The Great Merger
Children’s Hospital of Pittsburgh is a 260-bed general pediatrics facility. In 2009, it registered 12,983 inpatient stays, 67,369 emergency room visits, 23,129 surgeries and more than 1 million outpatient visits. It merged with the University of Pittsburgh Medical Center in 2001. That $500 million transaction was the largest hospital merger in Pittsburgh’s history, with UPMC promising to build a new $250 million hospital for Children’s. The new Children’s Hospital opened its doors on UPMC’s Montefiore Campus in Lawrenceville in May of 2009.
Central to the merger plans was a top-notch, state-of-the art research facility for Children’s, made possible through $8 million in contributions from the John G. Rangos Sr. Family Charitable Foundation, courtesy of Mr. Rangos, whose generosity and stalwart devotion to Children’s Hospital have been an integral part of the Hospital’s steadily rising success over the past two decades.
Mr. Rangos’ unwavering commitment to Children’s development and widely acknowledged excellence is not lost on Hospital officials, who are honoring Mr. Rangos by mounting his portrait in the new research center’s main reception area. The portrait has been painted by famed master portrait artist Benjamin McCready, who has painted several Presidential portraits, among others.
With nine floors (six of which are open laboratories) and 300,000 square feet, the new Rangos Research Center at Children’s has superseded the original Rangos building located in the Pittsburgh suburb of Oakland. Still operating under the auspices of UPMC, the original building has 100,000 square feet, and was made possible in 1990 through a $3 million donation from the Rangos Foundation.
That gift helped establish the John G. Rangos/Massimo Trucco Diabetes Center, a dedicated local resource used by scientists and medical professionals in their search for a cure to Type-1 diabetes, commonly called juvenile diabetes.
The original building is still operating as a UPMC research center, and Children’s is going strong, but things weren’t always that way. Hard is it might be to believe now that the 21st Century is well underway, there was a time when what is now widely considered one of the world’s finest pediatric hospitals experienced an enormous amount of struggle.
And if it wasn’t for the Mr. Rangos’ tireless dedication, optimism and unflinching confidence, Children’s might not be the vibrant and dynamic an institution it is today, as J. Gregory Barrett, president and chief development officer of Children’s Hospital of Pittsburgh Foundation, attests:
Children’s has provided free and uncompensated care to families in need since it first opened its doors in 1890. Children’s policy is to provide medical care for every child that comes through its doors, regardless of whether the child and his or her family have the ability to pay, Mr. Barrett said.
“Whether they have insurance or not, we don’t turn any child away, so every year, the Hospital loses money on those children who come in and aren’t able to pay for medical services. But the Hospital looks at that as part of its mission. We’re not-for-profit, and that’s what we have set out to do. The bottom line today is, if you come into our door, you’re going to get the best possible care, whether you have enough insurance or not,” he said.
Families who are socioeconomically underprivileged present their cases to the Hospital itself, and the Foundation helps provide the necessary financial support, he said. But that support only goes so far. The Hospital ends up absorbing a loss each year, and the Foundation provides as much available funding as possible to minimize the net loss.
“We give the money to the Hospital, and we let the experts do their job. Last year, the Hospital provided $31 million in free care, and the Foundation gave $18 million to help offset the Hospital’s free care expenditures. This is my first year – I started in January of 2010 – so I’m new here, but my understanding is that the Foundation’s historic swing has been between $15-25 million each year over the past ten years. It varies each year, depending on whether we receive a couple of bigger-than-usual gifts,” he said.
The Foundation’s goal is to eventually provide the Hospital with $50-75 million per year, Mr. Barrett explained, because that’s what takes to make a more significant impact on alleviating the Hospital’s costs, whether the funding supports research or education or clinical care.
But the Foundation essentially raises money through programs like its Free Care Fund, and through the commitments of people in the community Like Mr. Rangos who truly care, he said, emphasizing the global reach of the new Rangos Research Center.
