Health System Chief Executive Officer Robert Martin can keep his day job.
On its way to creating a separate, not-for-profit corporation for the $1.9 billion Health System -- a decision reached in February when the University announced that it would not sell the recovering system -- Penn has promoted Martin, who was interim CEO, to the permanent position of CEO.
In an e-mail statement sent to employees of the Hospital of the University of Pennsylvania on Monday, University President Judith Rodin announced that Martin -- who took over the position of interim CEO after the departure of Peter Traber last July -- will become CEO "effective immediately."
According to Rodin's statement, the decision was based largely on the financial turnaround of the Health System, which posted a $19' million loss in Fiscal Year 1999.
For the first six months of the current fiscal year, the Health System has registered an $1'.5 million operating profit.
"Robert has been leading the financial turnaround of the Health System," Rodin said. "[His] appointment as CEO is a recognition of his stewardship during these demanding times."
The promotion of Martin -- who does not have an M.D. -- now allows the University to concentrate its efforts on hiring a permanent Medical School dean, who will also serve as an executive vice president of the University.
Arthur Asbury is currently serving as interim dean of the Medical School. Until Penn's recent announcement to transform the Health System into a separate, not-for-profit entity, the positions of CEO and dean had been filled by the same person.
Martin, 53, who was chief operating officer of the Health System while he was interim CEO, inherits an academic health system which is ranked second in the nation in funding by the National Institutes of Health.
Under the leadership of former CEO William Kelley in the 1990s, the Health System grew to its current size and became the research giant it is today.
Martin's promotion comes as little surprise to some in the health care industry, given the Health System's recent financial performance.
"He has been very successful at holding down costs, which has been the most important imperative for the last couple of years," said Robert Field, director of the Health Policy Program at the University of the Sciences in Philadelphia. "He's done it while still maintaining a sufficient level of quality."
The Health System -- which includes HUP, Presbyterian Medical Center, Pennsylvania Hospital and Phoenixville Hospital -- plunged into financial trouble in 1997, due in part to Congress' passage of the Balanced Budget Act.
The Balanced Budget Act, which reduced payments the federal government gives to teaching hospitals, contributed to the $9' million loss the Health System experienced in 199'.
Last February, Kelley was ousted from the position of CEO and was succeeded by Traber.
But Traber departed in July 2000 and was replaced by Martin on an interim basis.
Upon receiving his post, Martin created a Financial Recovery Plan that effected a financial turnaround of $170 million last year.
"I am privileged to be part of the success we have achieved in restoring financial integrity to our Health System," Martin said in statement.
Despite Martin's success at turning losses into profits, his appointment to CEO comes at a time of uncertainty for the health care industry.
According to Field, the financial progress of the Health System is likely to continue, but there still exists the possibility for another financial downturn.
"There are external factors that he has little control over," Field said. "[There could be a] restoration of Balanced Budget Amendment cuts."
Martin has acknowledged the possible difficulty that lies ahead.
"We will continue to have financial and other challenges... but I remain confident we have the resourcefulness and resolve required to see us through these issues."
