Kelley talks on state of U. Health System

The head of the Medical School and Penn's Health System takes a look at medicine today. Despite being formally created just five years ago, the University of Pennsylvania Health System has emerged as a major force in the area, controlling 20 percent of the region's patient volume with annual revenues approaching $2 billion. Consisting of four wholly owned and six affiliated hospitals, the system employs 18,000 people, including about 1,500 physicians. Last week, The Daily Pennsylvanian sat down with William Kelley, chief executive officer of the Health System and dean of Penn's Medical School for a candid talk about the future of the system, as well as its competitors in Philadelphia's tough health care market . During a 45-minute interview in his office on the top floor of the Penn Tower Hotel, Kelley also touched on issues such as research, patient care and cost control -- subjects that affect health care providers nationwide. Health System expansion DP: How much further would you like to see the Health System expand? Kelley: There are a number of hospitals that we are currently in discussions with that we think will eventually come into the organization. If you look at the hospitals that we believe we could well have a long term relationship with within the next year or two, we think that we could well have a third of the market within [that time period]. DP: UPHS now owns four hospitals and is affiliated with six others. Which type of relationship do you prefer? Kelley: We really have never desired to own a lot of hospitals. In fact, the only reason we own the ones we have is basically to protect our teaching sites. Both Presbyterian and [Pennsylvania Hospital] have always been extremely popular teaching sites for us. [Pennsylvania Hospital] may be the most popular. So part of what we had to do is make sure we maintained those teaching sites. But we really don't want to buy hospitals -- that's not the business we're in. DP: Pennsylvania Hospital has had some financial difficulties following its merger last fall with the system, leading to a downgraded bond rating for Pennsylvania Hospital. Four of their department chairpersons chose to remain affiliated with Jefferson University Hospital and patient volume has fallen by 18 percent through the first four months of this fiscal year. Kelley: We knew that a number of physicians were going to leave Pennsylvania Hospital. Many of those physicians already were in those roles as chairmen of those departments over at Jefferson, so it wasn't a big surprise when they decided to move their practice over. It will take us a little while to get it back up to speed. And it will give us an opportunity to really bring in some superb people. The Philadelphia market DP: Currently, two other systems, Jefferson and Allegheny, also control sizable portions of the Philadelphia health care market. Where do you see them in the future? Kelley: Well, I think Jefferson is likely to be pretty close to our size over the long haul. It's a good system -- good people, good physicians. Allegheny has some good people, but I don't know that they'll make it in their current form. My guess is that we'll see Allegheny continue to divest some of its hospitals and some of its physician practices. I think we'll continue to have a number of smaller systems, just like we do today. I think Allegheny will be one of the smaller systems, probably. DP: Experts in the health care field say there are 40 percent too many hospital beds in the Philadelphia area. Where will the cuts fall? Kelley: Well, I think we'll see mostly hospitals downsizing. I'm not sure there will be many closures. We've seen one or two, we might see some more. The trouble with a hospital closure is that if the hospital is in a system, that system is not really going to want to close that hospital if it can avoid it, because of the loss of market share. If you close a hospital in South Philadelphia, that doesn't automatically mean that all those patients are going to go to your hospital in West Philadelphia or in Center City. So, there is a lot of concern about actually closing hospitals. DP:Will Penn's Health System end up closing some beds before the consolidations are over? Kelley: We might. In fact, we have some closed beds. At [Presbyterian] we have some beds that are not open, just like we do over here [at HUP], just like we do at [Pennsylvania Hospital]. Disease management DP: This fall, UPHS received the National Quality Health Care Award. Particularly noted in the citation for the award was UPHS's 'disease management program,' which provides doctors with a standard procedure for dealing with various illnesses. The program, which has received national attention, has proved an effective method of cutting costs while increasing treatment success rates. What led you to adopt the program? Kelley: Clearly, medicine has changed dramatically in the last 10 or 15 years, I mean really dramatically. And medicine for the future is going to be very different than medicine for the past for a lot of different reasons, driven in large part by the very strong cost constraints that are being brought upon the practice of medicine. So then one has to figure, well, what's the best way to practice medicine for the future, and how do we train students to practice medicine in this new environment? Now the best way to do that, then, is to play a major role in that evolutionary change. So, we are playing a leadership role in changing how medicine is delivered. And the reason we've put together a fully integrated academic health system is we believe we can change the way health care is provided in the future in a very positive way. What that means is that we can begin to implement a program of health and disease management, which by definition will provide the best possible quality, and it will provide almost by definition the best possible cost constraints. DP: Is there any concern that the individual patient's needs get lost in a system which treats diseases rather than patients? Kelley: Absolutely not, because first of all, what our program does is to lay out the best practice in the opinion of the experts and the primary care physicians who have participated in the development of that program. Now, the individual practitioner doesn't have to do that. In other words, they see what the experts would suggest, and then they might say for whatever their own reasons, this patient is not appropriate for this next drug, or this next approach, for the following reasons. But the important thing is they know what the expert said is the right thing to do. DP: Health maintenance organizations are often criticized for letting money make medical decisions. Is that a concern with this program? Kelley: No it isn't, and I'll tell you why. Maybe in our naivete, what we've decided is that our disease-management programs will be focused on what is the best practice of medicine and not necessarily what's the cheapest thing to do. Now, it turns out that frequently the best practice is the least expensive, and we believe that on balance, when we do this with 40 different diseases, it will be less expensive than the standard practice that we might have today. So for that reason we aren't concerned about something that costs a little more or even a lot more, if it's justified. Now, it's not to say that someday we might not have to worry a lot more about [cost]. And surely, if there are two things that are equally good and one is 10 times more expensive than the other, we're going to pick the cheaper thing. But the fact is, we're driven by what improves the care of the patient. We are not driven by the cost of it. Research funding DP: You've moved up to third in total National Institutes of Health funding this year and continue to be the medical center with the fastest rate of growth for such funding. Can you comment on that? Kelley: Let me say first of all that the NIH dollars to me are the most important for a lot of different reasons. First of all, they are the most competitive dollars. In the same way, they're a better measure of the success of our faculty. It's not just the dollars per se, but it's a good surrogate for high quality. We can let the peer review process [of NIH] tell us whether our faculty are outstanding or not.