At the time, UMMC was one of many hospitals across the country struggling to survive. A university board of regents, adept at governing research and education, faltered when it came to managing the business of running a hospital. Owned by the state but operated through the university, the hospital was burdened by chronic operating deficits, competitive challenges, benefit structure problems, and an often cumbersome pyramid procurement process. Pressure to build new facilities, add new technology and enhance programs translated to a revolving door approach to the need for state subsidies.

Encouraged by the reciprocal strength generated between UMMC and the University of Maryland School of Medicine (SOM), vision for a privatized hospital grew, and was realized when the state gave its approval, paving the way for the birth of UMMS.

E. Albert Reece, MD, PhD, MBA, the University of Maryland vice dean for medical affairs and medical school dean, observes that credit goes to the framers who wrote the bylaws that became the structure for UMMS. “Although it was written 25 years ago, it is exactly what I would like to see if it were being written today,” Reece says. “I’m not sure if they were clairvoyant or brilliant or both. The synergy and symbiotic relationship between the school and system is a perfect match that inextricably binds us together.”

Chrencik explains that the state’s investment in research activities at the SOM has provided muscle for important UMMS acquisitions, and has helped enable physical growth as well. The school ranks seventh of 76 public medical schools in total research funding, and 19th among all 130 medical schools. Since 1994, grants and contracts at the SOM have increased from $86 million to $377 million, positioning the SOM as a strong partner with UMMS as a statewide health care enterprise.
The success of UMMS affiliating with hospitals throughout the state is based on its ability to access low-cost capital, as well as partner with the SOM to attract physicians interested in building stronger clinical programs. With more than 90,000 annual admissions, UMMS revenues for 2009 were over $2 billion, and soon will reach $2.5 billion. That revenue base is diversified, with a major urban medical center added to urban, suburban and rural hospitals plus three facilities directed to specialized treatment.

The continuing relationship between UMMS and the State of Maryland is a mutually supportive one. Although UMMS is a privately owned 501-C (3) corporation, UMMC does receive capital support from the state as the acknowledged state medical center. Between medical school education and residency training, UMMS and the SOM supply more than half of Maryland’s doctors and provide care to a fifth of Maryland’s residents. In turn, the hospital’s board is appointed by the governor and includes two Maryland legislators as mandated members of the board, along with three university regents, the chancellor, the University of Maryland Baltimore president, and the dean of the medical school.

Early Progress
Among the initial priorities for the fledgling medical system as it began to show a healthy bottom line were major revitalizations at UMMC. The system’s flagship hospital would, in a relatively few years, become a bridge to health care in communities throughout the state, serving as a resource for medical talents, specialized care, and expansion of programs in member hospitals. First, however, came needs on the home front. Along with development of a strategic plan, and initiation of enhanced clinical programs at the hospital, renovation and expansion of UMMC facilities were soon underway. One of the first achievements was the building of the R Adams Cowley Shock Trauma Center. Originally created by an Act of Congress, the center is a 200,000 square-foot facility dedicated entirely to injury and critical illness. John W. Ashworth III, senior vice president of network development and associate dean at the SOM, was one of the architects of the center.

“The Shock Trauma Center today treats more brain injuries a year than any other facility in the country,” he says. “Its importance to Maryland residents can’t be overstated.”

In the years following, the Gudelsky Building and Harry and Jeanette Weinberg Building were added. A statewide cancer initiative resulted in the Marlene and Stewart Greene-baum Cancer Center gaining national recognition as one of only 64 centers accredited as a “designated center” by the National Cancer Institute (NCI). These achievements paved the way for expansion of the system to its current nine member hospitals—and in the process, created an extensive link that joins communities throughout Maryland in sharing the research and patient care benefits of the state’s academically centered hospital and the SOM.

“Our early milestones are intrinsically tied to the school,” Chrencik says. “As building expansion accelerated, and as clinical programs including transplantation, cardiac and cancer care grew, the intersection between UMMC and the school, which was undergoing its own transformation, contributed to the mutual success of both.”

By the end of the 1990s, community hospitals were pressured by the rise of managed-care contracts. With the growth of HMOs, many began to question whether they could survive on their own. At the same time, UMMS was positioned to expand its base, thanks to its strong bond rating and partnership with the SOM. The system was ready to deliver on the needs of hospitals seeking capital, physicians and improved clinical programs. According to Chrencik, an important decision was made then about the future direction of growth.

“We were determined to focus on Maryland,” he says. “We have since become known internationally, but in directing our sights on expansion, we remain committed to our own state.”

