UCSF Medical Center Finances Show Steady Improvement

UCSF Medical Center's financial profile is very strong, a sign that the 100-year-old clinical enterprise is poised to continue its tradition of improving and saving lives and training future health care professionals well into the future. As a $1.2 billion clinical enterprise, the academic medical center treated hundreds of thousands of patients in 2007, and both its operating expenses and revenue topped $1.2 billion in 2007. Overall, the medical center's financial performance has shown steady improvement in recent years with net income of $110.8 million in fiscal year ending in 2007, up from $95.6 million in net income in fiscal year 2005-2006. See medical center annual report data [here](http://budget.ucsf.edu/stories/ucsf-medical-center-annual-report-2007/). Net income is invested right back into the medical center and medical school, says Ken Jones, chief financial officer of the medical center. Importantly, the medical center serves as a teaching hospital and supports the clinical education of medical students, residents, nurses, pharmacists and other health care professionals. Funds earned in 2007 also were used to support seismic upgrades, make needed improvements to facilities and purchase new equipment, among other uses. Other funds supported a variety of programs that benefit the community. From leading community education programs on diverse health issues to providing free vaccinations and health screenings for underserved communities, dedicated nurses, physicians, technologists, therapists, volunteers and others at UCSF Medical Center and UCSF Children's Hospital are active in improving the community's health. Net income is also important because it leverages the medical center's ability to borrow money. "We've been saving our pennies because we need to borrow money to finance the development and construction of the UCSF Medical Center at Mission Bay," Jones says. Indeed, the medical center is embarking on the greatest transformation in its 100-year-history, says Mark Laret, chief executive officer of UCSF Medical Center. "By 2014, new children's, women's and cancer hospitals will rise at our Mission Bay campus – powerful physical evidence of the passion and commitment of people with a common goal." With a price tag estimated at approximately $1.66 billion, the Mission Bay medical center will need a strong financial commitment to become a reality. UCSF plans to use support from donors, hospital reserves, external debt financing and state funding to finance this project. See [fact sheet](http://pub.ucsf.edu/today/cache/feature/200711213.html) for more information. ##Concerns About Medi-Cal Another challenge stems from decreased state funding for Medi-Cal, the state health care program for low-income and disabled Californians. Reductions in reimbursements for Medi-Cal and the proposed cut in professional fees will mean a significant drop in professional fee revenues for medical center physicians, Jones says. "These cuts will be particularly hard on the physicians who see a lot of Medi-Cal patients," he says, "especially pediatric physicians, since the families of many sick children qualify for Medi-Cal." As a public hospital, UCSF Medical Center treats a large number of Medi-Cal patients, a population that has grown steadily in recent years. This growth is due in part to the fact that many private doctors refuse to take Medi-Cal patients because of already low reimbursement rates and burdensome paperwork. The proposed professional fee reduction could accelerate this trend. In a recent survey by the Alameda-Contra Costa Medical Association, 29 percent of doctors interviewed said that, after the fee reductions are implemented, they intend to drop their current Medi-Cal patients. In addition, 56 percent said they'll stop accepting new Medi-Cal patients altogether. The immediate impact of the state cuts, then, will be on medical center physicians, but Jones anticipates a secondary impact on the hospital as well. About one-quarter of the hospital's patients are Medi-Cal patients. The hospital is paid based on a complicated formula that is still being worked out at the state level. "We know it will hurt, but it will take a while to determine how much it will hurt," Jones says. Last year, UCSF provided $168.8 million in uncompensated care, a chunk of which covered the gap between what it costs to treat patients with Medi-Cal and the reimbursement for that treatment. Jones worries about the impact of the state budget crisis on UCSF and the 22 other public hospitals in California, including the UCSF-affiliated San Francisco General Hospital, that care for the state's poorest inhabitants. "We're very concerned about the effect of these budget cuts on safety net providers," Jones says. "They're certain to make the financial pressure we're under that much worse."