University of Pittsburgh
August 31, 1998


Contact:  412-624-4147

PITTSBURGH, Sept. 1 -- The University of Pittsburgh and the UPMC Health System today announced an agreement to extend and strengthen their partnership over the course of the next decade. University Chancellor Mark A. Nordenberg said the agreement is exciting news, not only for Pitt and for the UPMC Health System, but also for the people of Western Pennsylvania.

"The development of Western Pennsylvania as a center of world-class health care is one of the region's great success stories," Nordenberg said. "Nothing has been more important to our achievement of that level of quality than close, constructive and constantly evolving relationships between the University's health science schools and their partner hospitals. Working together, these institutions have made important contributions to the health of the people of Western Pennsylvania, as well as to the health of the region's economy."

"The University of Pittsburgh is particularly fortunate," added Nordenberg, "to have as its principal partner a health system that is forward looking, well managed, committed to the highest quality in education, research and patient care, and that has the financial capacity to support excellence in each of these important areas. In today's challenging health care environment, we too often see either providers lacking any long-term vision and focusing exclusively on the bottom line or providers who lack the financial capacity to invest in the types of programs that distinguish a truly great medical center."

UPMC Health System President Jeffrey Romoff underscored his belief that this partnership was mutually beneficial, emphasizing that the Schools of the Health Sciences are "at the heart" of the UPMC Health System. "Their internationally recognized research and clinical programs distinguish the UPMC Health System from all others. Similarly, the educational mission supplies the region with high-caliber health care professionals so necessary for the success of any organization in this labor-intensive industry," Romoff said.

He added that the survival of the research and educational mission of the Schools of the Health Sciences depends on the support of the clinical operations of the UPMC Health System. "In today's challenging health care environment, it is only by linking the schools with the health system that both can continue to flourish," he said.

The chairpersons of both institutions' Boards of Trustees strongly endorsed the new agreement. Speaking on their behalf, J.W. Connolly, chair of the University of Pittsburgh Board and first vice chair of the UPMC Health System Board, said: "A great deal of thought, creativity and effort have gone into the development of this agreement and we are confident that it represents the best way to strengthen a critically important partnership so as to allow both institutions to effectively and efficiently maintain their leadership positions while meeting the challenges of a changing health care market."

As a central part of the agreement, the two institutions "reaffirm their commitment to one another and to their interrelated teaching, research, clinical care and community service missions." A major element of the pact concerns ongoing financial support from the UPMC Health System to the Schools of the Health Sciences. Both Nordenberg and Romoff estimated that the University would receive revenues in excess of $1 billion from the UPMC Health System over the ten-year life of the agreement. These funds will be used for direct support of clinical programs and also will include substantial discretionary funds to be invested in promising areas of education and research in the health sciences.

In addition, the UPMC Health System is expected to build a major new research facility, which will provide laboratory space for University physicians and scientists to pursue their research activities. From 1985 to 1995, Pitt's share of funds awarded by the National Institutes of Health grew far more rapidly than any other American university. Both Romoff and Nordenberg emphasized that this new research space should position Pitt's faculty to compete even more effectively for federal research funds.

"Taken together, these steps will provide a stable funding stream for our health science schools; sustain and enhance the University's medical and biomedical research; and enhance the ability of Pitt and the UPMC Health System to attract and retain outstanding clinicians, teachers, and researchers," Nordenberg said.

Other aspects of the agreement guarantee the continued representation of the University on the UPMC Health System's Board of Trustees; ensure that Pitt will retain sole authority over academic matters, such as appointments, tenure, student affairs, curricular development and scientific research integrity; and provide that National Institutes of Health and other federally funded research will continue to be administered by the University.

The agreement also formalizes the unification of 18 distinct clinical practice plans as the University of Pittsburgh Physicians (UPP) and provides for the integration of the UPP into the Health System. The UPP will be organized as a non-profit corporation in its delivery of clinical services and will operate as a subsidiary of the UPMC Health System. The UPP will be capitalized by the UPMC Health System. However, it will be operated as a separate line of business with its own board of directors, composed principally of Medical School faculty and other University representatives. In the case of the termination of the agreement, the UPP would revert to University control.

"This step was recommended by the chairpersons of our clinical departments and reflects their belief that, under current market conditions, they will be best positioned to positively influence and benefit from the UPMC Health System if they are an integral part of it," Nordenberg said.

"The move also provides a more efficient structure for the management of the faculty group practices," said Richard Baron, MD, president of the UPP. "It helps us maximize the use of available resources, increase efficiency, and develop coordinated ways of responding to the health needs of the community."

"There are few universities in which the health sciences, and particularly medicine, play a more important role than they do at the University of Pittsburgh," Nordenberg said. "Sustaining and building upon existing levels of quality in the health sciences is an extremely high institutional priority. The partnership between the University and the UPMC Health System has been critical to our record of achievement in the Schools of the Health Sciences and has distinguished the UPMC Health System from its competitors."

"This new agreement represents the next step in the long-term, evolving partnership between two strong, financially sound institutions that already are important and committed citizens of this region. This ten-year commitment will significantly strengthen the mutually supportive relationships that have existed between the University of Pittsburgh and the UPMC Health System, play a key role in advancing our research, education and health care initiatives, and enable us to maintain our leadership position in the dramatically changing health care field," Nordenberg said.

The groundwork for the new agreement was laid in June 1997, when Chancellor Nordenberg announced changes in the partnership between Pitt and UPMC. Those included the merger of the positions of senior vice chancellor for the health sciences and dean of the School of Medicine, and the phasing-out of what had been known as the University of Pittsburgh Medical Center Division. The new agreement will be in force for a period of ten years, with two-year renewable terms thereafter.