In 2009, UMMS operated more than 1,900 licensed beds with 90,450 admissions, more than 250,000 emergency visits and 400,000 outpatient visits. Member hospitals were served by 3,000 physicians including over 1,200 faculty members at the SOM. Today, member hospitals, in addition to UMMC, include Baltimore Washington Medical Center, Chester River Hospital Center, James Lawrence Kernan Hospital, Maryland General Hospital, Mt. Washington Pediatric Hospital, the Shore Health System’s two hospitals—Memorial Hospital of Easton and Dorchester General—and University Specialty Hospital. Upper Chesapeake Medical Center and Harford Memorial Hospital—members of the Upper Chesapeake Health System—are new affiliates.

Expanding UMMC’s Influence
Beginning with the fact that the SOM and hospital have educated and trained a majority of the doctors in Maryland, it isn’t difficult to see the advantages to hospitals in partnering with the network. Jerry Wollman, senior vice president, corporate operations, says the link with Baltimore area hospitals and those as far as Maryland’s eastern shore is based on the needs of a specific institution.

“If a hospital wants to develop a cancer program, there is the opportunity to engage experts at an NCI-designated center in recruiting physician talent,” he says. “As another example, we recently expanded a radiation oncology program at Baltimore Washington Medical Center by having doctors there join the SOM faculty of the nationally renowned program at UMMC. In addition, our member hospitals can participate in important research through access to clinical trials by sending patients to UMMC, and in some cases, even through trials performed in their local communities.”

Recruitment of physicians and staff as well as providing resources, such as new clinical space, constitute still another benefit to hospital partners, Wollman reports. Certainly among the most important assets is UMMS’s ability to access capital. Because of its strong financial position and bond rating, UMMS has the ability to help hospitals that can’t borrow for expansion because of limited debt capacity.

Roy Smoot Jr., ’80, chief medical officer at Maryland General Hospital, a hospital now in the final phase of completion of a new $68 million building, reports that access to capital has been a major benefit to patients at the west Baltimore hospital.

“Ours is an urban community hospital with a patient population challenged by access and health care disparities” he says. “Because we are committed to the needs of our patients, we appreciate the ability to build a needed facility, as well as having the seamless ability to transfer patients to UMMC when necessary.”

The dean recently communicated with the CEOs of all member hospitals, putting them in touch with his vice dean of clinical affairs who will be the direct point person to respond to any clinical needs, and find appropriate people to provide the service in local communities or at UMMC.
“We must grow beyond numbers,” Reece says. “It’s important that we move toward a greater integration of services, rather than becoming a system of nine stand-alone hospitals.”

No enterprise reaches its 25-year mark unchallenged, however, and UMMS is no exception. Rapoport, the systems’s first CEO, served for 20 years before retiring. The following five years, prior to the appointment of Chrencik as CEO, experienced some turbulence around maintaining the alignment between the medical center and the SOM. In the past, individual and mutual goals of both entities were regarded. When that sense of collaboration eroded; so did the momentum of the system itself.

It is to the credit of those with a stake in the success of the alliance between UMMS and the school that the problems were resolved before any permanent rupture in the relationship occurred. In December 2008, Chrencik, a trusted financial leader at the system since its beginning, was appointed permanent president and chief executive officer after serving in an interim capacity since August.

The UMMS recent affiliation with the Upper Chesapeake Health System (UCH) is expected to add considerable strength to the Harford County economy through expanded medical services, jobs and construction. That system, which includes Upper Chesapeake Medical Center in Bel Air, and Harford Memorial Hospital in Havre de Grace, has experienced sizeable growth, and soon will add to its patient population due to the Base Realignment and Closure Commission’s transfer of thousands of jobs, many of them to Harford County. The partnership indeed merits celebration during UMMS’ 25th year, as it is one more example of the culmination of success that can evolve from collaborative enterprise.

As for the future, while health care on the whole positions itself for change, UMMS appears confident in being able to weather whatever challenges loom ahead. Commenting on uncertainties on the horizon, Chrencik says, “We have built strength through geographic and clinical diversification, and financial and operational strength. Whatever happens nationally, these are the essentials community hospitals will continue to seek.”

Reece agrees, adding that current leaders at UMMS have inherited something rare. “We owe a great deal to our predecessors who conceived the system and nourished it through its infancy,” he says. “We have been given something that we can move to the next level of excellence and sustainability, based on our collective vision, tenacity, and opportunities for mutual success.”

Private for only 25 Years?

The irony of this wonderful success story of the University of Maryland Medical System is that the original hospital was actually a private enterprise for its first 97 years of existence.

In 1823, Maryland became the first medical school in the country to construct its own infirmary for clinical instruction. The effort was spearheaded by the dean, Granville Pattison, who convinced his faculty colleagues to underwrite the cost of construction and furnishings totaling $16,000. The original name Baltimore Infirmary was changed to University Hospital around the turn of the 20th century. It came under state ownership in 1920 when the independent University of Maryland merged with the State College of Agriculture to become the University of Maryland Baltimore and College Park, a public university. The current title University of Maryland Medical System has been used since the 1984 privatization.