In a development that would make the founding fathers blush, the board of Pennsylvania Hospital in Philadelphia last week approved a plan to affiliate with the University of Pennsylvania Health System rather than rival Jefferson Health System of Radnor, Pa.
Pennsylvania Hospital, the first hospital in the United States, was founded by Benjamin Franklin in 1751. Jefferson's flagship hospital is Thomas Jefferson University Hospital in Philadelphia, named after Franklin's colonial contemporary and friend.
News of the decision by Pennsylvania Hospital's board sparked a swift response from Jefferson executives.
In a terse statement, Jefferson executives said they would expand services at Thomas Jefferson University Hospital and "compete directly with Pennsylvania Hospital." The facilities have been reluctant competitors, sharing many services and medical specialists.
The physicians who headed the neurosurgery, orthropedic surgery and otolaryngology departments at Thomas Jefferson also headed the same specialties at Pennsylvania Hospital. With last week's decision, the physicians will move their practices exclusively to Thomas Jefferson "in an orderly fashion," Jefferson executives said.
The defection of the physicians will "give us a significant strengthening of our market position," said Jefferson President Douglas S. Peters.
Other doctors who hadn't yet made their intentions public also would move to Thomas Jefferson, Peters said.
"As this plays out we'll probably be seeking space and facilities in other parts of our system to accommodate" an increased patient volume from the practice relocations, he added.
The system also will terminate its residency at Pennsylvania Hospital and end its cancer network affiliation with the hospital.
Under the affiliation contract with University of Pennsylvania Health System, Pennsylvania Hospital would remain largely independent. But as part of a large health system, it will be better positioned to negotiate with payers, hospital executives said.
John R. Ball, Pennsylvania Hospital's chief executive officer, said the board found UPHS to be a better geographic and academic match, as well as a stronger partner in dealing with managed-care payers than Jefferson.
A letter of intent with UPHS is imminent and a definitive agreement will likely be signed within four months, Pennsylvania Hospital said.
Pennsylvania Hospital will keep its name and a separate governing board. An autonomous foundation will be formed to manage its endowment.
Some clinical and administrative functions will be consolidated as a result of the affiliation. That would likely lead to job eliminations, Ball said, but the hospital would seek to use attrition rather than layoffs to achieve any personnel reductions.