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46 / Chapter 2 and in conversations with an investment banker who was a longtime friend, confidant, and advisor, they “designed a quick sketch” of what such a merger might entail.17 “What a perfect match,” paroo thought, and persuaded his friend “to take the idea to sherif Abdelhak,” who, paroo believed, “found it intriguing” (paroo, interview, August 16, 1994). With the knowledge of Hu and mCp trustees, serious discussions between Abdelhak and paroo ensued, discussions based on their mutual recognition that both mCp and Hu were vulnerable medical schools in relation to the other philadelphia schools and their academic health centers. news of the merger discussions broke in the Philadelphia Inquirer on December 13, 1989. Aware that rumors had begun to circulate, Abdelhak, paroo, and Walter Cohen had issued a short joint statement on December 12, 1989, which served as a basis for the story by Inquirer reporter Gilbert Gaul and accounts in pittsburgh papers on December 14 (Gaul 1989; Jones 1989; twedt 1989). the joint statement acknowledged that the three organizations “have been exploring the potential for a legal affiliation. . . . While there is clearly an opportunity for creating a very strong and competitive structure, there are issues that must be addressed before the management teams can make a recommendation to their respective boards” (Gaul 1989). two key issues, Gaul pointed out, “would be whether to consolidate some or all of the medical college’s and Hahnemann’s operations to gain economies of scale and create a single, dominant healthcare organization [and] . . . who would head the new organization.” A few weeks after this initial coverage, the Inquirer carried two more stories by Gaul on the first page of the business section. One story, based on interviews with paroo and other Hu officials, reported that Hu was “laying off 156 employees, reducing staff overtime, and taking other steps to trim expenses in response to cutbacks in government [medicare] funding.” the layoffs, paroo told Gaul, “are mainly spread through corporate administrative areas,” and represented his effort “to be proactive, not reactive” in responding to medicare cutbacks and the costs of uncompensated care (Gaul 1990b). Gaul’s second story updated his December coverage (Gaul 1990c). He reported that the negotiations between Hu and mCp were in their “final stages,” and that according to paroo the “fusion” plan “will result ultimately in a single university, single medical school, single graduate program . . . creating a highly efficient system with revenues exceeding $500 million a year.” “the new health-care corporation,” Gaul wrote, “would become a subsidiary of Allegheny Health services, inc., a well-heeled pittsburgh organization that merged with mCp more than two years ago.” According to paroo, 17. According to mCp’s president, Walter Cohen, a possible Hu-mCp affiliation was raised before paroo’s initiative. in fall 1986, when mCp began exploring merger options, the chairman of Hu’s board arranged a luncheon meeting with the leadership of mCp and Hu, but the exploration did not go beyond that discussion (Cohen, interview, July 25, 1994). Entering the Merger Arena / 47 Gaul revealed, Walter Cohen, president of mCp, would become chancellor of the merged entity, “responsible primarily for fund-raising,” while paroo would be president and CeO, reporting to a “newly created board of trustees in philadelphia and to sherif s. Abdelhak, president of Allegheny Health services.” the health care analysts and industry officials interviewed by Gaul were highly positive about the proposed merger’s implications for medical care and education in philadelphia. some commentators noted that mCp, despite the infusion of funds from Allegheny since 1988, remained particularly vulnerable to changes in philadelphia’s volatile health care market because of its ex-urban location and relatively small size and endowment. But the proposed merger with Hahnemann reported by Gaul created a firestorm at mCp. several of our interviewees who had been at mCp at the time vividly recalled the sight of “students marching and protesting in the halls” and the distress and anger of faculty and alumnae and alumni. mCp faculty, we were told, “were telling the students that the merger would destroy the family feeling at the institution, and mCp had a fear of being swallowed up by Hu.” mCp faculty, according to one reporter’s “informed source,” were concerned that Hu would be given many “top positions” because they have “more plus factors than mCp has” (Boynton 1990). turbulence also erupted at Hahnemann. While he thought that “mCp feared Hahnemann,” board chairman martinelli also attributed the failure of the merger attempt on...

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