In letter, Traber outlines his goals

The new UPHS chief's letter calls for a decrease in costs without layoffs. When Peter Traber was the chairman of Penn's Department of Medicine, physicians and administrators praised him for his intricate knowledge of the University of Pennsylvania Health System. Traber -- recently appointed the chief executive officer of UPHS and interim dean of the Medical School -- now has the opportunity to put that knowledge to use. In a letter that is being sent out to faculty and staff, he laid out his initial goals for returning the financially troubled Health System to stability. Over the past three years, the $1.9 billion healthcare behemoth has lost over $300 million. In the memo, Traber explained his future plans for the Health System, citing increasing cost effectiveness and planning for the future of healthcare. "Every move we make will affect our ability to successfully overcome past challenges as well as successfully position us for the future," he wrote. Traber explained that UPHS must be willing to revise its notion of how a healthcare center is organized, based on the marketplace in which it is located. "All operationally feasible options are being put on the table for review and discussion," he wrote. Last month, Traber maintained that he agrees with the concept of an integrated health system, but said he had not ruled out the possibility of hospital sell-offs or a separation of the Health System from the University. In the letter, Traber pointed to cost effectiveness as key to increasing revenues. This, he wrote, does not mean further reductions in personnel. Rather, he stressed the need to get more out of what is already in place. Specifically, he pointed to projects already underway to improve the Health System's billing system and resource utilization. Currently, the Health System has a central billing office that generates bills and interacts with the insurance companies. While there are currently no plans to change the billing system, most who know it agree that the system has its faults. Harvey Friedman, a professor of infectious diseases at the Medical School, thinks there needs to be more physician input in the billing process. He also pointed out that there is minimal interaction between the physicians and the billing office. "It's not only Penn, it's most major medical centers," he said. "The people who do the work and the people who generate the bills don't know one another." This, Friedman said, can lead to billing errors and inconsistencies. But Stanley Goldfarb, the interim chairman of the Department of Medicine, warned that decentralizing the billing process could mean increased operating costs. "The more you decentralize, the more staff you need to do the tasks," he noted, adding that he still thought UPHS would explore the possibility of decentralization. Friedman also emphasized the importance of cost effectiveness at the Health System. He pointed to the resource utilization per patient as a prime example. "We get reimbursed based on the diagnosis," he said, "so if you order too many lab tests you don't get reimbursed per test. If you find that you're overdoing it? that's a way to save money," he explained. Peter Quinn, the chairman of the medical board at UPHS, said part of the problem is that city, state and federal governments aren't compensating the Health System for the charity care it provides to uninsured indigenous patients. According to Quinn, who is currently leading a committee looking into resource utilization at UPHS, the Health System spent $66 million last year to treat uninsured patients. "We're providing care to Philadelphia city residents and the city doesn't give us help, the state doesn't give us help and somehow that's our problem," he said. Quinn added that Congress should look into reversing parts of the Balanced Budget Act of 1997, which drastically cut federal healthcare reimbursements, as a way to give much needed funds to academic medical centers. "We do have to get enough of a bottom line to reinvest in the Health System," he explained.