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1st
appeared 02 July 1999
UCSF Stanford Health Care Weighs Options for
UCSF/Mount Zion
As UCSF Stanford Health Care considers making major changes in patient services to curb
financial losses at UCSF/Mount Zion, officials are meeting with concerned employees,
neighbors, elected representatives and others to update them on the situation.
"We're facing very difficult times," Bill Kerr, chief operating officer, told
the Hospitals Auxiliary of UCSF Medical Center. "We're not alone. Other health care
providers in the Bay Area and other academic medical centers across the country are
struggling."
Chief Executive Officer Peter Van Etten told the San Francisco Board of Supervisors on
Tuesday that "UCSF Stanford is not closing Mount Zion. The several options being
explored all retain extensive services at Mount Zion."
 The next community meeting to discuss the future of Mount
Zion is scheduled for July 13, from 7 to 9 p.m., at the College of Podiatric Medicine,
Reiss Hall, 1835 Ellis St. UCSF Stanford officials will discuss the options at the next UC
Regents meeting on July 15 and make a recommendation at UCSF Stanford's next board meeting
on July 23.
While no decisions have been made about Mount Zion,
UCSF Stanford officials say changes are necessary as part of an overall plan to restore
fiscal stability to the entire clinical enterprise, which is projected to end 1999 with a
$60 million shortfall. UCSF Stanford is now in the midst of cutting $170 million from its
$1.5 billion budget to break even in 2000.
This effort will result in layoffs of some 450 employees at the north campus alone.
"These layoffs have been painful to all of us and have raised serious concerns among
the unions and legislature," says Haile Debas, dean of the School of Medicine and
vice chancellor for medical affairs.
As part of UCSF Stanford's plan to find $100 million more in cost savings or revenue gains
to achieve a 3- to 4-percent operating margin in 2001, administrators are considering
several options for Mount Zion, a 113-year old hospital which became part of UCSF in 1990.
One of four acute care hospitals united during the November 1997 UCSF Stanford merger,
Mount Zion faces losses of up to $56 million this year, UCSF Stanford officials say.
"It should be perfectly clear to everyone that, with or without the merger, UCSF has
to stop this financial hemorrhage to ensure the survival of its clinical programs,"
Debas says.
Since the options for restructuring services have come to light, many people have
expressed concerns about the potential for closing Mount Zion's inpatient and emergency
room services. "Nobody wants to see these services closed, but the funds needed to
keep them going have to come from somewhere," Debas says.
Deficits at Mount Zion are due to a number of factors. First, it is difficult to support
all of the services involved in running an acute care, 365-bed hospital with a patient
census of only 100, Van Etten says. Second, revenues from government and private payers
are not keeping pace with escalating costs for drugs, supplies and wages at the hospital.
Third, due to a complicated federal formula for Medicare funding, Mount Zion gets
reimbursed significantly less than the UCSF Medical Center on Parnassus for caring for
Medicare patients.
The entire clinical enterprise faces reduced Medicare payments mandated by the Balanced
Budget Act of 1997, which targets Medicare for cuts of $116 billion between 1998 and 2002,
including reduced support for graduate medical education. Annual reductions in Medicare
payments to UCSF Stanford will total $38 million next year.
Van Etten and other teaching hospital officials met with US senators to make the case for
federal Medicare support for training future physicians at academic medical centers.
Senator Patrick Moynihan's (D-New York) bill to stabilize Medicare's funding for graduate
medical education at its current level is pending action.
Weighing the Options
Mount Zion has been losing money for years, UCSF Stanford officials say. Mount Zion's
losses have totaled $159 million in the last six years. But since its integration with
UCSF in 1990, the medical center has been able to offset its losses with operating gains
earned two miles away on Parnassus. Now that that medical center also faces its own
financial deficit, UCSF Stanford officials say they need to find a way to deliver more
cost-efficient services across both sites.
Van Etten on Tuesday outlined options being considered for Mount Zion and their projected
financial consequences for UCSF Stanford:
The option to operate only those functions that
relate to outpatient physician practices and the outpatient clinical cancer center at
Mount Zion and transfer inpatient and emergency care to the UCSF Medical Center would save
about $20 million annually with one-time capital costs of about $11 million;
an option to operate all outpatient services and a
72-hour short-stay unit and move inpatient and emergency care to the UCSF Medical Center
would save about $10 million a year with one-time capital costs estimated at $35 million;
another option to move some clinical programs and
their hospitalized patients from UCSF Medical Center to Mount Zion and fill vacated
services on Parnassus with new programs would initially result in annual losses of about
$3 million to $10 million, depending on the size of the programs transferred. Over several
years, growth at UCSF could restore the loss and generate up to a $13 million annual gain.
One-time capital costs of $36 million to $60 million would be needed under this option.
A fourth option, to build a women and children's
hospital at Mount Zion, is a long-term possibility. However services are reorganized, Van
Etten says, Mount Zion will still operate clinics for adults and children, full service
outpatient cancer services and ambulatory surgery. Both UCSF and UCSF Stanford have
significant commitments in the Western Addition neighborhood, where an outpatient cancer
center is under construction and two medical office buildings and a cancer research
facility have been built in recent years.
