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Temple University School of Medicine, West Penn Allegheny Health System,Philadelphia
Temple University School of Medicine expects to open its branch campus with West Penn Allegheny Health System in 2013 and will admit 30 students.

Healthcare Market Profile: Philadelphia-Camden-Wilmington

Branching out: School readies campus for move into Western Pa.

By Melanie Evans
Posted: July 25, 2011 - 12:01 am ET

Philadelphia's Temple University School of Medicine will invest more heavily in Western Pennsylvania's competitive healthcare marketplace as it moves to open its second branch campus.

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The medical school and West Penn Allegheny Health System, Pittsburgh, announced plans in June to launch a satellite medical school. Expected to open in 2013, the branch campus will admit 30 students into a four-year program. The school previously operated a program at West Penn Allegheny for students in their final two years.

Temple's three-year campus at St. Luke's Hospital & Health Network in Bethlehem, Pa., is scheduled to open this fall.

Dr. Larry Kaiser, Temple University School of Medicine dean and CEO of Temple University Health System, says the Philadelphia medical school, which recruited a majority of its most recent incoming class from Pennsylvania, moved to open its branches to better recruit and train students across the state.

News of Temple's agreement to open a second branch campus came shortly before insurer Highmark moved to check the clout of Pittsburgh's largest, strongest health system—UPMC—with a $475 million bid for West Penn Allegheny, the city's smaller, struggling hospital operator.

The deal, it seems, preserved the Philadelphia medical school's plans to pair with West Penn Allegheny.

“It is important to have a second system and to have options so that people who want a second choice, who want another option, doctors, patients, nurses, whoever it may be, have somewhere to go when they need an option or second alternative,” Highmark President and CEO Dr. Kenneth Melani says.

Highmark also said it would invest $75 million in medical education as part of the acquisition.

Temple—the state's third-largest medical school in 2010 with 769 students—approached Highmark for a grant prior to learning of the insurer's pledge, he says.

Pennsylvania's two largest medical schools—Jefferson Medical College and Drexel University School of Medicine—also call Philadelphia home. So does the Perelman School of Medicine at the University of Pennsylvania, which ranks a close No. 4 among the state's medical schools, AAMC data show, and the Philadelphia College of Osteopathic Medicine.

In such a crowded city, schools must all vie for training locations inside hospitals and ambulatory settings, Kaiser says. The school's broader geographic reach “allowed us to expand without further compromising the clinical rotations here,” he says.

But in branching out with West Penn Allegheny, the Philadelphia medical school has committed to a partner with faltering finances.

An immediate cash infusion from Highmark of $50 million allowed the system to avoid closing its West Pennsylvania Hospital in Pittsburgh. The health system's budget for the fiscal year that began July 1 would have “necessitated it closing,” Dan Laurent, a West Penn Allegheny spokesman, said in an e-mail. Executives declined an interview request, Laurent says.

Highmark also said it would pour another $50 million into West Penn Allegheny, which has hemorrhaged cash and continues to struggle despite turnaround efforts, and the insurer also pledged loans of up to

$300 million.

Dr. Elliott Goldberg, a Temple School of Medicine senior associate dean and vice president of undergraduate education for West Penn Allegheny, says negotiations to create the campus began about two years ago and the health system hopes the graduates will be convinced to stay and practice.

The city struggles to recruit physicians, he says. Temple School of Medicine will seek to recruit 65% of students for its second branch from Pennsylvania, he says.

The campus will seek to expand its class size to 50 from 30 by its fourth year, he says.

Startup costs for the campus include $5.5 million to renovate two floors of an office building near Allegheny General Hospital in Pittsburgh and the $2.3 million-per-year cost to recruit a dozen basic science faculty.

The Allegheny-Singer Research Institute, the system's not-for-profit research subsidiary, employs another 16 science faculty. Goldberg estimates the branch campus will lose $10 million to $12 million until 2015, when operations are expected to break even.

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