Empire Building: Consolidation and controversy at UPMC

As the Pitt medical complex coalesces in the 1990s, Jeffrey Romoff's role becomes more visible -- and resented / Third in a series

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EMPIRE BUILDING
Jeffrey Romoff and the ascent of the University of Pittsburgh Medical Center


Associated Press

Jeffrey Romoff in 1994, addressing a University of Pittsburgh Faculty Senate meeting.


THE SERIES

Part One: How a stagnant psychiatric institution led to UPMC's growth

Part Two: Organ transplants put UPMC on the map, confirm growth strategy

Tomorrow: 1996-2002, UPMC faces competition. Jeffrey Romoff struggles with his personal life.

Thursday: Join an online chat with author Steve Levin about the series


Online Graphic:
UPMC's Hospitals and Facilities


Bob Donaldson, Post-GazetteJeffrey Romoff meets with Pittsburgh Post-Gazette editors in 1996.


A TIMELINE

1985

Dr. Ronald Herberman, formerly of the National Cancer Institute, named director of the new Pittsburgh Cancer Institute.

In a poll of most popular Pittsburghers, Dr. Thomas Starzl finishes second to Steelers' patriarch Art Rooney, beating out Mr. Rogers.

1986

Dr. Thomas Detre named the university's senior vice president for health sciences and president of its newly created Medical and Health Care Division.

Presbyterian-University Hospital announces a $230 million renovation and expansion project to make more room for its transplant center, add space for the Pittsburgh Cancer Institute and create 375,000 square feet of laboratory space for research.

1987

Presbyterian-University Hospital named one of the country's 64 best hospitals in the book "The Best Hospitals in America."

1988

More than half the world's liver transplants now done at Presbyterian-University Hospital.

1989

Pitt's Medical and Health Care Division makes a deal for Montefiore Hospital for $140 million. A portion of the deal -- $75 million -- enables establishment of Jewish Healthcare Foundation in 1990.

1990

Montefiore Hospital merges with Presbyterian to become a part of the University of Pittsburgh Medical Center -- shortened to UPMC -- the first time the name was used.

1991

Jeffrey Romoff earns $294,000 as vice president of health sciences. The salary of new university president J. Dennis O'Connor is $200,000.

1992

Dr. Detre, senior vice president of health sciences and director of Western Psychiatric Institute and Clinic, the highest paid official at Pitt with a salary of $378,000, says he wants to retire.

The executive committee of University of Pittsburgh board of trustees approves a $250 million bond issue to refinance debts and fund $98 million in new capital projects.

Mr. Romoff appointed senior vice chancellor for health administration and president of UPMC by board of trustees, replacing Dr. Detre.

The world's first transplant of a baboon liver into a human is done at Presbyterian.

Mr. Romoff's salary now $312,000, second at university behind Dr. Detre's $391,000.

1993

Mr. Romoff's salary now $319,800.

1994

St. Margaret Memorial Hospital, a 267-bed hospital near Aspinwall, intends to affiliate with UPMC.

Mr. Romoff's salary now $328,435.

Washington Hospital joins the UPMC network.

Dr. Arthur Feldman brings eight researchers from Johns Hopkins University and helps boost cardiac research funding to $8 million.

1995

With no successor yet found, Dr. Detre becomes the highest-paid university employee at $411,596.

Blue Cross of Western Pennsylvania announces intended merger with Pennsylvania Blue Shield, creating country's third-largest Blue Cross/Blue Shield plan and changing way health care is paid for and delivered. Merger completed a year later.

1996

UPMC acquires South Side, Aliquippa and Braddock hospitals.

Jeffrey Romoff and second wife, Maxine Ketterer, divorce.


To counter rising medical costs and increased competition, Dr. Thomas Detre and Jeffrey A. Romoff faced a daunting task in 1985: restructuring the University of Pittsburgh's relationship with its various independent medical institutions.

Nationally, there were no merger models to guide them. Academic medicine was filled with what Mr. Romoff called "a hodgepodge of bastardized versions of current realities," none of which suited the unique situation at Pitt, where half a dozen health-sciences schools on the university campus were allied with the medical school and five hospitals and clinics scattered in Oakland and Shadyside.

But there was one success story for them to draw on, one they had engineered themselves at Western Psychiatric Institute and Clinic.

Twelve years earlier, Dr. Detre had seen WPIC as an underachieving facility with great potential, and, with Mr. Romoff's help, made bold moves to change it.

