The region's hospitals and medical research centers came up winners in the recently-enacted plan to distribute Pennsylvania's approximately $11.3 billion share of the national tobacco settlement.
With significant portions of the money going to medical research and hospital reimbursement for uninsured patients, the funds will likely give Philadelphia a boost in its efforts to be a national leader in medicine and the life sciences.
"I doubt if the medical community is celebrating as much anywhere as they are in Pennsylvania," Tim Reeves, Gov. Tom Ridge's spokesman, said of the legislation that Ridge signed into law on Tuesday.
The funds, which will total up to $425 million over 25 years, are the result of the 1998 settlement by major tobacco companies in a multi-state lawsuit that sought to recoup tobacco-related Medicaid expenses.
Besides the state's annual disbursements, the plan also includes such one-time allowances as $100 million to create three biotechnology "greenhouses" throughout the state to commercialize laboratory discoveries, and $60 million for a venture-capital fund to underwrite health-science investments.
The majority of the money for research will be allocated to medical centers based on the amount of funding they currently receive from the National Institutes of Health. Since Penn is the state's top-recipient of NIH funds, it will receive the largest portion of the new research funds for the fiscal year starting July 1 -- about $8.7 million.
"We're really grateful to have this opportunity to look at additional resources for research," University Provost Robert Barchi said, adding that no decisions have been made as to how those funds will be spent.
An additional six percent of the annual payment is earmarked for competitive grants open to any individual or institution.
These open funds will not be restricted to tobacco-related research. Instead, preference will be given to proposals that deal with public health issues, such as those affecting Pennsylvania's older population, according to Richard McGarvey of the state health department.
"There's just a tremendous amount of opportunity for us," Department of Medicine Chair Stanley Goldfarb said, citing Penn's expertise with cancer and cardiovascular disease research.
However, Robert Reischauer, president of the Urban Institute -- a nonpartisan economic and social policy research organization -- believed that the state money for medical research might be better directed elsewhere, as research is a "public good that benefits everybody in the nation, if not the world."
But Reeves said that the state will reap economic gains from its research expenditures that "could be off the charts," especially as Pennsylvania tries to position itself as a "world leader in biotechnology."
Area hospitals will also benefit, as the deal channels 10 percent of the annual payment into hospital reimbursements for uninsured patients. This will amount to $34 million available statewide for fiscal year 2001-2002, along with a "catch-up" payment of $15 million for the previous fiscal term.
While the University of Pennsylvania Health System spends up to $60 million annually on uncompensated care and expects to receive only about $5 million next year from these state reimbursements, Health System CEO Robert Martin maintained that the funds will help the Health System to remain profitable.
"It will make a difference, but it certainly will be a very small proportion of the total uncompensated care," Martin said.
Although Pennsylvania is the second-to-last state -- out of the 46 that sued -- to provide a plan for the bounty, some feel that the time was well spent.
"What makes it really impressive is that it's all going to healthcare-related needs," John Crosbie, vice president for public affairs at the Delaware Valley Healthcare Council, said. "This message was not sidetracked."
