USC Medical School Dean Quits in Fallout Over New Hospital : Health care: Facility has drawn complaints about diversion of resources and put pressure on the faculty.

Robert E. Tranquada, dean of the USC Medical School, has resigned amid continuing turmoil over the opening of a new, private university hospital last month and the financial pressures it has brought on academic departments and faculty members.

In his letter of resignation, addressed to faculty, staff and associate deans, Tranquada said he was stepping down at the end of this month to make way for “new leadership” better able to deal with the “tensions” and “serious budgetary problems” spawned by USC’s ambitious plans for the medical school.

“I am disappointed that I was unable to provide the ability for the school to move through these profound changes without the erosion of confidence which makes it essential for me to take this step,” Tranquada, 61, wrote in the two-page letter, dated June 4 and obtained by The Times on Tuesday. Tranquada could not be reached for comment.

Because of delays in the university mail system, most faculty members got the letter Monday, and a follow-up letter from university Provost Cornelius J. Pings late Tuesday.

Pings said in an interview that he hoped to appoint an interim dean next week, and was convening a search committee for a permanent successor. The process could take as long as a year, he said, but added that USC’s goal was to have a new dean of medicine in place within seven months.

But several medical school staff and faculty members reacted to news of Tranquada’s resignation with alarm.

“It has had a very unsettling effect,” said one faculty doctor, who requested anonymity. “Rumors are flying in all directions and things are happening very fast.”

Last month, the university unveiled a $157-million hospital built in partnership with National Medical Enterprises, one of the largest commercial hospital chains in the country. The hospital has joined Los Angeles County’s largest public hospital, County-USC, as the university’s teaching hospitals for medical students and residents.

The same doctors will staff both hospitals, but the new hospital is primarily for patients with private insurance or covered by Medicare, while the majority of patients at County-USC are poor and uninsured or covered by the state’s financially strapped Medi-Cal program.

The new hospital, university officials have said, was necessary for USC to compete for top medical talent, provide them with adequate research space and equipment and with a base of private, paying patients to supplement their salaries and produce income for the medical school. County-USC, because of its predominantly indigent patients and dependence on taxpayer financing, was unable to do that, university officials said.

The distinctions between the hospitals and pressures on the faculty to bring in income from private patients has triggered much of the turmoil at the medical school, along with concern about the fate of poor patients. About 200 faculty members last month signed a letter to USC President Steven Sample protesting what they saw as a diversion of resources from existing medical school programs and personnel at County-USC to meet the needs of the new hospital, called USC University Hospital.

In his letter, Tranquada said some of the issues that have arisen as a result of the tax-exempt university’s relationship with a commercial hospital chain were more complicated than expected, although he did not go into detail.

“I think none of us foresaw the full level of complexity in that relationship,” Tranquada wrote. “We have meaningful economic challenges which remain unresolved.”

He added, however, that he is confident that problems can be worked out “if the university is willing to make the essential commitment to the success of the entire venture. It is my profound hope that such a commitment can be made to my successor.”

Tranquada is to begin a one-year sabbatical starting July 1, after which he is expected to return to USC as a professor in the Department of Medicine, according to university officials.

Pings, the university provost, expressed regret at the departure and said Tranquada had accomplished a great deal during his five-year tenure.