“Mr. Rangos is one of those people. He’s absolutely at the top of the list. He has served on the Foundation’s board of directors for more than 20 years, and has had an abiding interest in our Free Care Fund and other fundraising programs. He understands the breadth of what we do. Remember, it’s not the ‘Rangos Free Care Fund.’ It’s the Rangos Research Center. Mr. Rangos exemplifies teaching a person to fish so that he can eat for a lifetime, instead of simply giving someone a fish to eat for just one day. He understands that caring for kids is crucial – and he’s always very solidly supportive of the essential mission – but Mr. Rangos also knows that the research being conducted at the research center bearing his name touches children all over the world,” he said.
“The research end of it is extremely important, and that’s what distinguishes Children’s Hospital of Pittsburgh from other hospitals because great research facilities attract great doctors and scientists which, in turn, raises an institution’s profile and quality. You simply can not be the best without great research programs in place, and Mr. Rangos clearly understands that fundamental concept,” Mr. Barrett added, noting that the new Rangos Research Center was an instrumental part of Children’s merger with UPMC.
“As an independent hospital, Children’s didn’t have the financial wherewithal to build this new campus, and being part of UPMC makes us even more effective. We were already integrated with Pitt in a number of ways, so it was a very logical merger. And the merger with UPMC made the new Rangos building possible. It’s a magnificent facility. And it takes an organization with the financial wherewithal of UPMC to take on the level of debt required to build a tremendous new hospital and research center like that. Looking to the future, the Rangos Research Center will continue to expand UPMC’s global reach, and that will continue to benefit children everywhere. It also benefits Children’s in terms of our ability to have a presence in places we normally wouldn’t have,” he said.
Business Acumen, Wisdom and Visionary Approach
Several hospital officials concurred that the new Rangos Research Center is enhancing the already formidable quality of children’s healthcare at UPMC, and making a major impact on the local and regional economy. They spoke very highly of Mr. Rangos, citing his business acumen and praising his wisdom and visionary approach to the need for expansion of facilities which, in turn, leads to improvements in overall performance and quality of healthcare. They also credited him with helping to turn Children’s Hospital of Pittsburgh into one of the finest pediatric centers in the world.
The general consensus was that, while Mr. Rangos is an immensely generous and philanthropic man, he also gives money in a very precise and strategic manner in order to ensure that his contributions make a solid and measurable impact.
Foundation Vice Chair Mary Jo Dively, who is also Vice President & General Counsel of Carnegie Mellon University, said the new Rangos Research Center is meeting the growing demands for more research space.
Children’s was independent for many years, Ms. Dively pointed out, but when it merged with the UPMC system in 2001, part of the agreement was that the University of Pittsburgh would build a new, state-of-the-art hospital and research facility. And while the merger with UPMC made the new Rangos Research Center possible, she said, it works both ways: To a very real extent, the Research Center also helped make the merger possible.
“It’s a big university and medical community, so there’s always a need for more research space, and we were just delighted that we could add this building to UPMC,” she said. “Besides having triple the amount of space, we reached a point where, because of the medical school’s dramatic rise in the rankings, it’s a hub for great clinicians and academicians. We’ve seen a tremendous increase in the quality of people we are able to attract to Pittsburgh, and the governing factor for that is space,” she said, adding that Mr. Rangos has played an instrumental role in helping Children’s become a leading child care institution.
“To attract top researchers, you really have to have the kind of space they want to work in – and the kind they’re used to having. This new building was designed with all the things today’s researchers have in mind. It’s designed in a way that makes research more collegial and interdisciplinary. We really wanted to foster that,” she said.
“Children’s is the jewel of Pittsburgh. It’s consistently ranked among the world’s top hospitals for children, and John has been such a huge part of that. He was the seminal donor who helped us establish our own research center 20 years ago. He stepped up at a time when we didn’t really have any other major donors. His generosity allowed us to move forward and build, and to solicit other substantial donations. But there was a time when he was really it,” she added.
Mr. Rangos is very committed to philanthropy and medical research, she emphasized, and always comes through for the Hospital, noting that he genuinely cares about the Pittsburgh community and its economic progress, and is deeply concerned about the quality of available healthcare.
