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Merger Games

The Medical College of Pennsylvania, Hahnemann University, and the Rise and Fall of the Allegheny Healthcare System

Judith P. Swazey

Publication Year: 2012

With deepening financial problems, Allegheny Heath, Education and Research Foundation filed for bankruptcy in 1998—in the midst of its landmark merger of The Medical College of Pennsylvania and Hahnemann University. What resulted was another dire event in an escalating disaster. As civil and criminal investigations probed Allegheny's collapse, the survival of the medical school and other health sciences university schools, and the operation of the hospitals hung in the balance. Fortunately, a savior arrived in the form of Drexel University who used this opportunity to create its own medical school.

Merger Games is Judith Swazey's gripping account of this historic transaction. Based on extraordinarily detailed first-hand research and continuous inside access to the developments, this book clearly delineates who the players were and what this merger means for the future of medical education and institutional healthcare.

Merger Games is a definitive history of one of the most important academic medicine mergers in Philadelphia and the country, which happened at a time when medical care was becoming commodified in almost every state.

Published by: Temple University Press

Contents

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pp. v-vi

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Preface

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pp. vii-xi

The major portion of this research-based account is set in the years 1993–1998. The bare outline of the story is as follows: During that time, a nonprofit health care corporation based in Pittsburgh, Pennsylvania, the Allegheny Health, Education and Research Foundation (AHERF, or Allegheny), acquired Hahnemann University...

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Acknowledgments

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pp. xiii-xv

Many people gave me invaluable help in the course of writing this book and in conducting the study that preceded it. I am indebted to the Acadia Institute project staff for their many contributions that made the project possible: Carla M. Messikomer, Vicki Leeman Hall, Judith C. Watkins, Richard I. Emmett, Athena...

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Prologue. “Honoring the Past, Creating the Future”

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pp. 1-9

Broad Street, one of Philadelphia’s most historic thoroughfares, was festooned with banners as the medical students marched to the Academy of Music—the performing arts center that was home to the Philadelphia Orchestra—to receive their long-awaited doctor of medicine degrees. The banners, fluttering in the breezes of those two...

Part I: Let the Games Begin

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1. Setting the Stage: Hahnemann, MCP, and Allegheny

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pp. 13-27

We begin our story of the merger of Hahnemann University (HU) of the Health Sciences and the Medical College of Pennsylvania (MCP) by moving back in time to the nineteenth- century beginnings of its principal organizations—Hahnemann and MCP in Philadelphia1 and the Pittsburgh-based Allegheny health...

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2. Entering the Merger Arena

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pp. 28-50

The contours of the arena in which Allegheny acquired Hahnemann in November 1993 took gradual shape from the early 1980s through mid-1993. The playing field was formed by events and decisions made by the boards and senior administrators of the Medical College of Pennsylvania and Allegheny Health Services that led to MCP...

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3. If at First You Don’t Succeed: The Acquisition of Hahnemann

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pp. 51-73

By spring 1993, HU’s president Iqbal Paroo and board chairman Alfred Martinelli agreed that HU’s financial and academic management problems were grave enough “to revisit the option of consolidation.” In May Martinelli convened a trustees’ retreat. The attendees “agreed quite emphatically that maintaining the status quo at Hahnemann...

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4. “Our Maximum Leader”: Sherif S. Abdelhak

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pp. 74-97

For many within and without the organization, the Allegheny Health, Education and Research Foundation and its president and CEO Sherif S. Abdelhak—called Sherif by most of those who knew him—were synonymous. “Allegheny is Sherif; Sherif is Allegheny,” was a litany we heard on many occasions. As a prominent Pittsburgh...

Part II: Merger Landscapes

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5. Corporate, Higher Education, and Teaching-Hospital Merger Arenas

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pp. 101-111

AHERF’s acquisition of MCP in 1987 and of HU in 1993, its subsequent merger of the two institutions, and the organization’s addition of numerous hospitals, primary-care groups, and physician practice plans to its health care system were part of a larger economic and social landscape of mergers and acquisitions (customarily abbreviated...

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6. Merger Patterns: Human and Organizational Upheavals

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pp. 112-125

While the merger of MCP and HU and the collapse of AHERF have particularistic elements, it is not a unique story. For, transcending this detailed case study, it illuminates common and salient elements in mergers, in the complex processes of merging and in the actions that can lead to the downfall and dissolution of both...

Part III: Merger Games

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7. Who and What We Are: Creating an Organizational Image and Identity

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pp. 129-145

“To learn, to teach, to heal the sick, and to conserve health”: these are the resounding words with which AHERF proclaimed its mission in internal publications and in materials for external audiences such as prospective patients, faculty, students, and donors; for recipients of its corporate giving; and for health care...

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8. Consolidation Calendar: Tasks and Timetables

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pp. 146-153

The formal ratification of the consolidation by the AHERF and HU boards initiated an extensive and ongoing series of planning and implementation tasks to meld MCP and HU, to structurally and functionally define and establish its place in the AHERF system, and to assure the financial viability of the health sciences university,...

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9. “Merger Guinea Pigs”: The Medical Students

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pp. 154-172

In anticipation of the arrival of the first cohort of students at the consolidated medical school in August 1995, a host of interrelated planning and implementation tasks had been under way for months. These preparations would not only affect the students but also the school’s faculty, departments, offices and committees concerned with...

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10. Upsizings: Institutional Expansions

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pp. 173-190

The union of MCP and HU brought in its wake a range of institutional expansions in Allegheny University of the Health Sciences and the AHERF health care system. In 1992, before the acquisition of HU, AHERF had a relatively small and simple organizational structure: its components were AGH and its Neuropsychiatric Institute...

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11. And Downsizings: Institutional Contractions

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pp. 191-205

Concomitant with the organizational expansions examined in the previous chapter, the merger also led to institutional contractions, or downsizings. These downsizings show that a merger should be understood as consisting of processes of mini-mergers, which, like entire combined organizations, can undergo a devolution, or de-merger. The contractions set into...

Part IV: End Games

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12. AHERF, AHERF Sat on a Wall, AHERF, AHERF Had a Great Fall (with Apologies to Humpty Dumpty)

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pp. 209-231

For over a year, widening cracks in AHERF’s financial structures had caused the system to totter atop its perch as Pennsylvania’s largest integrated health care delivery system, until it finally imploded and crashed to the ground. The formal beginning of what proved to be its irreparable fall came on July 20, 1998, when its board of directors...

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13. Saving the University

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pp. 232-251

By late summer and fall 1998, the shockwaves induced by the AHERF board’s July 20 decision to file for Chapter 11 bankruptcy protection for its Eastern Region hospitals and Allegheny University of the Health Sciences, its preliminary agreement to sell the hospitals to Vanguard Health Systems, and the revelation of its estimated...

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14. No One Could Put AHERF Together Again

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pp. 252-271

The tangled web of matters revealed by AHERF’s Chapter 11 bankruptcy, and the length of time it took to unravel and resolve them, is a complicated story both substantively and temporally, stretching from 1998 through 2003. This chapter highlights issues and actions that emerged during the bankruptcy proceedings from 1998...

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15. End Games: 2002–2003

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pp. 272-281

Although the histories of Hahnemann University and the Medical College of Pennsylvania and the fate of AHERF, its other former subsidiaries, and their principals continue to be written, the story that we watched unfold reached its closure in 2002 and 2003. Events during those two years constituted the end of the merger games...

Appendix: The Players: People and Organizations

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pp. 283-286

References

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pp. 287-302

Index

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pp. 303-307


E-ISBN-13: 9781439907191
Print-ISBN-13: 9781439907184

Page Count: 307
Publication Year: 2012