Penn Medicine to no longer receive $100 million

The University will no longer receive the $100 million in funding it was promised in a grant agreement announced last academic year. According to a memo distributed to Penn's Board of Trustees in December by Trustees Chairman James Riepe, Penn and the Philadelphia Health Care Trust have "mutually agreed" to terminate the plan, which would have transferred the charity's assets to Penn Medicine, the governing body for the University's Health System, by 2009. Riepe wrote that the agreement "was contingent on approval by the Philadelphia Orphans' Court within a year which has not yet occurred, and now appears unlikely to occur within the requisite time-frame." "After careful thought and consideration, and having worked under the agreement for the past year, we have concluded that the relationship envisioned by the agreement, whether or not approved by Orphans' Court, does not serve the best interests of Penn Medicine or the Trust," Riepe wrote in the memo. According to the agreement, which was announced in March, Penn Medicine would have received an increasing percentage of the trust's interest until 2009, when the PCHT would have transferred the remainder of its assets. Although the value of these assets has fluctuated, it was estimated at that time to be $100 million. If awarded in full, the gift would have been the third largest in Penn's history and meant a significant financial boost to the University's once-ailing Health System. Although it has rebounded in recent years, it saw a $300 million loss in the late 1990s. But Riepe said that because the funds were not scheduled to be transferred for seven years, they were not a factor in the Penn Medicine's financial planning and will not impact its "near-term finances." The agreement also stipulated that PCHT Chairman Bernard Korman would become a member of the Penn Medicine board. He was scheduled to step down from his position as vice chair of the board and chairman of its Finance Committee by the end of the year, according to Riepe. Over the last year the grant agreement had faced resistance from community organizations, including the Philadelphia Unemployment Project and the Action Alliance of Senior Citizens of Greater Philadelphia. These groups claimed that the funds should be used to better serve low-income patients, especially the uninsured, instead of being given to Penn. "We were from the beginning aware of the challenges the terms of this unique arrangement posed, but are of course disappointed it will not come to fruition," Riepe wrote. "We appreciate both Mr. Korman¡s and the PHCT¡s commitment to Penn Medicine and the future direction of Penn¡s Health System and School of Medicine."

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