“When you have someone like John giving as much as he does, he’s helping to advance the amount and quality of available healthcare, and creating important jobs because they’re the kind of jobs which are not only well-paying, but which also involve caring for people who require medical care, and which make a real impact on society because they involve a high level of satisfaction for both the caregivers and those who need care,” Ms. Dively said.
“It goes beyond the fact that he has been an incredibly generous donor. He typically asks questions which are focused in two ways. He always brings us back to the kids and what’s best for the kids, so he’s our conscience in that sense. But equally important, he’s very business-oriented about the way we deliver our services, and about making sure we’re going to be here a hundred years from now. He loves Pittsburgh, and he wants the city to prosper. He knows that the kind of industry which comes from groundbreaking research is vital to the area, and he invests at all levels. He invests in basic research, and then he invests in spin-off companies, often providing angel capital for researchers who want to start a new company,” she said.
“And John is a very sophisticated donor. He’s a person who motivates others. He’ll issue challenge grants: ‘I’ll give this, if you can get it matched.’ He does it to cure children and achieve great results for children’s health, and he also wants business spin-off because he knows it’s good for the city and the region. It’s good for the economy, and he recognizes that, in Pittsburgh, healthcare is increasingly the most important industry,” she said.
“Above all, John’s commitment to medicine and children is sustained. Not all donors are as faithful and constant. He is also a prolific giver to other institutions, and he has been behind Children’s Hospital for two decades. He’s very patient. He knows what the hospital needs, and he always comes up with it,” she said.
Inspiring Leadership
Past President of the Foundation Roger Oxendale, who is now CEO of Nemours Children’s Hospital in Orlando, said the new Rangos Research Center has expanded Children’s Hospital of Pittsburgh’s range of services by rendering more effective patient care more efficiently, and cited Mr. Rangos’ inspiring leadership in the overall effort to expand.
“The new Hospital is making an impact in fundamental ways. We’ve reorganized the service aspect, so from an efficiency standpoint – from the way physicians and nurses work together to provide services to the way we’re able to operate support services – there’s greater opportunity for delivery. Everything operates more efficiently, which is better for patients,” he said.
“From a research standpoint, one of the advantages is that the new facility and the physicians’ office buildings will all be on the same campus. Under the previous configuration, we were separated by city blocks, so there wasn’t proximity between someone working in a research lab and somebody else working in a specific division. People who take care of patients were not as readily connected to folks who do the research in those areas. With the new configuration, interaction is much more frequent, and that connectivity is important for advancement and progress, he said.
“Everyone feels more connected with the bigger mission. The open-design concept of the new labs promotes greater collaboration between researchers and sharing of equipment and information. Each floor is connected on one end with a staircase and a gorgeous, bright area of window-walls that look out over the whole city. Researchers will naturally gravitate toward that area to take a break from the rigors of their daily routines, and that will promote a natural exchange between them,” he said.
The new facility is both a testament and tribute to Mr. Rangos and his leadership, Mr. Oxendale added.
“Mr. Rangos is a person who really looks for how he can inspire and provide incentive for major work to be done. He’s not the kind of person who stands up during a board meeting and says, ‘Follow me.’ He’s a person who understands how important research is to the organization, and he looks at how his contribution can motivate researchers and foster overall growth,” he said.
Major Impact and Driving Force
David Perlmutter, Chief Physician & Scientific Director of Children’s Hospital and Department Chair of Pediatrics at UPMC, said that in addition to being a larger and more modern facility, the new Rangos Research Center is making a major impact on pediatric care nationwide, and therefore globally.
“The new research center not only has triple the amount of space – which allows us to continue this trajectory of growth (in terms of attracting top-notch scientists) – but it’s also designed in such a way which has very important implications for the future. It’s designed as an open lab, and when you have an open lab, you capitalize on researchers working with each other. You can share more equipment and resources. A typical floor of this building has 22,000 square feet. In a traditional research building, that would all be in separate rooms. But this is all completely open, where 17-18 thousand of the 22,000 square feet is basically one big lab, and each group occupies a designated area within that space,” he said.
“The merger (with UPMC) has been fabulously successful. We’ve done a tremendous number of wonderful things. Everything you can measure about hospital activity – how many patients, how it’s doing financially, how accessible its services are to the community, how well those services are delivered – is unprecedented. Each year, we’re setting new standards,” he said.
