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1st appeared
3 November
1999 The UCSF Medical Center: Present and Future A Message From the Chancellor The experiment known as UCSF Stanford Health Care is approaching an end. The two universities have begun negotiations to dissolve the merger of their hospitals. We expect these negotiations to be cordial. We do not know how long they will take nor what they will cost. It is possible that some shared services will be preserved. Prime candidates include the pediatric and laboratory services, both of which made gratifying progress towards unification under the aegis of the merger. The Board of Directors of UCSF Stanford will retain authority over the hospitals until the dissolution has been executed. I participated wholeheartedly in efforts to make the merger effective. I am disappointed that we failed but eager for all of us to move on to the challenges that lie ahead. I have great confidence in the ability of our staff, faculty and leadership to surmount those challenges. What does all of this connote for the Medical Center of UCSF? Nothing more nor less than steady course, full steam ahead. We face the same financial challenge now as before. The thought that dissolution of the merger might somehow lighten our burden is a cruel delusion. The operating losses for our hospitals in September were approximately four million dollars, for the Stanford hospitals 3 million. There is little likelihood that we will reach the breakeven point before fiscal year 2000-2001 and we will do that only by brunt of strenuous effort. We must pursue vigorously the recovery plan implemented under the supervision of the Hunter Group. John Stone of the Hunter Group will continue as Chief Operating Officer of our hospitals for the present. He has been working effectively with our staff, faculty and campus leadership. But UCSF has initiated a national search for a hospital director of its own. The search committee, chaired by Dr. Steve Hauser, has been asked to proceed as expeditiously as possible. The sooner we have this officer in place, the sooner we can proceed with the rebuilding of our hospital management staff, which has sufferred appreciable attrition. As part of our fiscal recovery plan, we must continue with the reconfiguration of Mount Zion Hospital. The equation that led UCSF to the original decision to consolidate inpatient services has not changed. The UCSF Medical Center has subsidized Mount Zion by more than 200 million dollars over the past decade. Much as all of us admire the tradition and spirit of Mount Zion, such subsidies are no longer possible. The changes we are making at Mount Zion are designed to keep the facility a place of medical service and discovery. The cornerstones will be the UCSF Cancer Center, primary care, outpatient surgery and urgent care. The proud tradition and spirit of Mount Zion will be sustained. How will the dissolution of the merger affect our Schools? Perhaps little more than the budgetary stringencies already implemented or anticipated within the merger. The School of Medicine in particular can expect a reduction in what has been called "strategic support" - funds paid by the hospitals for services rendered by the faculty and used for various academic purposes in the clinical departments. To put this into perspective, I note that strategic support presently represents approximately 6% of the budget for the School of Medicine. Strategic support rose appreciably under the merger, and it is not yet clear whether the current support will fall to below the premerger level. We will be sure that we sustain the academic preeminence of our clinical departments. There is one misapprehension that should be laid to rest. The operating losses of the hospitals do not threaten the fiscal integrity of our Schools. The Medical Center and the Campus are separate financial entities. The losses of the former cannot be attached to the budget of the latter. The hospitals must somehow stand on their own and we are prepared to see that they do so. The fiscal difficulties of our hospitals are a local manifestation of a national crisis. Most urban academic health centers are now bleeding red ink. For example, all the major hospitals in the Harvard system are losing money, and the hospitals of the University of Pennsylvania lost 190 million dollars in the last fiscal year. Closer to home, the UC Davis Medical Center is gearing up for 300 or more lay-offs in anticipation of a deteriorating bottom line. There are three fundamentals that combine to create this crisis: academic health centers are inherently inefficient, even when aggressively managed; they provide a disproportionate share of the nation's charitable care; and revenues from virtually all sources are in steady decline. The Federal government could provide an assist (but not a panacea) by freezing the ongoing reductions in Medicare payments to academic health centers. An initiative in Congress to do this is finally showing signs of life, but the outcome remains uncertain. Whatever relief might come from public agencies, the UCSF hospitals will continue to face financial pressures that can only be addressed by stringent management and improved revenues. I am confident that we will eventually prevail in this struggle. We have a resourceful staff and faculty, and the strong backing of the Board of Regents; and we offer world-class health care, of which we can be justly proud. During the recent debates over the fate of the merger, some critics argued that our campus had slipped from its preeminence. That is an ill considered and reckless claim. Look at any reasonable parameter - extramural funding of research, philanthropic giving, quality of our students, laurels for our current faculty, recruitment of new faculty, ambitious and visionary undertakings for the future, ranks of grateful patients, contributions to human welfare; look at any of these and you will see no evidence that we have been diminished. UCSF remains one of the premier health science centers in the world. We reached that eminence through the communal efforts of a devoted staff and faculty. We will retain that eminence in the same way.
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