How the Big Boys Do It
The Pitt and Penn Medical School Models

BigU med school is all atwitter over recent developments. St. Thomas and Allina are contemplating starting their own medical school. The College of St. Catherine has a School of Health planned. A wasteful and duplicative children's hospital arms race is in progress. Various hospital ratings are a matter of concern. The Vice President of the Academic Health Center has charged the Dean with coming up with a plan to move BigU’s med school into the top twenty – perhaps based on NIH funding, depending on how you read the charge. These actions inspired by the University of Minnesota administration’s proposed ten year long march to greatness: “to become one of the top three public research universities in the world.” [sic]

So let’s take a step back and have a look at a recent JAMA article on how Pitt and Penn – two Big Boys- one public and one private – have played the game. Maybe there are some lessons here for BigU?

Excerpts from JAMA (The Journal of the American Medical Association):

JAMA, June 13, 2007—Vol 297, No. 22

Clinical Revenue Investment in Biomedical Research

Lessons From Two Academic Medical Centers

Marjorie A. Bowman, MD, MPA
Arthur H. Rubenstein, MBBCh
Arthur S. Levine, MD

Penn has been among the top 10 institutions in NIH rankings of research awards to university faculty since 1985. Pitt moved into the top 10 in 1997 and has maintained that position since, a shift in rank that occurs only rarely. Life sciences comprise 80% of Penn’s research dollars and 87% of Pitt’s. Without their medical schools, Penn’s ranking would decline from 6th to 48th in National Science Foundation total research rankings; Pitt’s ranking would decrease from 13th to 30th.

Institutional Comparison

Although Penn is a private institution and Pitt is state-related, the schools share a number of characteristics. Both have strong undergraduate and graduate medical education programs; support robust basic science portfolios but also emphasize clinical and translational research (both received 1 of the inaugural 12 NIH Clinical and Translational Science Awards); and are associated with large, profitable hospital systems.

Additionally, both academic health systems include large clinical practice plans, are major transplant centers, and began significant expansions of facilities, services, and programs in the mid-1980s emerging as large, stable enterprises, despite marketplace challenges.

Differences between the institutions include the University of Pennsylvania Health System (UPHS) having 4 hospitals, 15 000 employees, a 2006 fiscal year revenue of $2.4 billion,anda service area presence as academic health centers in Philadelphia, while the University of PittsburghMedical Center(UPMC)has 19 hospitals, 43,000 employees, a 2006 fiscal year revenue of $6 billion, and it is the only academic health system in western Pennsylvania.

Penn and Pitt also share financially challenged urban environments and austere support for higher education from the Commonwealth of Pennsylvania. Over the last 5 years, one asset that has offset this otherwise modest support has been Pennsylvania’s use of 19% of its funds from the master settlement agreement with tobacco manufacturers to support biomedical research. Through this legislation, Penn and Pitt each receive $9 million to $10 million per year based on their share of Pennsylvania’s total NIH funding.

The major difference between the 2 academic health systems is their organizational models. In the mid-1980s, when the universities faced heightened concern about the potential financial risk of their large health systems, the organizations responded differently. At Penn, UPHS was retained as part of the university but with rearrangements in report- ing and board structures.7 At Pitt, UPMC became a separate corporation but remained closely linked to the university, including a substantial number of shared board members and formal contractual relationships that defined UPMC’s longstanding financial support of the medical school.

Strategies for Success

Despite their differences, the success of Penn and Pitt in sustaining research productivity rests on the decision of both institutions to adopt a growth strategy centered on 1 principle: In an academic health center, research and clinical success are synergistic and interdependent.

A strategic collaboration between the clinical and the academic enterprises will enhance the success of both beyond what would occur with an investment in either alone.

For both institutions, the starting point for making this philosophy operational was to invest clinical income in research infrastructure, including facilities, equipment, and investigator start-up packages.

At Pitt, clinical growth was led by organ transplantation— but this growth began with a substantial investment in research. In 1981, university leaders recruited Thomas E. Starzl, MD, PhD, when liver transplantation was still a controversial concept. Starzl assembled an interdisciplinary team of surgeons, immunologists, pharmacologists, and other clinicians and expanded his previous clinical and laboratory research.