Capitalizing on National Institute of Mental Health budget increases, Dr. Detre helped to secure millions of dollars in clinical research grants, enabling WPIC and the university's department of psychiatry, of which he was chairman, to attract top-level researchers. Annual federal research funding in the department of psychiatry doubled between 1982 and 1985, to $13.9 million.

They had used the same formula -- hiring top researchers whose discoveries help clinicians provide better patient care, which leads to attracting more patients, resulting in more income -- at the Pitt medical school. Dr. Detre was dean there and senior vice chancellor of the other schools of health sciences -- public health, dentistry, nursing, pharmacy, and health and rehabilitation services.

Between 1980 and 1985, the medical school's National Institutes of Health grants for clinical research increased from $15.7 million to $29.2 million, and other health sciences schools nearly tripled their awards, to $7.2 million.

Now, in 1985, Dr. Detre and Mr. Romoff decided to use that model yet again, this time at the part of the Pitt medical complex collectively known as the University Health Center: Presbyterian University Hospital, Falk Clinic, the Pittsburgh Cancer Institute and Eye & Ear Hospital.

Mr. Romoff attacked the task with the kind of single-mindedness that had gotten him hired by Dr. Detre 12 years earlier. Along with Dr. Detre and hospital attorneys George A. Huber and Alexander J. Ciocca, he interviewed the 29 trustees of Presbyterian University Hospital for their input. A concept paper was ready in early 1986 and by mid-year, both Presbyterian University Hospital and Pitt trustees had approved the consolidation. It was given an unwieldy name: Medical and Health Care Division, or MHCD.

Presby would continue as a separate entity but with a closer administrative relationship with the university. MHCD would manage Western Psych, Eye & Ear and Falk Clinic. Under this arrangement, Pitt's academic medical programs would benefit from the income generated by patient services at a time when there was less government support for medical education.

Dr. Detre assumed the title of president of MHCD and Mr. Romoff became executive vice president. Mr. Romoff now managed Presbyterian, Eye & Ear and Falk in addition to WPIC.

The position put him in contact with a number of new employees and executives who found his abrasiveness and aggressiveness off-putting. He didn't just attend meetings, he consumed them. Mr. Romoff, with a master's degree in political science, was a voracious reader of medical journals and research studies. For him, preparation trumped personality. Peers might have medical degrees and specialties, but no one was going to be better prepared for meetings or discussions.

"I wanted to create a knowledge base and reorder the knowledge into a product, into something good," he said. "There were other things where what I was really doing was focusing learning, coordinating an effort where everyone else had the knowledge [but] they managed not to get it to work."

It was that attitude that set people on edge. He was called a bully, a tyrant, a micro-manager. He was also being called something else: successful.

Five impressive years
The years from 1986 to 1991 under Dr. Detre and Mr. Romoff were a time of tremendous growth at the hospital complex and were marked by the consolidation of the pair's power. In May 1988, six key Presby administrators were forced to resign and another was shifted into a new job. Several pointed fingers at Dr. Detre, saying it was a power grab.

The administrators were ousted because "they didn't toe the line," said a former UPMC official who asked not to be identified.

When, just a few years later, a department of medicine official organized several department chairmen in an effort to counterbalance Dr. Detre's and Mr. Romoff's control, he was forced out, too.

According to another former UPMC official, now an executive with a Midwestern hospital, that got everyone's attention.

"The other chairs watched that and said, 'I'm not comfortable; it's not worth it' " to challenge the pair. "They lined up with Detre and Romoff," he said.

The resignations had no impact on the hospital complex's growth. Employees increased from 1,730 to more than 7,000; revenue increased from $85 million to $518 million. Much of that increase stemmed from the 1986 MHCD consolidation, which allowed the medical center to better coordinate programs and purchases.

During the next 18 months, to meet burgeoning administrative-office needs, Presby bought the University Inn -- now the Wyndham Garden Hotel -- and an adjacent office building for $23 million.

In June 1988 construction began on a planned $280 million, nine-floor research facility built atop a seven-story hospital parking garage.

Because of the size of that project, Pittsburgh was shocked in November 1989, when MHCD announced it had made a deal for venerable Montefiore Hospital, built in 1908 to provide services and training for Jewish patients and doctors.