All the options are being evaluated in terms of their financial and operational benefits,
impact on the community and employees and effect on academic programs, UCSF Stanford
officials say. Particular care, they add, is being taken to discuss the impacts of moving
the Mount Zion emergency services to UCSF. Mount Zion receives 6 percent of San
Francisco's ambulance calls.
"Once a recommendation is brought forward to the UCSF Stanford Health Care board, it
has the ultimate responsibility to make the decisions," Kerr says.
Any decision to make major changes in hospital services would trigger a formal review
process by the San Francisco Health Commission. If closing Mount Zion's ER is advised, the
city and county Emergency Medical Systems would review the impact and make a
recommendation to the state.
About 50 people, including laid-off UCSF Stanford employees and union members, protested
outside the Regents' meeting at UCSF's Laurel Heights campus on June 18. Among their many
concerns, protesters do not want to see major cutbacks at Mount Zion and question
decisions to lay off workers in favor of contracting with private companies to cut costs.
Acknowledging that UCSF Stanford has had to discontinue valued programs to make ends meet,
Kerr says administrators have tried to close only those services that are available
elsewhere in the community. The outpatient pharmacy at the ambulatory care center on
Parnassus, for example, had seen a decline in prescriptions from a high of 1,500 per day
to some 300 to 400, he says. UCSF Stanford transferred its outpatient pharmacy
prescription records to Safeway pharmacies. Safeway has agreed to serve UCSF patients with
unique needs such as those whose prescriptions require treatment authorization requests.
As for the loss of valued employees, Kerr says UCSF Stanford has offered job fairs and
counseling to help them through the transition. While most health care workers will likely
be able to find another job, he says less skilled workers may have a more difficult time.
"With budget cuts of this magnitude, it can't be business as usual. We need to make
changes in processes and practices to make us more cost-effective. We are working with
physicians, nurses and staff to figure out how to deliver patient care more efficiently.
And we will be monitoring our services to be certain we are maintaining high
quality."
UCSF Stanford also is working to increase revenues by renegotiating contracts with HMOs
and other private insurers. UCSF Stanford is negotiating price increases from Medi-Cal,
which paid $80 million less than the cost of providing care to its recipients last year,
and three large HMOs. "It isn't enough," Van Etten says. "They are still
paying us less than our costs, but it would have been much worse if we didn't have the
market clout as a merged organization."
Fate of UCSF/Mount Zion
During his recent state of the school address, Debas detailed how UCSF faculty will take
part in the review process. While UCSF Stanford's Office of Strategic Development,
directed by Patty Perry, analyzes the implications of the options, three UCSF advisory
committees are evaluating the impact of each option on training and clinical programs.
Debas anticipates that the UCSF committees will submit a consolidated report to the UCSF
Stanford board as an official School of Medicine response.
Debas established the first of these three committees, which includes department chairs,
faculty and members of the dean's office and meets Tuesday mornings. While Debas is on
sabbatical, Lee Goldman, associate dean for clinical affairs and professor and chair of
medicine, will chair the committee now called the Tuesday morning group. The Tuesday
morning group created a committee at Mount Zion, chaired by Ernest Ring, associate dean
and assistant CMO at Mount Zion. Ring's committee represents most of the departments with
clinical activities at Mount Zion.
"We've bottomed out on the amount of full-time equivalent [employee] cuts we can
endure," says Ring, chief of radiology at Mount Zion. "So any savings have to
come from a programmatic change. Everybody is looking for a change that doesn't hinder the
academic mission. My hope is that any change will allow the opportunity for growth."
Ring oversees clinical and research programs, education of medical students and house
staff, recruitment of faculty and serves as a liaison between faculty at Mount Zion and
the Parnassus site, and between community physicians. Whatever happens, Ring says,
employees hope that the hospital is able to maintain its long-standing history of
providing personalized patient care in an academic setting. "The rank and file staff
are team players," he says. "They want to do whatever is necessary to keep this
place part of the clinical enterprise."
Training residents in surgery, anesthesia and other disciplines, Mount Zion assigns 31 of
its 80 residents in primary care. "One of the strengths of this hospital has always
been that we are exposing trainees to doctors who have been treating the same patients for
30 years," says Ring, who began working at Mount Zion in 1993. "As I came to
know this place, it reminded me why I went into practice in the first place."
A third committee, established by Ring and chaired by Orlo Clark, chief of surgery at
Mount Zion, and Lawrence Pitts, professor of neurosurgery at Mount Zion, includes other
Mount Zion faculty, trustees and community physicians.
Debas, who began his sabbatical this month, plans to remain "fully engaged in all
merger-related discussions and decisions."
Links:
UCSF Stanford Health Care
Daybreak's UCSF Stanford
archives
Related Daybreak/Newsbreak stories:
School Strong Despite Merger
Difficulties, Debas Says
UCSF Stanford Health Care
Works Toward Financial Recovery
Kerr Responds to Speculation
on Mount Zion's Future
Source: Lisa Cisneros, Newsbreak
editor |
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