Penn sells cash cow system

In a surprise reversal of an earlier decision, University President Judith Rodin announced last night that the University Health System will be sold after all. "We have come to the conclusion that the Health System's financial troubles are too large to be sustained by the University as a whole," Rodin said, after leaving an emergency meeting of the Executive Board of the University Trustees. "I don't know what the hell we were thinking in the first place." Rodin would not comment as to who the new owner of the Health System would be, but a source close to the negotiations has confirmed suspicions that Nashville, Tenn.-based Vanguard Health Systems has offered $2 billion dollars for the Health System's assets. "The Hospital of the University of Pennsylvania will remain under the control of the University," the source said. "But the other three hospitals will all be transferred to Vanguard." In February of this year, the Board of Trustees had decided, amid speculation of a sale, to keep the Health System under the umbrella of the University. Rodin attributes the recent change of direction to basic economics. "The price was just too good to pass up," Rodin said last night. "Lets face it, Penn had two choices. We could either let the Health System bleed us dry or we could make some cold, hard cash. It's all about the Benjamins." Officials at Vanguard were unavailable for comment, but The Daily Pennsylvanian has learned that Provost Robert Barchi has been frequenting the city of Nashville for the past month. According to flight records, Barchi has made a total of six flights to Nashville on US Airways in a period of four weeks. Barchi, who maintained that he is a "really big fan of the Grand Ole Opry," would not confirm that Vanguard is the Health System's new owner. The Health System -- which includes HUP, Pennsylvania Hospital, Presbyterian Medical Center and Phoenixville Hospital -- has been in dire financial straits for the past few years. In October 1999, Moody's Investor Service had lowered the University's bond rating largely because the Health System was screwing everything up for the rest of the school. Last year marked a first for Penn, when Moody's again lowered the bond rating to junk. In February of last year the Health System's chief executive officer, William Kelley, was ousted from his position. Peter Traber, who succeeded Kelley, stepped down last summer. Amazingly, Arthur Asbury, interim-dean of the Medical School, was completely surprised by Rodin's announcement. Asbury was "shocked and saddened" when he learned of the sale through a late-night phone call by a DP reporter. "I can't believe it," Asbury said. "I was convinced we had seen the worst of Judy [Rodin] when she fired Bill Kelley." Kelley, who two weeks ago was honored for his contributions to the Health System, said last night he was "glad to have left when I did." "I knew Judy was up to no good when she said at my reception that the Health System was worth more than ever," Kelley added. Health System interim CEO Robert Martin was one of a few to not be upset regarding the sale. "I know I have a job waiting for me when the new owner comes in," Martin said. Financial records obtained by the DP indicate Martin owns close to $10 million in stock in Vanguard. "In the final analysis, this makes perfect financial sense," Martin said. "For the new owner, they got a good deal. For Penn, they can spend more time on Wharton, which we all know is the real money-maker." An anonymous source told the DP, however, that Vanguard has put an indefinite hold on its plans to acquire the Health System until the University repairs significant problems with floors at all four hospitals.