Montefiore, landlocked among MHCD's various Oakland institutions and needing a $50 million renovation, had been filling only half its 520 beds and was barely breaking even. The cost to Presby was $140 million -- $65 million in Montefiore debt and $75 million toward establishing the Jewish Healthcare Foundation.

Even with the $11 million already spent on initial construction of the research tower/garage, the move saved MHCD more than $100 million in construction costs -- the project was never built -- while providing immediate move-in space. But had Mr. Romoff and Dr. Detre waited a year, they likely could have acquired Montefiore for a fraction of that cost, since many other Jewish hospitals around the country were closing. Mr. Romoff said there was a second reason for the deal besides financial considerations: MHCD wanted to help the Pittsburgh Jewish community.

"It was important ... that [the restructuring] be done in a dignified way and it be done proudly," said Mr. Romoff, who is Jewish. "It was our commitment to permit the Jewish community to move into the future."

With the addition of Montefiore, MHCD also moved into the future, changing its name to the University of Pittsburgh Medical Center. And it continued growing. By 1992 its earnings had ballooned to nearly $800 million, and it had more than 10,000 employees.

In the midst of the success, Dr. Detre, then 68, said he wanted to retire. He'd had bypass surgery and was still working 80-hour weeks. His 1992 salary was $391,000, making him the highest-paid official at Pitt, but he told Chancellor J. Dennis O'Connor that he couldn't physically continue at his current pace. He suggested that Mr. Romoff replace him.

"Jeff was almost like his son," said Dr. Michael Karpf, executive vice president for health affairs at the University of Kentucky and former vice chairman of UPMC's department of medicine.

Dr. Detre had a different legacy in mind.

"I was absolutely convinced that he would carry on the same tradition, and that's exactly what happened," Dr. Detre said.

Mr. Romoff was appointed senior vice chancellor for health administration and president of UPMC. His appointment outraged some members of the Pitt faculty. The Faculty Senate formed an ad-hoc committee to investigate why he was named president without a national search for candidates, because school policy required that jobs at the associate chancellor level and above be filled through search committees.

A vote by faculty in the health sciences schools showed 82 percent favored reopening the job search. Those voting were so worried that Mr. Romoff or Dr. Detre might discover their identities that they insisted on secret ballots. But because the Faculty Senate is advisory only, the job remained Mr. Romoff's.

The pressure response
UPMC's growth chart was not without dips. Between 1992 and 1996 hundreds of jobs were eliminated and the annual budget was twice cut by 10 percent. Mr. Romoff refers to such downsizings as a redeployment of hospital system resources. The majority of cuts were in mid-level administration and management, a streamlining of the two areas Mr. Romoff considers least important to a hospital's mission. Such "cut and grow" tactics are indicative, he says, of an organization that constantly reinvents itself to respond to external variables.

In 1996, those external pressures were accentuated as health care became a commodity instead of a social good. The state's two largest health insurers -- Blue Cross of Western Pennsylvania and Pennsylvania Blue Shield -- initiated a merger to create Highmark Inc.

At the same time, city hospitals were growing tired of watching suburban hospitals siphon away patients through more sophisticated technology and practitioners. To preserve -- and expand -- their patient bases, the larger urban hospitals began consolidating with their competitors, resulting in networks of affiliated hospitals.

Adding impetus to such moves were the pending managed-care cuts in hospital admissions and lengths of stay. In addition, the bigger a hospital system was, the more leverage it would have in preventing insurers such as Highmark from demanding discounted reimbursement fees.

Suburban physicians, eager to cash in on consolidation, sold their practices to hospitals. This let hospitals expand patient bases and increase referrals. For primary care physicians, the so-called "gatekeepers" who decide whether patients need more expensive tests or require hospitalization, joining a hospital network was professionally lucrative. The hospitals paid them to join the networks, while physicians' management costs were reduced by being part of a larger group.

Medicine was changing. Hospital management was focused on market share and market forces and low-cost and high-quality networks. The competition to become the region's leading integrated health-care delivery system was fierce.

Mr. Romoff realized UPMC had to continue to adapt in order to overthrow what he called "the tyranny of yesterday's paradigms."

In moving out of Dr. Detre's shadow, Mr. Romoff stepped into the middle of a feverish competition for the region's patients, physicians and hospitals, a fight that would change the face of health care in Pennsylvania.


Steve Levin can be reached at slevin@post-gazette.com or 412-263-1919.


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