Statement from Dr. Robert Kelch to the University of Michigan Health System Community

February 20, 2009

Dear Members of the University of Michigan Health System Community,

I’d like to communicate very candidly about our Health System and its place in this difficult economy. It speaks directly to our Strategic Principle of High Value and Fiscal Soundness and the framework we’ve created to fuel continuous progress.

Some are saying our nation’s hospitals and academic health centers are on the brink of a financial crisis. I would counter that the University of Michigan Health System can be a beacon of hope for now and the future.

Indeed, we face extraordinary challenges in this turbulent economy as we stay true to our mission of superb patient care, life-changing research and innovative teaching for our next generation of physicians, scientists and health care professionals. The Health System is more than $48 million behind its revenue projections this fiscal year, primarily because of shortfalls in patient care and research revenues. Additionally, our investments have taken a market value loss of $552 million.

During the past several months, we have had to make difficult decisions to ensure we continue to make the Michigan Difference for our patients, students, faculty and staff. We all need to recognize that other hard decisions lie ahead. I’m grateful for your hard work and commitment during these trying times. Because of your efforts, coupled with our history of prudent fiscal management, we are well positioned to navigate through this economic downturn. And we will.

We cannot let this recession keep us so focused on today that we lose sight of tomorrow and our necessary and important future growth. The purchase of the Pfizer property is a much more cost-effective way to meet our needs than building new research space. It is also a strong signal that we can help accelerate the economic transformation of our state and enhance the region as a hub of scientific discovery and innovation. In fact, the value of the U-M Health System as a resource for our state has never been more important than it is now.

Building the future state of health care will start with strategic decision-making unbridled by economic fears, yet grounded in sound fiscal practices. It will mean investments in programs and services that bring significant return. And it will require wise use of our resources, especially our people.

We’re confident that years from now, we will look back on this time with pride and a great sense of accomplishment. Our storied history can be our guidepost to the future: In the late 1970s and early 1980s, when our country experienced a similar recession, we didn’t buckle. Rather, we looked to the future and decided to build the University Hospital and A. Alfred Taubman Health Care Center—at the time, our largest building project ever. We did it then; we can do it now.

Our challenge is great and our spirit may waver at times, but we will weather this difficult period.

Sincerely,

Robert Kelch
Executive Vice President for Medical Affairs
University of Michigan