“We are world-renowned for organ transplantation in children. Children’s Hospital of Pittsburgh does more transplants for children than any other pediatric institution of any variety,” he said.
Children’s has also enjoyed breakthroughs in terms of community access to excellent pediatric care, he added.
“You can get an appointment with a sub-specialist (e.g., pediatric cardiologist or pediatric oncologist) at Children’s Hospital within seven days 80 percent of the time. But if you go to other cities, sometimes it takes weeks or months to see a doctor. We make a point of making ourselves available,” he said.
Dr. Perlmutter also noted that Mr. Rangos has been a driving force behind the Hospital’s ascendance as one of the country’s premier pediatric institutions, citing that Mr. Rangos’ ability to see the larger picture, to move things along from a business and administrative standpoint, and to facilitate internal politics and dynamics of the institution make him a key player in Children’s progress.
“Mr. Rangos has been a driving force. There’s no question about it. His support has been critical. It’s not only that he has supported the growth of this institution financially through his generosity as a donor. He’s also been very progressive, prescient and incisive with his ideas. We have thrived from both his generosity and his wisdom as an advisor. His advice has always been incredibly strategic,” he said.
“With Mr. Rangos, it’s all about big thinking: Children’s Hospital should be the best, so how do we make it the best? There are only four or five children’s hospitals in the country that think about being the best in the world. We all do that through our perceptions and strategies, and Mr. Rangos has pushed us here in Pittsburgh to embrace philosophies and strategies that have led to the hospital’s positioning itself at the very top. He appreciates the importance of doing research in terms of what we do every day, and also in terms of positioning ourselves as a great institution that can attract the best scientific and medical talent,” he added.
Wonderful Gentleman Who Plays a Crucial Role
George Michalopoulos, professor and chairman of UPMC’s Pathology Department and an NIH Merit Award recipient, said Mr. Rangos has played a crucial role in both Children’s Hospital and UPMC’s rise in the national rankings.
“John is a wonderful gentleman. I’ve known him as a friend for several years. He comes to the office, and we talk about everything from Greek affairs to American trends to hospitals, academics and healthcare. He is a wealthy person who is genuinely willing to part with his wealth to improve something. And that’s actually kind of rare. He’s also somebody who really has a soft spot for children, diabetes research and medical treatment of individuals,” said Dr. Michalopoulos, who is in charge of all diagnostic research in pathology at UPMC and Pittsburgh’s 14 hospitals.
“John always comes from the perspective of needing to think about the greater common good. He really thinks about it. He doesn’t just throw money at anyone who comes a-calling. He provides strategic assistance. And that’s something I really like about him,” he said.
“The original Rangos building was already up by the time I came to Pittsburgh, and that became the nest-egg from which many other wonderful programs have emerged – from stem cell research to an array of other things which have become the cornerstone for pediatrics research in this country,” he added.
With 175 faculty members, UPMC’s Department of Pathology is the largest clinical organization of its kind in the country, and is consistently ranked among the top five. Dr. Michalopoulos, who taught Pathology at Duke University for 14 years before joining UPMC in 1991, said Mr. Rangos has had a lot to do with helping UPMC transform into one of the country’s pre-eminent medical centers.
“Maybe I’m biased because he’s my friend, but objectively, it comes down to money and space. One of the biggest challenges for hospitals to rise in the rankings is to be able to bring in faculty to do research on the cutting edge of their fields. And to do that, you need quality space. And to have quality space, you need financial resources. So you need somebody who provides money for that space; who provides financial support for endowment; who empowers a clinical enterprise to attract research-oriented clinical chiefs,” he said.
“This is what creates leading programs which, in turn, create leading centers of research. And that’s what John has done for Children’s Hospital and the University of Pittsburgh. He has given the money that has helped attract very talented clinicians to the UPMC community. One doctor came to us from Yale, for example. To recruit him, we had to put together the financial resources and create research space in the new research tower. That didn’t come directly from John. But it came from the financial resources at Children’s, which John has contributed to over the years,” he added.