing is that our number one focus is teaching and research," Foley said, adding that "everything we do in developing our health system is to support our academic mission." Lux said hospitals such as Phoenixville are drawn to Penn's system for that very reason. Because the University conducts research into experimental treatments for incurable diseases, for example, Phoenixville is able to offer these options to patients if their illnesses do not respond to traditional methods of treatment. And as a result of the void left as small hospitals and independent doctors quickly seek large-scale alliances, Columbia/HCA -- a huge, nationwide chain of for-profit hospitals -- recently announced its intention to buy into in the Philadelphia area. Penn Health System Chief Executive Officer and Medical School Dean William Kelley predicted that "the rapidly-expanding for-profit sector will take root and grow." The University -- like virtually every other major health care provider in the area -- is a non-profit institution. But Kelley and other Health System administrators remain confident that the University will retain its share of the market. "We have a plan that we really haven't made major modifications to over the last couple years," Foley said. "It's really centered on developing a strong physician network."