Penn State Hershey preparing for change, says Medical Center's CEO Paz

HERSHEY, Pa. – Growth continues to be the trend at Penn State Milton S. Hershey Medical Center and Penn State College of Medicine, but according to the man responsible for overseeing it, the Medical Center and college must brace for sweeping change in health care and biomedical research, as well as the education and training of the next generation of clinicians in the years ahead.

Dr. Harold L. Paz, who serves as the Medical Center's chief executive officer, Penn State’s senior vice president for health affairs and dean of the College of Medicine, told Penn State’s Board of Trustees on Friday (March 15) that while Penn State Hershey has enjoyed great success in recent years, the University’s health science center must be rigorous in preparing for dramatic change within the health care industry and potentially significant reductions in government funding to support education, research and patient care.

“We face an unprecedented era of change in health care and biomedical research,” said Paz. “Health care reform requires us to reexamine how patient care is delivered. New technologies and a new understanding of the human genome are revolutionizing life sciences research and redirecting the future of medicine. These developments and future scientific breakthroughs must shape how we educate the next generation of scientists, doctors, nurses and other health professionals.”

Collectively, the Medical Center and College of Medicine have a combined budget of nearly $1.5 billion, representing roughly one-third of Penn State’s total budget. In his annual address to University trustees, Paz highlighted the continued growth of Penn State Hershey’s clinical, research and education missions. He also showcased a number of key accomplishments, including the opening of the new Penn State Hershey Children’s Hospital, which trustees toured before the meeting.

Paz reported that patient volumes at Penn State Hershey have continued to grow. Hospital admissions in the last fiscal year (FY 11-12) were more than 27,000, up just slightly over the prior year. Outpatient visits grew by 1.2 percent to more than 893,500. Emergency visits were up 5.5 percent to more than 64,400 and surgical cases increased by 1.8 percent to more than 27,600.

He also touted Penn State Hershey’s September 2012 re-designation as a Magnet™ organization by the American Nurses Credentialing Center (ANCC), among fewer than 8 percent of all U.S. hospitals to earn such recognition. The Children’s Hospital also was recognized for excellence, named by U.S. News & World Report among the nation’s Best Children’s Hospitals in three clinical specialties (orthopedics, cancer, and diabetes and endocrinology).

Paz noted that Penn State Hershey’s financial performance over the past several years has been strong, with an operating margin of 10.4 percent in FY 11-12. He also informed trustees of the increased financial burden of caring for the under- and uninsured. Penn State Hershey’s charity care costs in fiscal year ’12 were nearly $51.7 million, up from $35.3 million the year before and suggested that an impending 2 percent reduction in Medicare, part of federal sequestration, could bring additional challenges.

Meanwhile, extramural research funding increased to nearly $107 million last fiscal year, up from approximately $105 million the previous year. Paz told trustees that growth in research funding comes in spite of increased competition for a shrinking pool of federal research dollars from the National Institutes of Health and again cited sequestration as a challenge. Penn State Hershey stands to lose an estimated $4.85 million in extramural research funding next year if impending sequestration cuts remain in place.

The College of Medicine received more than 7,000 medical student applications for 145 available openings for the class of 2016, which began this fall. The college also welcomed its first cohort of 13 medical students to its new regional medical campus in University Park last summer.

Paz told trustees, however, that Penn State Hershey’s continued success depends on its ability to adapt to a rapidly changing health care environment. He said that numerous activities are already under way to lay the groundwork that will enable Penn State Hershey to be a leader in each of its core missions.

These activities include the launch of the Institute for Personalized Medicine, the establishment of 13 Patient-Centered Medical Homes, accredited by the National Committee for Quality Assurance (NCQA), in Penn State Hershey’s growing Medical Group practice, the launch of a new core curriculum in the College of Medicine, and the publication of the organization’s first Community Health Needs Assessment.

The Institute for Personalized Medicine, established in February 2012, is a research institute designed to improve patient outcomes by tailoring therapies based on an individual’s genetic and biologic makeup. The institute’s signature laboratory space was dedicated in January. Paz highlighted the importance of Penn State’s share of the Commonwealth’s CURE funds (tobacco settlement monies), in supporting the institute. CURE funds in the amount of $1.5 million were used to purchase high-tech equipment such as a gene sequencer to help investigators identify genetic biomarkers that may indicate whether a specific drug will be more or less successful in treating a particular disease in an individual.

“Medicine has always been personal, but through the research conducted here, there is now the potential to be able to create a future in which it is possible to help each person tailor the healthiest possible lifestyle, and when necessary, to treat each patient with an individually designed medication,” said Paz.