The US Food and Drug Administration’s approval of the immunosuppressant cyclosporine in 1983, based largely on Starzl’s clinical experience with the experimental drug, greatly improved graft survival and long-term outcome. In 1986,UPMC invested $230 million to expand the transplantation program and to provide space for its fledgling cancer institute and other research initiatives. By 1988, more than half the world’s liver transplantations were performed in Pittsburgh, generating exceptional clinical revenue.

Activities Promoting Research

and Clinical Success

Each institution bolstered its investment of clinical revenue by creating mechanisms to impel new research initiatives, including technologically rich core facilities for use by multiple investigators.

These core facilities were developed in the areas of genomics, proteomics, bioinformatics, clinical research computing, DNA sequencing, transgenic and chimeric animals, diagnostic imaging, microarrays, and others.

Other research-support resources include technical assistance in grant preparation, financial and protected time incentives, pilot and bridge funding mechanisms, and active guidance in technology commercialization. With this focused resource commitment, faculty at both universities were able to translate this revenue into successful grant applications.

The ensuing faculty success in reporting research findings, especially those related to significant clinical advances, promoted the visibility of each institution’s medical school, affiliated health system, and of each entire university, which has led to the increased clinical volume and robust financial performance that is the cycle’s entry point.

In Pittsburgh, UPMC created Stentor, a start-up company based on medical imaging technology developed collaboratively by university andUPMCresearchers. In 2006, Royal Philips Electronics acquired Stentor for approximately $280 million, giving UPMC a $36 million gain from its research investment and providing the medical school with nearly $11 million. UPMC’s Strategic Business Initiatives division was subsequently launched, in part, with the profit from this deal to create and manage small companies, many based on faculty-developed technologies.

Pitt established a formal Office of Academic Career Development to offer guidance, assistance, and mentoring to faculty.

Both institutions preferentially hired basic scientists whose research themes foster translational research, focusing on platform disciplines such as structural and computational biology, pharmacology, developmental biology, and biomedical informatics.

The expectation is that close relationships between MDs and PhDs, such as having MDs in basic science departments, PhDs in clinical departments, and more MD/PhD faculty, will stimulate collaborations that lead to tangible bench-to-bedside outcomes.

Financial Resources

In addition to health system transfers and federal funding, both institutions have had access to endowment and philanthropic support. Penn has a larger endowment, whereas Pitt has a strong local philanthropic tradition for current-use gifts. However, by far the most important reason for the success of the 2 academic health centers has been the transfer by UPHS and UPMC of significant funds to their respective medical schools.

Sustaining Success in Biomedical Research

A combination of strategic investments and initiatives has enabled 2 Pennsylvania universities to achieve and sustain an NIH ranking among the top 10, even during periods of health care financing turbulence.

In all cases, the hospital system’s financial and philosophical partnership was the most critical factor in fostering research success. These investments should help the institutions overcome the current regressive NIH budget climate.

Institutions should invest in long-term research expansion strategies when finances are conducive. An influx of wisely invested clinical revenue will strengthen the entire enterprise—research and clinical—for the longer term and far beyond that which would occur with an investment in either alone. For example, UPMC’s investment of clinical revenue in transplantation research eventuated in an exponential clinical return, fostering its rapid growth. The heightened research success enhances both the reputation of the parent university and the stature of the hospital system, enabling it to accrue sufficient market share to remain financially successful, even during periods of market instability.

This overall success will enable the health system to continue to invest in the medical school—the starting point of the strategy for success.

Mr. B. has fond memories of Pitt and Pittsburgh and he is proud to see them prosper. His first scientific job was in the microbiology department at Pitt in the med school. The chairman of the department was Niels Jerne, who had not yet received the Nobel Prize. Wonderful man and outstanding teacher, he was a favorite of the med students who gave him the golden apple, clearly demonstrating that research and teaching are not incompatible. Good times, good times.

Leadership does, indeed, make a difference...

Ciao Bonzo